Japan’s offshore wind sector faces challenges

A lengthy approval process needs to be halved if the country is to meet its goal of installing 10GW of wind capacity by 2030, law firm White & Case says.

Wind power generation capacity in Japan increased 61.1 percent – or 261MW ­– but none of it was from offshore wind, according to the Japan Wind Power Association.

The association cited a lengthy environmental impact assessment process as the cause. Law firm White & Case highlighted that process, along with upfront decommissioning plans and opposition from local fishing communities, as the obstacles facing offshore wind developers in the country.

Japan’s offshore wind sector is expected to become one of the biggest opportunities in the renewables sector in Asia-Pacific, as the country aims to install approximately 10GW of onshore and offshore wind capacity by 2030. But a lead time of four to five years for the mandated environmental impact assessment required for large-scale projects is a challenge. “It is predicted that the government’s 2030 goal will only be achieved if, among other factors, the average lead time is halved,” the law firm stated in its report Offshore wind projects: Assessing the environmental impact.

The Japanese government has been working towards speeding up the process by adopting a new front-loading procedure that allows project sponsors to start the survey, forecast and evaluation procedures required under the Environmental Impact Assessment Act before public consultation with stakeholders has finished.

“The EIA process can take between three to five years, depending on the cases,” Ayako Kawano, a partner at White & Case’s Tokyo office and co-author of the report, told Infrastructure Investor. “[But] a study conducted by [public research and development agency] NEDO showed that there were successful cases where the review process was reduced by around 40 percent, averaging two years and three months, through the introduction of a front-loading procedure.”

This would bring Japan’s EIA processing time “to a level similar to that of other countries”, Tim Power, a partner at the firm specialising in environmental, planning and land acquisition issues, explained.

Navigating other challenges

Other challenges that remain include the requirement that project developers make appropriate decommissioning plans for a project when they submit an application for certification of the business plan to the Ministry of Economy, Trade and Industry. “These plans must include decommissioning costs (to be determined based on estimates by waste disposal companies),” according to the White & Case report.

“Decommissioning plans are generally prepared at a later point in time, maybe when the project is being commissioned, or during the lifespan of the wind farm,” Power explained.

According to the report, if it is difficult to obtain an estimate of decommissioning costs from waste disposal companies, these should be estimated as at least 5 percent of the total construction cost.

“That cost will have to be factored in the feed-in-tariff, and the developers will have to figure out how to make money given that extra cost,” White & Case senior counsellor Arthur Mitchell said.

He also argued that developers will need to keep the rights of the “important” fishing industry in mind when designing a new project. “Location of the farm can have a huge impact on fishing.”

Power added local governments can feel uncomfortable with a development if it “affects people’s livelihood,” even if compensation has been agreed. To mitigate this risk, he recommends developers engage early with local communities. “Stakeholder consultation is absolutely fundamental: making sure that communities understand the project, the effect of the project on their fishing activities and, if so, how they will be compensated,” he explained.

Developers should also be mindful of the project’s location and whether it allows fishing vessels to operate within the wind farm area. “The impact on a community that is reliant on fishing will be greater if the project prevents fishing vessels from entering parts of the farm,” Power said.

Other challenges that are regularly cited by offshore wind developers include poor grid connectivity in remote areas of the country, the depth of Japan’s seabed close to the shore and frequent natural disasters.

“Prospective investors and developers need to carefully examine each proposed project site to account for this,” White & Case stated.