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Japan's Tepco plans 2 trillion yen green power push by 2030

[TOKYO] The renewable power unit of Japan's biggest utility plans to spend more than two trillion yen (S$25.75 billion) over the next 10 years to boost its green generation by as much as 70 per cent.

The push by Tokyo Electric Power Co (Tepco) comes as the nation's institutions are under increasing pressure to curb support for coal, both at home and abroad, and as Prime Minister Shinzo Abe's government seeks to bolster the role of clean power.

The unit, Tepco Renewable Power, plans to help fund its new ventures through a green bond offering that may exceed 10 billion yen and is likely to come before March, according to president Seiichi Fubasami. Offshore wind and hydro generation are the unit's primary focuses as it seeks to develop seven gigawatts of green power capacity in Japan and overseas in partnership with other companies.

"To cope with climate change, we are moving towards a carbon-free society," he said in an interview. "Our target is to make renewable energy a main source of power."

The clean energy spending plans are among the most ambitious from Japanese utilities that lag global peers in shifting away from fossil fuels. Despite being home to numerous engineering firms that export power generation infrastructure, Japan doesn't yet have a commercial offshore wind farm and will need to lean on other countries' expertise to build out capacity.

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Tepco in March established a joint venture with Danish wind developer Orsted to build a project off the coast of the Chiba prefecture, near Tokyo. Jera Co, a joint venture between Tepco and Chubu Electric Power Co, said in December 2018 it was buying stakes in wind projects in the UK and Taiwan that would help it in future ventures in Japan and overseas.

Tepco lost 0.3 per cent to 384 yen a share at 11.05am in Tokyo. The benchmark Topix index slipped 0.3 per cent.

"MOST PROFITABLE"

Feed-in tariffs for Japan offshore wind projects will be set at auctions that have yet to be scheduled. Still, Mr Fubasami said he expects the domestic farms to be the "most profitable" among the unit's clean power ventures. The company aims to develop as much as three gigawatts of domestic offshore wind capacity in the next decade.

Developing that type of clean electricity is seen as key to meeting a government target of obtaining nearly a quarter of the nation's power from renewables by 2030, up from 17 per cent in the year that ended in March, 2019. Natural gas generated 38 per cent with coal at 32 per cent and nuclear at 6.2 per cent.

Tepco Renewable Power aims to boost profits to 100 billion yen in 2030, from 40 billion yen in the year that ended in March, Mr Fubasami said. Domestic offshore wind projects will contribute to about 20 per cent of that future profit, with overseas offshore ventures adding 10 per cent. Hydroelectric projects in and outside Japan will contribute about 15 per cent each, with the remaining 40 per cent coming from existing generation.

Global interest in green, social and sustainable bonds prompted the unit to explore a green bond issuance, although the timing and size are still being discussed, and the company may seek additional project financing through banks and other institutions, Mr Fubasami said.

Tepco Renewable Power currently has 170 renewable facilities with total capacity of 9.96 gigawatts. Of the total, 9.91 gigawatts are from 165 hydro power plants, 30 megawatts are from three solar farms, and 21 megawatts come from two wind plants.

Tohoku Electric Power Co said in February it planned to price what would be the debut green note for a Japanese utility.

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