Cheap offshore wind 'puts $71bn of Japanese coal assets at risk'
Consumers face costs from 'stranded' plants as wind at sea outcompetes new coal as early as 2022, says study
Offshore wind power is on course to be cheaper than coal generation in Japan as soon as 2022, leaving the country’s consumers exposed to higher costs from up to $71bn of stranded coal assets, claims a new study.
Plants built-out from Japan’s 11GW coal pipeline also risk being outcompeted by new solar in 2023 and fresh onshore wind installation by 2025, calling into question the viability of any investments in the polluting fuel source, said the report from the Carbon Tracker initiative, the University of Tokyo and CDP.
Offshore wind will beat Japanese coal from the word go, matching its price at around $65/MWh and then rapidly falling further as new coal plants get more expensive, although in the long term to 2040 it will be solar that shows the most spectacular reductions, according to projections in the study.
“Building coal power today equals high-cost power and fiscal liabilities tomorrow. Japan’s planned and operating coal capacity is partially protected by regulations that give coal generators an unfair advantage in the marketplace,” said the report’s authors.
“These regulations are sheltering high-cost coal from significant cost declines in renewable energy. Without policy reform, the Japanese consumer may not be receiving the lowest-cost power possible.”
Japan’s offshore wind sector is finally starting to spark into life after its parliament, the Diet, earlier this year passed a law creating a legal framework for auctions and zone allocations to enable the country’s 5GW-plus project pipeline to move forward.