Shulman Advisory

The State of Biomass Power Generation in Japan

Previously, we have looked at the general renewables landscape in Japan, as well as at solar generation, including the associated incentive schemes that drove its growth over the last decade.

In this article, we’ll take a look at biomass – the third largest renewable power source in Japan’s generation mix.

Biomass as a Part of Japan’s Cleaner Power Generation Mix

In 2011, the Fukushima nuclear disaster brought Japan’s nuclear power plants to a halt. While some of the plants have since been restarted and nuclear accounted for as much as 7.07% of the country’s power generation in FY 2019, that figure is nowhere near the pre-Fukushima figure of roughly 30%.

Rather than bringing nuclear generation back up to the pre-Fukushima levels, the Japanese government aims to generate 20% – 22% of its power from nuclear by FY 2030. To further reduce its current reliance on fossil fuels – primarily natural gas and coal, it also plans to increase the share of renewable generation to 22% – 24% by that same year.

The government expects about two-thirds of its renewable target to be contributed by hydro and solar plants. However, it also has ambitious targets for biomass power generation. By FY 2030, it aims for biomass to make up about 20% of Japan’s renewable generation, or between 3.7% and 4.6% of the country’s total generation.

Considering that in FY 2019 (April 2019 – March 2020), biomass power plants in Japan generated 16,815.63 GWh of power, accounting for 1.95% of the total electricity generated in the country, biomass generation will have to double within the next decade for the government to hit its target.

Japan’s Dependence on Limited Biomass Fuel Imports

To hit the target, not only will enough biomass power plants have to be built in Japan, but the country will also have to secure enough biomass supply to fuel those plants. It is the latter that is expected to pose a more significant challenge.

In fact, as of the end of March 2017, there were already 491 licensed biomass power plants (both operating and planned) with a total capacity of approximately 12,000 MW. Contrasting that is the fact that currently, more than 80% of projects approved under the government’s feed-in tariff program are offline due to their inability to procure fuel.

While forests cover about two-thirds of Japan’s land area, difficult terrain increases the cost of using that land to produce biomass fuel. That, combined with the lack of manpower caused by Japan’s aging and shrinking population, means that domestic production of wood pellets, the main fuel used in biomass power generation, has been stagnant for the last five years.

In an attempt to make up for the lack of domestically produced biomass fuel, plant operators have been turning to foreign suppliers.

Mitsubishi and Marubeni managed to secure a supply of 1.5 million tons of wood pellets annually from US supplier Enviva starting in 2021, and Mitsui has signed a 10-year contract with Australia’s Altus Renewable to procure 100,000 tons.

Overall, wood pellet imports have increased more than sixfold between 2012 and 2017, decreasing the related self-sufficiency ratio from almost 60% to just 20% over the same period. Even with that, however, the ability of Japanese biomass power plants to secure imported fuel is very limited.

Biomass Power Plant Operators in Japan

Going back to biomass power plants, of the 491 licensed plants that were in Japan at the end of March 2017, the most (81) were located in the Kanto region, followed by 64 in the Chubu region, and 41 in the Tohoku region.

The same three regions led in terms of biomass generation capacity as well. Licensed biomass power plants had a combined capacity of 2,390 MW in the Kanto region, 1,863 MW in the Chubu region, and 1,791 MW in the Tohoku region.

Some of the largest operational biomass power plants in Japan include:

  • Muroran Biomass Power Plant (74.9 MW) – JXTG Energy brought this woody biomass power plant in Hokkaido into operation in May 2020. It is fueled with palm kernel husks (PKS) imported from Southeast Asia. The fuel is unloaded and stored at a wharf 800 meters away from the power plant, from where it is transported to the plant by conveyor belt. All electricity generated at this power plant is sold.
  • Itoigawa Biomass Power Plant (50.0 MW) – This power plant started operations in January 2005 and is run by Summit Myojo Power, a joint-venture of Summit Energy (a wholly owned subsidiary of Sumitomo Corporation) and Myojo Cement (a wholly owned subsidiary of Taiheiyo Cement). The plant procures woody biomass fuel from Myojo Cement’s adjacent plant and uses the ash from the power plant as a raw material for cement.
  • Hofu Biomass Coal Co-Firing Power Station (112.0 MW) – AWEP Yamaguchi, a joint-venture between Air Water Inc. and Chugoku EPCO, commissioned this power plant in July 2019. Their plan is to generate approx. 800 GWh of electricity annually by co-firing coal and up to 50% biomass. The biomass fuel used in the plant includes unused thinned wood procured from the Federation of Forest Owners Cooperative Associations of Yamaguchi Prefecture and imported woody biomass.

Interestingly, paper mills – among Japan’s largest industries – operate a number of biomass power plants as well.

In 2014, Japan Pulp and Paper Company formed a partnership with New Energy Development Company to build a 14 MW woody biomass power plant in Noda, Iwate Prefecture. Nippon Paper Group has been involved in biomass power generation as well, starting with its Ishinomaki power plant built in 2018.

While Nippon Paper Group eventually aims to fuel its biomass plants with woody biomass produced in its own forests, at this point, it relies on imported fuel.

The Future of Biomass Power Generation in Japan

At this point, the future of biomass power generation in Japan looks challenging. While there are enough biomass power plants to meet the Japanese government’s FY 2030 target, there is not enough affordable fuel supply to power them.

In fact, over the last year, numerous planned projects including, those mentioned below, have been scrapped primarily for that reason:

  • Nippon Paper Group’s Akita Plant – The company intended to operate a 112 MW power plant using a mixture of coal and wood pellets from FY 2021. The plan was canceled due to increasing fuel and construction costs affecting its projected profitability.
  • Kansai EPCo’s Sakata Plant – The utility canceled its plans due to the project’s likely unprofitability.
  • Okuma Town’s Plant – The municipality has determined that it would be difficult to apply for the feed-in-tariff program, and even if the plant went into operation, it would be challenging to reach profitability.

That said, the Japanese government still views woody biomass as a fuel with the ability to not only offer a stable power source but that could also revitalize regional economies. As such, it is investing both time and money in promoting this power generation method.

Among other things, biomass is expected to receive 20% of the government’s incentives for renewable generation in the coming decade, and the government also provides grants to start-up biomass producers.

In addition, this year Japan’s Ministries of Economy, Trade and Industry, and of Agriculture, Forestry and Fisheries have started a study group to examine the “development of forestry and woody biomass power generation.”

Its main goal is to pave the way for reduction of fuel costs; in other words, to remove the most significant barrier to successful biomass power generation in Japan.

Stay Tuned!

With the situation surrounding biomass power plants in Japan constantly changing, we plan to keep you updated about related developments on this blog, as well as in our newsletter, reports and data products.

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