Market News

 September 09, 2014
Power Plants Heading Out to Sea in Post-Fukushima Japan

 One of the biggest hurdles to building new power plants in Japan is finding a place that's safe from earthquakes and tsunamis. That place may turn out to be 30 miles at sea.

Sevan Marine ASA, a Norwegian builder of offshore oil-drilling vessels, is proposing a $1.5 billion natural gas-fired power plant that will float on a cylindrical platform bigger than a football field moored off the Japanese coast.

It's one of several innovative efforts Japan is considering for generating electricity after the Fukushima nuclear disaster in 2011 prompted widespread public concern over how the country will produce electricity -- and where. Already, plans are being made to dot the coast off Fukushima with some of the largest floating wind turbines in the world.

"We are now focusing on mainly floating offshore wind, but we want to push various types of technical development and research" for floating power stations, said Toshimitsu Motegi, a member of Japan's ruling Liberal Democratic Party and the former minister of economy, trade and industry.

The Sevan proposal has won supporters within the transport ministry, which has encouraged Japanese companies to expand into offshore equipment after losing ground to Chinese and South Korean rivals in shipbuilding.

The ministry "is very interested in the floating power project, and we'd like to support marketing of the facility both at home and abroad," according to an e-mail from the transport ministry.

The gas-fired project will have 700 megawatts of capacity, about two-thirds the capacity of a modern nuclear reactor.

Fukushima Disaster

"The power situation in Japan after the Fukushima disaster has encouraged us to propose this solution," Fredrik Major, Sevan's chief business development officer, said in an e-mailed response to questions.

Sevan envisions building a cylindrical platform 106 meters (348 feet) across, and would install power equipment including turbine generators from Siemens AG, according to planning documents from the Arendal, Norway-based company.

IHI Corp., co-owner of Japan's second-largest shipbuilder, may supply storage tanks for liquefied gas and may also build the hull.

"We will consider any types of facilities floating on the sea," Akinori Abe, president of IHI's offshore projects and steel structures operations, said in an interview. "We intend to lead Japan in the field."

IHI's shares rose 10 yen, or 2 percent, to 513 yen at the close in Tokyo, their biggest one-day gain since Aug. 21. The Nikkei 225 Stock Average gained 0.3 percent.

Site Selection

The floating platform could be anchored to the seabed anywhere from 5 kilometers (3 miles) to 50 kilometers from shore in water deep enough to mitigate the affect of a tsunami, Major said.

Shipping lanes, traditional fishing areas and whether the platform would be visible from shore would all play a role in selecting a site. Power would be delivered to land by an undersea transmission cable.

While Sevan says the concept can work anywhere, the company decided this year to focus on Japan, Major said. The company submitted its proposal to the country's Ministry of Land, Infrastructure, Transport and Tourism in May, and executives expect to return to Japan this year for additional meetings.

While the Sevan group's platform would produce electricity by burning liquefied natural gas, the move offshore could eventually see nuclear power generated on the oceans, where they'd be more immune to earthquakes and the kind of giant wave that overwhelmed Fukushima more than three years ago.

Floating Reactors

It's an idea outlined by scientists at the Massachusetts Institute of Technology in April. And Russia's state-run nuclear power company, Rosatom Corp., laid the keel in 2007 for a vessel that's expected to house two nuclear reactors. The ship, Akademik Lomonosov, is scheduled for delivery in 2016.

Meanwhile, Israel's IDE Technologies Ltd. is designing a floating water desalination vessel and Turkey's Karadeniz Holding AS runs a fleet of 'Powerships' that carry thermal power plants. The Karadeniz vessels are designed to meet urgent electricity needs and are more akin to traditional ships than floating platforms. The seven ships in Karadeniz's existing fleet have combined capacity of about 1,000 megawatts.

Solar is also heading beyond Japan's shores. Kyocera Corp. and Century Tokyo Leasing Corp. said in August that they plan to build two solar power stations designed to float on the surface of reservoirs. The plants will be installed in Hyogo prefecture in western Japan.

Nuclear Opposition

Floating power stations promise to overcome some of the drawbacks to land-based plants in Japan, where a majority of the population largely opposes nuclear stations in their communities. Fifty-seven percent of respondents to a poll conducted Aug. 2 and Aug. 3 by the Kyodo news service oppose nuclear restarts, while 35 percent are in favor.

Sevan believes the floating platforms can be cost competitive with land-based plants, Major said by e-mail. Still, others are skeptical.

"The technological hurdles to make such a facility will be high, and even if they clear those hurdles, cost issues would remain," said Hiroshi Takahashi, an energy research fellow at the Fujitsu Research Institute.

Critics say floating power plants would also face obstacles winning approval in local communities with economies based on fishing. And safety concerns remain.

"At issue is when something unpredictable happens on the sea and then the question arises of how the situation can be controlled," said Shinji Sato, a professor at the University of Tokyo who specializes in coastal engineering. "In terms of tsunamis, it's safer to be away from the coast but it's also more dangerous when you consider the action of waves in general the further you get from land."

Black Ships

IHI, which traces its history to 1853 when predecessor Ishikawajima Shipyard was founded with the arrival of Admiral Perry's black ships at the end of the samurai era, is already retooling for an offshore future. The heavy-equipment maker remodeled its Aichi yard in central Japan in 2010 as a manufacturing base for offshore structures.

Japan's new Basic Energy Plan, released in April by the Ministry of Economy, Trade and Industry, calls on the nation's energy industry to more aggressively promote the development of new resources through technologies such as floating production, storage and shipment facilities for liquefied natural gas.

Though the University of Tokyo's Sato doubts offshore nuclear generation will ever come to Japan, Sevan's proposal may hold some appeal off the coast of Fukushima as a symbol representing efforts to revitalize the region, he said.

"It's easier to accept such a facility in a site with specific circumstances like Fukushima," Sato said.