Report looking at low temperature small-scale geothermal opportunity in Japan

Report title, screenshot

Alexander Richter 12 Dec 2017

A report by Frost & Sullivan published last week is looking at “Japan’s Onsen Power”, or the role of low temperature geothermal resources for clean power generation in Japan.

Following the big Tsunami and the Fukushima nuclear disaster of 2011, Japan took measurable steps towards changing its energy policies and market. But to the day, the country is largely dependent on imported coal, natural gas, and oil to satisfy its energy demands, so the new report by Frost & Sullivan.

With an installed geothermal power generation capacity of 535 MW, Japan is lagging way behind on its potential for utilising its geothermal resources for power generation. Established feed-in-tariffs have not had the impact to push development.

But there has been increasing interest in smaller scale developing lower temperature geothermal resources below 120 degrees Celsius. According to Frost & Sullivan, this could be a significant growth market for Japan.

With technological innovation, “decreasing costs and, doubling efficiencies at these low temperatures are expected to accelerate the broad based adoption of the technology. This, combined with multi-application benefits for hot spring owners, attractive feed-in-tariffs and grant financing offered by government, relaxation of development restrictions in national parks, lack of environmental assessment requirements, and improved cooperation at the community level is expected to set up low temperature geothermal power as a potential game changer in the exploitation of the country’s geothermal potential, providing access to a market potential of 7.5 GW from 28,000 hot springs.

Frost & Sullivan expects the development of the low temperature geothermal industry in Japan to represent a significant contributing step in the establishment of a stable, low emission power industry in the country. ”

With a feed-in-tariff of 42 JPY/ kWh ($0.0.373/ kWh) for 15 years for smaller-scale (below 15 MW capacity), there is an attractive incentive for smaller scale development. Examples such as Turkey also show that with smaller sized development projects, a huge jump can be made in the overall utilisation of geothermal energy for power generation. The feed-in-tariff for larger scale geothermal plants beyond 15 MW capacity is at 27.3 JPY/ kWh ($0.242/ kWh).

The concern of large scale development in or near protected national parks have been very alive in the country, and small-scale development could actually receive better acceptance.

As of July 2014, there are 19 prospect areas that could see development beyond 10 MW, 7 prospects in the range of 1 to 10 MW and 18 prospects of less than 1 MW.

The  potential geothermal sites in the country can be found mostly in the southern part of the country (Kyushu) and in the northern part (Tohoku, Fukushima) and on Hokkaido.

Frost & Sullivan shares some details on the potential developable sites based on regulations imposed after 2012. Based on regulations, development in National Parks Class 1 is not allowed, while for National Parks Class 2 and 3 special zone, development is limited to small-scale development. In national parks not categorized and ordinary zones, both large and small scale development is allowed.

The overall potential is thereby limited at around 8,800 MW in total … 7,700 for only small-scale development, and 1,100 MW for large and small scale development.

The report provides a great overview on the key market drivers and restraints for development of small-scale geothermal development.

Today, there are a number of companies that are able to serve the Japanese market in the small-scale low temperature geothermal sector, that include a number of known technology payers, such as ElectraTherm, Ormat Technologies, Climeon, Fuji Electric, Turboden, Kawasaki Heavy Industries as well as developers (and others), such as Orix (large shareholder of Ormat), IHI, JFE Engineering, TLuxe Power, Kobelco.

It will  be interesting to follow this market.

For the full report see link below.

Source: Frost & Sullivan