the changing energy market in japan - valmet.com · valmet and jfe’s cooperationagreement 4 state...

三菱ＵＦＪ信託銀行株式会社様

1

The Changing EnergyMarket in Japan

4 October 2018

Valmet Customers Days 2018Energy Session

Copyright © 2018 JFE ENGINEERING Corporation. All Rights Reserved.

JFE Group

2

5

JFE SteelNet Sales (BillionJPY)

2,715Employees

44,500

JFE Shoji Trade

Net Sales (BillionJPY)

1,908Employees

7,300

JFE Holdings(est. 2003)

45.93%

9,300

Net Sales (BillionJPY)

Employees391

Japan Marine UnitedNet Sales (BillionJPY)

330Employees

6,200

100%

Est. 1912 Est. 1951


JFE Engineering Business fields

3

Oil&Gas

Steel Structure

Others

Net Sales (billion JPY)

391FY2017

38%

18%

6%

13%

14%

6%

4%

Power

Water

IndustrialMachinery

Environment


Valmet and JFE’s Cooperation Agreement

4

➢State of the art CFB and BFB technologies

➢More than 250 references of fluidized bed boilers(up to 260MWe)

➢Leading market position in Europe and North America

➢JFE’s presence in Japanese industry

➢EPC capability of power plants(More than 100 plants references including WtE plants)

➢Leading Industrial Boiler supplier in accordance with EBA(up to 50MWe for CFB)

EBA: Electricity Business Act in Japan

Cooperation Agreement (signed on March 2015)

Right to sell in Japan given to JFE:

➢ CYMIC CFB Boiler➢ HYBEX BFB Boiler


JFE’s References of CFB Boilers

5

100MWe Class

75MWe Class

30MWe or below

50MWe Class

On going Operated

Showa Shell 49MWe

OJI Materia Nikko 70t/h

Myojyo Cement 30MWe

EneVision Shimane12.7MWe

Mitsuuroko

Iwakuni 10MWeHokuetsu Kisyu Paper Kisyu 130 t/h

eRex Tosa 20MWe

eRex Saeki 50MWe

Sigma Power

Mikawa 50MWe

Taiheiyo Cement eRex

Ofunato 75MWe

eRex Kyuden Mirai

Buzen 75MWe

Hachinohe Biomass 12.3MWe

MPM OJI Hachinohe 75MWe

SANIX Energy Tomakomai 180t/hx2

IDI Kushiro 112MWe

Projects to which CYMIC are to be applied

Green Energy Tsu 20MWe

Air Water Energia Onahama 75MWe

eRex Okinawa gas

Uruma 50MWe


On-going Projects

6

Taiheiyo Cement eRex Ofunato

75MWe (4Q2019)

eRex Kyuden Mirai Buzen

75MWe (4Q2019)

MPM OJI Hachinohe

75MWe (3Q2019)

IDI Kushiro

112MWe (2Q2020)

Air Water & Energia Onahama

75MWe (2Q2021)


JFE’s Market Shares in Japan

7

41 %

35 %

18 %

6 %

Number of Boilers

SHI (FW) JFE & Valmet Andritz Doosan

45 %

37 %

12 %

6 %

MWe

SHI (FW) JFE & Valmet Andritz Doosan

These shares are from Order Back-log as of September 2018, excluding the boilers smaller than 50MW:


Major Items Influencing Market

8

Items Causes Prospects

1FIT or Otherscheme forRenewables

➢ Revision of FIT➢ Auction for ordinary woody biomass introduced

from FY2018.➢ New scheme foreseen around FY2020.

2Liberalizationof Energy

➢ New market system➢ Division of Utility COs

➢ New market system to be introduced base-load, capacity, carbon-free value until FY2020

➢ Utility COs to be divided into power generation, grid, and retail company on FY2020

3 Land Selection➢ Grid connection

availability➢ Grid connection rules to be revised for flexibility

and fairness among potential power generators

4 Fuel➢ Fuel supply sustainability➢ Project sustainability in

post-FIT period

➢ Bankable white pellets price to increase➢ Demanding fuel to be utilized for cost reduction

5 Nuclear Power ➢ Restart of Nuclear Power➢ Restarted reactors lower than government’s

target in FY2030(Target: 20-25%, Prospects: less than 10%)


FY2017 Amendment of FiT Law (Biomass)

9

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

Ordinary Woody BiomassUnused wood, waste wood Waste, Methane fermentation

FY2030 TargetMarch 31, 2016

6,020 -7,280 MWe

14,730MWe

6,010MWe

3,700MWe

12,420MWe

※（Number of Units）

（MWe）

11,470MWe

20MWe or above

10.620 MWe

（363）

Before Introduction of FIT

2,310MWe

2,740 -4,000MWe

610 MWe

1,400MWe

RPS1,270 MWe

590MWe（128）360MWe（354）460MWe（72） 290MWe（242）

2,950MWe20MWe or above

2,650MWe

（104）

March 31, 2017

Before Introduction of FIT

2,310MWe

Source: METI, Agency for Natural Resources and Energy

➢ FIT applications for biomass power plants is overheated because of the change of the tariff from 24 to 21 JPY/kWh for ordinary wood from FY2017.

➢ FIT-certified plants has been almost doubled against FY 2030 target.

Diesel with

Palm Oil, 4,360 MWe

PKS with Woody

Biomass, 5,160 MWe

Woody Biomass

Only, 1,950 MWe

* Fiscal Year: April to March

Copyright © 2018 JFE ENGINEERING Corporation. All Rights Reserved. 10

FY2018 Amendment of FiT Law (Biomass)

CategoryGross Output

WoodLumber

General Wood-based

biomass

ConstructionWaste

Municipal Waste etc

≧10MWe

32

Auction

13 17＜10MWe

21

＜2,000kWe 40

(JPY/ｋWh)

• Auction (Tariff Competition) required for general wood-based biomass (e.g. PKS, imported pellets) with Gross Output of ≧10MWe;

• Capacity limit for FY2018: 200MWe (180MWe for solid biomass fuel)

* Fiscal Year: April to March


JFE’s View of Future Market

11Source: Bloomberg New Energy Finance

Generated power by fuel, Japan

Uncertainty for Future Mix of Energy

➢ Nuclear• Able to restart?

➢ Coal• 15GWe to be developed until 2025• How anti-coal movement affect?

➢ Nuclear and coal are expected to expand their share after 2020. But anti-nuclearand anti-coal movement will affect on this expansion

➢ Only gas and Biomass/WtE can substitute for them


Cost Target of Biomass Power Generation

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Coal

0

50

CCGT

100

150

200

2017 2020 2025 2030

Utility-scale PV

$/MWeh - 2016 real

250

Estimated Levelized cost of energy by fuel

2035 2040

Onshore wind

Source: Bloomberg New Energy Finance

Present cost of 112MWe plant

Target Cost

➢ Biomass Power Association (BPA) aims to reduce the cost of biomass power generation to 10JPY/kWh by FY 2030.

➢ Target cost of biomass power generation is less than cost of CCGT in FY 2030.

How to reduce cost of generation

➢ Fuel cost reduction• Diversification of source of supply• Utilization of demanding fuels

(e.g., Waste-based fuel)➢ Enhancements of thermal efficiency➢ Scale Merit


OPT

0,00

0,05

0,10

0,15

0,20

0,25

0,30

0,35

0,40

0,45

0,50

0,0 0,1 1,0 10,0

SugarcaneBagasse

Oil Palm Trunk

Potential Demanding Fuels

13Na+K (dry-wt%)

Cl (d

ry-w

t%)

Sugi Cedar

Hinoki Cypress

Rice Straw

Pine

BambooBark

MunicipalSolid Waste

EFB

Rubber Tree Trunk

Coconut Shell

AcaciaEucalyptus

PKS

50

100

300

Annual Recoverable Amount

(est. Mt/yr)

Fuel Source

Orange: Domestic

Blue: Overseas


Pretreated EFB Pellets Testing

14

Empty Fruit BunchPretreated

EFB Pelleted(Developed by Taiheiyo Cement Corp.)

Processing

Valmet R&D Center Tampere

Combustion in pilot fluidized bed

reactor to check:

➢Fluidized bed behavior

➢Primary emission

➢High temperature corrosion risk

➢Slagging and fouling

➢Ash composition

Maximum mix of EFB pellets to be

revealed for CFB boiler


JFE-Valmet Joint Development Program for Demanding Fuels

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➢ Co-development of technologies for demanding fuels with Valmet➢ Multi-approach for chlorine and alkali-metal management in fuels

Sootblowing

Fuel Pre-treatment

Loop Seal

Corrosive Material Monitoring

Bed Material

Boiler Additive


Conclusion

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➢ The biomass power generation has emerged and boomed in Japan since the introduction of FIT scheme in FY 2012. However, the boom will fall within coming couple of years because of the revision of FIT scheme.

➢ Japan is at lost in energy mix after the nuclear disaster in Fukushima. Regardless of FIT, biomass/WtE will take an important role to mitigate global warming effect as a realistic option in the future. Usage of domestic fuels are also considered as a benefit from biomass/WtE.

the changing energy market in japan - valmet.com · valmet and jfe’s cooperationagreement 4 state...

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