November 22 2021

Offshore wind bidding for round 2 areas in Japan

Nishimura & Asahi | Energy & Natural Resources - Japan

Amane Kawamoto, Hudson Hamilton

Introduction
Round 2 offshore wind promotion zones
Promising areas and other candidates
Outlook


Introduction

The Ministry of Economy, Trade and Industry (METI) has designated Happo (Akita Prefecture) as a promotion zone for offshore renewable energy projects in Japan. Happo is the first round 2 area to be designated a promotion zone for offshore wind development.

In addition, METI has designated four additional areas as "promising areas":

  • Isumi (Chiba Prefecture);
  • Murakami (Niigata Prefecture);
  • Oga (Akita Prefecture); and
  • Yuza (Yamagata Prefecture).

These new promising areas can now proceed to the next step of the promotion zone designation process, which includes a formal consultation with local representatives, academic experts and local stakeholders (eg, fishery associations) via the establishment of a council.

Round 2 offshore wind promotion zones

Under the Act on Promotion of Use of Marine Areas for Development of Marine Renewable Energy Generation Facilities, which came into effect on 1 April 2019 (the Act), METI and the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) have been tasked with selecting areas for the promotion of offshore renewable projects (promotion zones).

METI and MLIT announced the first round of five promotion zones on 21 July 2020 (for further details please see "Offshore wind bidding for round 1 areas in Japan"):

  • Choshi (Chiba Prefecture);
  • Goto (Nagasaki Prefecture);(1)
  • Noshiro (Akita Prefecture);
  • Yurihonjo North (Akita Prefecture); and
  • Yurihonjo South (Akita Prefecture).

In addition to these promotion zones, METI and MLIT previously designated the following four areas as promising areas under the Act:

  • Happo (Akita Prefecture);
  • the Sea of Japan coast of Aomori Prefecture (north and south); and
  • Saikai (Nagasaki Prefecture).

This group of promising areas is sometimes referred to as the "second round", as METI is expected to designate them as promotion zones, following the first round of promotion zones noted above.

From this list of promising areas, Happo was the first to be designated a promotion zone, on 13 September 2021. Following its designation, METI published draft occupancy guidelines for Happo, which were open for public comment until 10 November 2021. The draft guidelines are generally consistent with those of the first round – although, the maximum bid price for the supply price has been lowered from 29 yen per kilowatt hour to 28 yen per kilowatt hour. The bidding process for phase two is also substantially unchanged from the process for phase one, despite some concerns being raised by bidders regarding, for example, restrictions on reaching out to local stakeholders.

Promising areas and other candidates

In addition to selecting Happo as a designated zone, on 13 September 2021 METI selected the following four additional areas as promising areas under the Act:

  • Isumi (Chiba Prefecture);
  • Murakami (Niigata Prefecture);
  • Oga (Akita Prefecture); and
  • Yuza (Yamagata Prefecture).

Further, METI announced that the following areas are potential future candidates for promotion zone status:

  • Awara (Fukui Prefecture);
  • Gan'u (Hokkaido);
  • Hibikinada (Fukuoka Prefecture);
  • Hiyama (Hokkaido);
  • Ishikari (Hokkaido);
  • Karatsu (Saga Prefecture);
  • Kuji (Iwate Prefecture);
  • Matsumae (Hokkaido);
  • Mutsuwan (Aomori Prefecture); and
  • Shimamaki (Hokkaido).

Prior to being designated promising areas, these candidates must meet certain conditions with respect to identifying interested parties and grid connection requirements.

Outlook

Following the appointment of Prime Minister Fumio Kishida on 4 October 2021, the Kishida Cabinet promptly approved Japan's sixth Strategic Energy Plan, on 22 October 2021. The approved Strategic Energy Plan made no change to the production targets for offshore wind that METI proposed in its draft Strategic Energy Plan, as released in July 2021 (which was 10 gigawatts by 2030 and 30-45 gigawatts by 2040). To meet these targets, METI is expected to continue to promote the designation of additional offshore wind promotion zones in round 3 and beyond.

For further information on this topic please contact Amane Kawamoto or Hudson Hamilton at Nishimura & Asahi by telephone (+81 3 6250 6200) or email ([email protected] or [email protected]). The Nishimura & Asahi website can be accessed at www.nishimura.com.

Endnotes

(1) Goto was designated as a promotion zone on 27 December 2019.