The engineering division of the world’s second-largest steel maker and a globally-ranked construction company are joining forces to develop 500MW of offshore wind capacity in Japanese waters.
Nippon Steel & Sumikin Engineering Co, Ltd, (NSENGI,) a unit of Nippon Steel & Sumitomo Metal Corp, is partnering with Kajima Corp, with the goal of constructing offshore wind farms over the next five years, explained Koji Sakai, to Windpower Offshore. Sakai is section manager of the offshore wind section within the company’s marine engineering and construction division’s new business development and project department.
The company has constructed about one hundred wind turbine towers since 1999, and Sakai’s section was established in November 2011, designed to capitalise on new offshore wind opportunities. NSENGI’s parent company, Nippon Steel & Sumitomo Metal Corp, was itself created on 1 October 2012, via the merger of two existing steel companies with a combined production that puts them second only to ArcelorMittal.
Meanwhile, Kajima Corp has built about 20 onshore wind farms in Japan, since its first such project, the Tappi wind park in Aomori prefecture, in 1992. Kajima Corp is the fifteenth largest global construction company by revenue (2011 figures) and the highest-ranking Japanese company on the global list produced annually by Engineering News-Record.
The two companies are likely to begin with bottom-fixed projects in areas relatively close to shore, said Sakai, adding that key decisions about which projects to pursue will depend on how Japan’s offshore wind market develops.
The NSENGI – Kajima alliance aims to capture 50% of Japan’s emerging offshore wind market, said Sakai .
Obstacles that may slow down offshore wind development in Japan include resistance from fishermen and a lack of clarity about which parts of the country’s government should regulate the sector. Currently, various ministries appear to have overlapping responsibilities.
Higher rate FiT needed
But the biggest unresolved issue is price. Japan’s new feed-in tariff (FiT) system, introduced on 1 July, requires electricity suppliers to purchase wind energy at 23.1 yen ($0.28) for a period of 20 years.
But the 23.1 yen rate is only feasible for supporting onshore wind farms, says Sakai. Offshore wind farms will require capital investment 2-2.5 times that of onshore wind, and FiTs need to be adjusted to reflect this, he said. "We would need to see a price of 30 to 35 yen per kw/h for offshore wind," he said.
Other leading Japanese construction companies, such as Shimizu and Maeda, and industrial firm Hitachi Zosen have also signaled their intention to build offshore wind farms. Shimizu is part of a consortium working on a floating offshore project planned for the deep waters off Fukushima prefecture, in which Nippon Steel is also involved. Maeda has said it will build a fixed-bottom project off Shimonoseki and Hitachi Zosen is planning 300MW.