The COVID-19 outbreak spread at a rate far exceeding initial expectations, further expanded geographically, and has now become a global pandemic. Uncertain how long the situation will continue, but there is no doubt it will have a major impact on Japan’s wind power industry and projects. Here are some of the considerations involved.
Two types of restrictions on movementTo prevent the further spread of COVID-19 in Japan, the government has extended its state of emergency declaration to the end of May, and has called on people to refrain from movement in order to avoid the so-called “3 C’s” – closed, crowded, and close-contact settings – with the goal of reducing contact with others by 70 to 80 percent. Refraining from movement, which is being strongly urged by central and local governments, recommends people to stay, but, in actuality, it also simultaneously restricts the movement of goods (logistics) due to a majority of flights being cancelled, for instance, so the effect of restriction is two-fold.
In a majority of cases, these restrictions will result in time delays. The delays in the development, construction and operation of wind power facilities increase costs and lowers profitability, so COVID-19 could have a major impact on the wind power industry.
Concerns on potential impact in every phase from development to operations and maintenanceWind power projects can be roughly divided into three phases: planning, construction, and operations/maintenance. Sites suitable for wind farms are generally in sparsely populated areas and rare in cities with large populations.
Project developers therefore need to make frequent visits to the project site from the initial planning and development phase in order to explain the project in advance to the local government, landowners and other stakeholders, gain their assent, and move forward with various procedures, including environmental assessments, grid access and FiT program certification.
However, when developers are unable to visit project sites due to restrictions on movement (travel) as is the case now, many procedures are delayed, and in the worst case, developers may have trouble complying with deadlines established by law. Further, they may also have trouble meeting with overseas wind turbine makers and domestic construction firms, which could also delay projects.
Construction could be impacted as well. For example, to build a wind power plant, a construction plan has to be submitted and accepted after a technical pre-screening is conducted. In the current situation, it is questionable whether these screenings can be smoothly carried out within their regular timeframe without delay.
Additionally, it goes without saying that projects may be affected by physical restrictions and limitations on manufacturing and transport. Wind power is now a cross-border industry of global proportions, so the entire supply chain could cause an impact. Will equipment and parts needed for construction, not to mention the turbines themselves, be delivered in time so that construction can proceed? Will construction supervisors from overseas planning to come to Japan be able to enter the country as scheduled? There are more than a few concerns.
The pandemic may also have a major impact on operations and maintenance. The purpose of operations and maintenance at wind power facilities is to ensure safe and stable operations, and there is currently no indication that the Covid-19 outbreak will subside over the short term. To ensure reliable daily inspections and maintenance of wind power facilities, workers and engineers have to be secured according to schedule, and necessary parts must be procured in a timely manner. In some cases, large cranes and other equipment are brought in from long distances, and it’s not necessarily a simple process.
As discussed above, it will take time to get COVID-19 under control and the impact on the wind power industry is likely to be considerable. JWPA (Japan Wind Power Association) is therefore currently administering an emergency questionnaire to all its members. We plan to quickly compile the results and collaborate with stakeholders for necessary actions.
The age that everything is changingThe WTI crude oil price in the U.S. recently dropped into negative territory for the first time in history. The COVID-19 pandemic may be fundamentally changing everything about the way society operates on a global scale. The same will be true for energy policy and the structure of industry in Japan.
For example, deployment of renewable energy will likely be more robustly promoted from the standpoint of energy security. At the same time, though wind turbine manufacturers are a symbolic presence in the wind power industry, Japan’s manufactures, unfortunately, have all withdrawn from new development and production, and there are now no turbine makers in the country. If renewable energy comes to be promoted based on different concepts and through new mechanisms, will it be possible to once again build a wind power manufacturing industry and supply chain in Japan? It is certainly worth considering.
- Shigehito Nakamura
Managing Director, Japan Wind Power Association（JWPA）
- Shigehito Nakamura is an energy industry professional based in Tokyo, Japan, with extensive power industry experience particularly in strategy planning and development of renewable energy (mainly wind energy) projects.
- Managing Director, Japan Wind Power Association (JWPA) since May, 2014
- Senior Managing Director, Eurus Energy Holdings Corporation since Jan., 2012
- Managing Director, Eurus Energy Holdings Corporation Jun. 2004
- President, Eurus Energy Japan Corporation Oct. 2001
- General Manager, Department I, Power Business Division, Tomen Corporation Apr. 1998
Academic Credential：Bachelor of Law, Keio University (1972)
- Shigehito Nakamura