This post is also available in: Japanese
It’s exactly 25 years ago that I went to Japan on a business trip and gave a presentation to the headquarters of the Japanese trading company I was then working for, on offshore wind power. I remember feeling deflated by the lack of enthusiasm for my recommendation that the company invest in this sector in Europe.
At that time, the main obstacle was the high cost of connecting the offshore wind turbines to the power grid, but I felt sure that in the long run the costs would come down and this kind of high value infrastructure project in renewable energy was an investment Japanese trading companies should be making.
25 years later, I felt vindicated to read that the recent announcement of $22bn Japanese investment in the UK turns out to be primarily composed of investments by Japanese trading companies in offshore wind projects. Actually this investment is not entirely “new” – Japanese trading companies have been investing in UK offshore wind projects and transmission infrastructure from around 10 years’ ago.
Nonetheless, Japanese companies are perceived to be late comers to European wind power, at least in terms of supplying wind turbines. European companies such as Denmark’s Orsted or Vestas or Germany’s Siemens are seen as the leaders. It’s not surprising, then, to see that many Japanese companies have teamed up with foreign companies and a significant proportion of the 542 members of the Japan Wind Power Association are companies headquartered outside of Japan.
As JWPA itself points out, while Japan’s share of wind turbine sales globally may be small, Japan excels in companies who supply the components for wind energy turbines, such as precision machinery and electric equipment. If these companies do not already have a presence in Europe, then I expect they will soon, as Japanese investment tends to bring a Japanese supply chain with it.
Unlike the 1970s and 1980s, however, it seems to me that this time it is not a case of “domestic first, then overseas.” Renewable energy is a huge global challenge, which needs to be tackled speedily and in a collaborative way, so that we can learn from each other.
The remaining obstacles are still very local, however. Most offshore wind projects in the UK are in the North Sea, on the eastern side of the country, where I live. There has been a vocal campaign by residents against the cables from the offshore wind projects running through picturesque countryside, or substations being sited near residential areas, which recently resulted in many local politicians losing elections.
Another challenge that runs right across Europe is the shortage of connections to the national grid, sometimes resulting in a 5 or 10 year wait. With increased electrification such as the EU switch to electric vehicles, and Germany’s controversial proposed ban on gas boilers, the grids themselves, rather than the equipment or connections, have become the bottleneck. Hitachi’s acquisition of ABB’s power grids business brings Japanese investment to this part of the energy chain too.
This article by Pernille Rudlin was first published in Japanese in the Teikoku News, 12th July 2023
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