New offshore wind general waters bill approved by Japanese Cabinet

On 9 March 2018, the new bill for the use of Japan’s general waters for offshore wind projects was officially approved by the Japanese Cabinet. Up until now, there was no legislation for offshore wind farms in general waters. IX has been involved in Japanese offshore wind projects since the beginning in 2012 and has high expectations for the future with this new bill! In the next few months we will see what projects will materialize in that direction, since this new bill could pass the Japanese Diet as early as May 2018 and potetially take effect four months after its promulgation.

In full, the bill is called the “Bill on promotion of use of territorial waters for offshore renewable energy generation facilities (Kaiyo saisei kanou enerugi hatsuden setsubi no seibi nikansuru kaiiki no riyo no sokushin nikansuru houritsuan)”, which is why it is referred to as “the New Bill”.

The general scheme for offshore wind development provides for the Japanese national government to firstly identify appropriate areas in Japan for offshore wind development. It will do this by working with relevant local prefectual governments and newly established bodies in each propective development area that will be known as “councils”. The key role of each counsil is to work to identify issues of local and national concern for offshore wind development in the area for which it is responsible.

Developers must lodge competitive bids for use of the relevant offshore zone, setting out the proposed project details, including the bid price for electricity supply from the project. The winner is not determined on the price alone but on how price and well the overall development plan meets the development (area’s) criteria, requiring developers to compete on both price and suitability to secure the rights to specific offshore areas.

The bid winner will then have the right to occupy nad use the specified general waters area for a period oup to a maximum of 30 years. Therefore, the New Bill grants a longer occupancy period that the current prefactual rules, which are usually limited to 3-5 years.

The Japanese government intends to designate five promotions zones by 2030 and this is probably not the maximum number of zones. Despite the fact that there is no current limitation on how many MW of capacity will be included in these zones, the Japanese Wind Power Association has requested a commitment from the Japanese government to develop 10GW of offshore wind power by 2030. The government however, has been silent so far on such commitments, leaving the actual Japanese target capacity for offshore wind unclear.

Source: Baker McKenzie Client Alert March 2018