Japan’s government pushing geothermal exploration and development

Japan’s government pushing geothermal exploration and development Geothermal plant in Hachimantai City, Iwate Prefecture, Japan (source: Iwate Chinetsu)
Alexander Richter 27 Aug 2021

The Japanese government seeks to expand geothermal development by funding wide exploration work on potential areas for development in Japan.

Earlier this year, we reported on plans of the Japanese government to push geothermal development with deregulation efforts. So together with great feed-in-tariff support, now it seems geothermal is set for another kick.

According to news by Nikkei Asia, the Ministry of Economy, Trade and Industry (METI), which is responsible for Japan’s energy policy, “will request 18.3 billion yen ($166 million) in the fiscal 2022 budget for exploration and development of new geothermal sources, up roughly 60% from 11 billion yen allocated in 2021.”

The plan is to assess about 30 locations in a round of exploration work by METI across Japan from Hokkaido in the North to Kyushu in the southwest. With the long time it takes to develop projects, it seems there is a certain time sensitivity for the government’s plan to have geothermal contribute 1% of electricity production in the fiscal year of 2030. This would require an expansion of currently 603 MW in geothermal power generation capacity to 1,500 MW. The plan is to boost the capacity by 1,000 MW with current ongoing projects and additional 500 MW to be determined by the planned national survey.

The sought funding will go mostly to Japan Oil, Gas and Metals National Corp. (JOGMEC) for the exploration work for surface and drilling surveys expected to take about two years.

Development of the sites is expected to then be passed over to private sector developers. The ministry’s projections foresee about half of the sites with the opportunity for commercialization.

JOGMEC has already done study work on five sites since 2020 with plans to study additional 15 sites in 2021 and further ones in 2022. Find further details about JOGMEC’s geothermal activities and support scheme here.

Japan has among the highest feed-in-tariffs for geothermal power, of USD 0.369/ kWh for plants smaller than 15 MW and USD 0.24/ kWh for newly built plants.  The current installed power generation capacity is 603 MW represented by 23 plants larger than 1 MW in installed capacity. Geothermal development is supported by a financial assistance program by JOGMEC that supports various activities in geothermal development from subsidies for the survey of potential resources, equity capital finance for exploration and liability guarantees for loan financing for the construction phase. In 2019, the program supported 24 projects.