Japanese JV buys offshore wind stake from Macquarie

Japanese joint venture Jera has purchased a 49 percent stake Taiwanese offshore wind farm Formosa 2 from Macquarie.
Photo: Ørsted
Photo: Ørsted

Japanese company Jera, a joint venture between Tokyo Electric Power Company (Tepco) and Chubu Electric Power Company, purchased a 32.5 percent share of Taiwanese offshore wind farm Formosa in 2018.

Wednesday, Jera reveals that it has bought a 49 percent stake in Formosa 2. Whereas the first of these facilities has an effect of 128 MW, Formosa 2's is rated quite a bit higher at 376 MW. The seller is Australian investment bank Macquarie, which is retaining a 26 percent holding in the project.

The project's remaining 25 percent, which will consist of 47 Siemens Gamesa wind turbines, is owned by Swancor, which in the process of being sold to US investment company Stonepeak.

"In association with Jera’s participation in the Formosa 1 project earlier this year, Jera has newly established an operation base in Taiwan to expand business activity and dispatch engineers to contribute to the project and to gain knowledge and experience in construction and operation of the offshore wind power generation," the joint venture writes in a statement.

Jera informs in the press release that it intends to contribute to the projects and improve profitability by securing a considerable portion of equity interests early on in project stages.

Formosa 2 has entered a deal with Taiwan Power Company entailing a firm feed-in-tariff (FIT) extending 20 years.

The offshore wind farm is set to enter operation in late 2021.

Gaining knowledge

Jera, which established itself in Taiwan's offshore wind market by acquiring equity in the two Formosa projects, is far from the only Japanese player interested in the market.

In April, German utility Wpd, for instance, announced that it had sold its 27 percent stake in the 640MW offshore wind farm Yunlin to a Japanese consortium consisting of Sojitz Corporation and Japanese energy companies Chugoku Electric Power, Shikoku Electric Power and JXTG Nippon Oil & Energy.

Jera writes in the statement that it wants to gain knowledge of offshore wind, presumably because the JV's domestic market is starting to heat up.

Even though Japan's offshore wind market is still only in the earliest of phases, it is gradually beginning to take form and is attracting major ambitions.

Tepco, for instance, announced earlier this year that it is considering developing offshore facility Chosi, with a minimum capacity of 1 GW.

"Tepco wants to make renewable energy a central energy source by developing renewable energy projects with a [combined, -ed.] capacity of 6-7 GW in Japan and internationally," said Tepco Chief Executive Tomoaki Kobayakawa back in January.

In June, Obayashi and Siemens Gamesa disclosed that the two firms had established a partnership with the 455MW project Akita, planned to go online in 2024 at the earliest.

That project, however, is pending more than a mere financial closure on the part of the project developer. Because even though Japanese parliament ratified legislation in this autumn to allot more space to offshore wind, the government has not yet enacted concrete plans for the power source – neither regarding timetables nor quantities.

Even so, the project and its extension will become a reality, Siemens Gamesa has asserted.

"It is true. But nonetheless, I'm sure that it will happen. Because all signs are in place, and both Japanese players and international investors are preparing themselves for this," said Siemens Gamesa's Offshore Chief Executive Andreas Nauen after publicizing the partnership with Obayashi.

"Ørsted is going. Equinor is going; there must be a reason for that," he added.

Altogether, many of the large European offshore wind players have gathered around the Japanese table. These include oil supermajor Shell, German utility Eon and Danish fund Copenhagen Infrastructure Partners, all of which have established themselves in the country.

11 offshore wind sites

Yet another step was taken late this summer toward actually establishing an offshore wind industry, and the Japanese Ministry of Economy, Trade and Industry (METI) as well as Ministry of Land, Infrastructure, Transport and Tourism, (MLIT) selected 11 areas in five regions in the country's waters for offshore wind installations.

Among these 11 areas, four are designated as being "very promising", and early preparations can begin immediately. Specifically, this means that wind conditions can by gauged and geological assessments can be made, the ministers wrote.

Ørsted announced in January that it had signed a Memorandum of Understanding with Tepco regarding an offshore wind cooperation, initially in the form of the aforementioned Choshi project off the coast of Tokyo – a project for which Tepco has already completed seabed analyses that showed the area to be well suited for offshore wind.

Japan's Parliament has ratified framework legislation that will lead to allocation of offshore wind zones and the holding of public tenders. However, details still need to be formalized before the expansion can get started. Japan has set a target to have installed 10 GW of offshore wind power in 2030.

English Edit: Daniel Frank Christensen

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