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Webinar: Biomass power in Japan on the rise

Webinar: Biomass power in Japan on the rise

Tokyo (SCCIJ) – Up to 51 members and guests of the SCCIJ joined the August webinar on biomass as a growing power generation source in Japan. The speaker Ms. Annette Bossler, a consultant and expert for Japan’s renewable energy market, explained how and why Japan has become one of the world’s fastest-growing market for wood pellets, chips, and palm kernel shells as biomass fuel for power production. Full recording available here!

Webinar: Biomass power in Japan on the rise

SCCIJ webinar speaker Ms. Annette Bossler is a renewable energy consultant and expert with a focus on Japan (© Annette Bossler).

Reform after Fukushima accident

The rise of biomass as a power source goes back to the reforms of the electricity market in Japan after the Fukushima nuclear accident in March 2011. Since July 2012, high feed-in tariffs guaranteed for 20 years stimulate investments into new power plants with renewable energy sources. A liberalization created many independent power producers and retailers. Green energy should make Japan less dependent on fuel imports and help it reach global reduction goals for carbon emission. According to the speaker, this subsidy program has been highly successful: At the end of 2019, water, sun, wind, and biomass were the source of about 20% of Japan’s electricity, twice as much as in 2012.

Two major developments are ahead, Ms. Bossler explained: First, offshore wind parks for 15 GW are in the pipeline. Second, the number of biomass plants is rising sharply. Ms. Bossler named two reasons: The government has forced holders of early FIT certifications to build their plant or lose their power offtake rights. Besides, biomass plants may become a baseload provider in the newly introduced capacity market. As a result, the government may increase the target share for renewable energy including biomass when it revises its energy outlook in the coming months. Currently, the goal for 2030 is a share of 22-24%.

Sustainably managed forests

In Japan, biomass plants mainly burn waste wood and construction waste as well as wood chips and wood pellets. The speaker emphasized the need for the use of wood from sustainably managed forests. “Good woody biomass means, whatever you harvest, you replant, instead of just cutting down the trees,” the expert said. Also, good pellets use only left-overs like mill residues, thinnings, low-quality wood, tops, and limbs, but no saw timber.

Palm kernel shells as fuel have become a controversial subject not only in Japan. On the one hand, they are a by-product of palm oil production and thus do not enable long-term supply contracts needed for financing of a biomass power plant in Japan. On the other hand, the source countries, Indonesia and Malaysia in particular, cannot make sure that palm kernel shells are from sustainable farms. “The Japanese government seems to want more regulation of this fuel,” Ms. Bossler said.

Switch to tender offers

The current developments in the biomass electricity market in Japan are quite complex. First, the government has started to put out tender offers for new larger plants instead of a fixed feed-in tariff price. “After the deflation of the current FIT certification bubble, such plants based on tender results may be built from 2023, 2024 onwards,” she predicted. However, the domestic market does not generate enough woody material.

Although Japan has abundant forests, ownership is highly fragmented. Few and small forest roads limit the use of logging machines which makes the wood more expensive. Thus, these bigger biomass plants will fire imported wood pellets from Canada, the United States as well Asia Pacific countries like Vietnam and Australia instead of domestic wood. For the success of this trend, the ports need to build more infrastructure to store the fuel, though. Different from coal, such fuel has to be kept dry, the speaker explained.

Co-firing of biomass in coal plants

The government pricing demands in the tender offers could become another major constraint for the development of this industry, she said. At the last tender ceiling price of 19.6 yen per kilowatt-hour, the plant operators have to strictly control their capital investment and supply chains to make a profit. In contrast to solar and wind, the efficiency of biomass power plants can only be increased to a certain extent because the fuel itself is not free and requires transportation.

The speaker sketched another likely scenario: More coal power plants will co-fire or fully switch to biomass because of the attractive feed-in tariff and of the lower carbon emissions from wood compared to coal. Considering all these trends together, “Japan could become a major producer of electricity from biomass,” the speaker concluded.

Biography of the Speaker

Ms. Annette Bossler is Managing Director of Main(e) International Consulting LLC and also Senior Market Intelligence Expert at FutureMetrics LLC, a leading global consultancy in the wood pellet sector which has supported numerous Japanese clients. Ms. Bossler has over 25 years of experience in international business development for private and public entities. She has been monitoring the Japanese energy market since 2010, especially concerning renewable energy and the ongoing power market reform. She holds an MA Honors Degree in Japanese Studies and Public & International Law from Bonn University.

Text: Martin Fritz for SCCIJ

Find below the complete recording of the webinar:

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