International Finance

Japanese utilities buy into vast offshore wind farm in UK

Offshore, Wind Power, Win
J-Power and Kansai Electric’s $900 mn deal will give them a know-how of the sector

Two of Japan’s biggest power companies are all set to buy around 40% of a German-owned developer of offshore wind farms in the UK – seeking to learn from Britain’s lead in the sector and being the know-how back home.

J-Power, also known as Tokyo-based Electric Power Development, will join Osaka regional utility Kansai Electric Power in investing in a unit of Germany’s Innogy. The deal is estimated to be worth around $900 mn, and will give J-Pwer and Kansai, a 25% and 16% share respectively. This will mark the first investment in an offshore wind project by Japanse power companies.

Innogy plans to start up the 860-megawatt Triton Knoll offshore wind project—one of the biggest of its kind in the world—in the North Sea in 2021. The vast installation will have up to 90 9.5 MW turbines and sell its output to local utilities under a 15-year fixed-rate contract.

J-power, which supplies mainly fossil-fuel based electricity to Japanese regional utilities, will set up a subsidary backed by the government-run Development Bank of Japan, to participate in the project. Engineers involved, will firsthand study the construction and maintenance methods.

While land-based wind turbne are proliferating worldwide, offshore wind farms have progressed mainly in Europe. Installed capacity totaled more than 18,000 MW at 2017 end. At maximum capacity, it can produce as much power as that of 18 nuclear reactors.

Japan is known to have a scarcity of offshore wind farms in commercial operations, and little in the way of engineering know-how in this field or infrastructure for linking these typles of installations to the land power grid. There are plans however, for a total of 4,000 MW of offshore wind power capacity, including projects under feasibility studies.

J-Power set up a renewable energy division in June to look for opportunities to expand into wind and geothermal energy in Japan. Kansai Electric also seeks know-how for increasing its reliance on renewable energy, even as it hurries to restart idled nuclear reactors.

Aside from these two companies, trading house Marubeni is also poised to invest in a Taiwanese venture with plans for a 600 MW offshore wind farm.


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