Sun, Jul 20, 2003 - Page 11 News List

Japan's wind farms turn profitable

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Japan Wind Development Ltd, whose shares have surged threefold since its initial public sale in March, may raise this year's profit estimate in a sign that wind farms are benefiting from Japan's support for clean energy.

"Our profit may be more than expected because some projects are coming on line" earlier than planned, said senior managing director Katsuki Ouchi.

The Tokyo-based company and rivals such as Eurus Energy Holdings Corp, a venture between Tokyo Electric Power Co and Tomen Corp, are gaining from Japan's efforts to match other developed nations in using cleaner energy.

Japan has wind-power capacity of about 500 megawatts, compared with more than 12,000 megawatts in Germany, the world leader. Efforts to catch up -- the goal is 3,000 megawatts by 2010 -- prompted Japan to offer subsidies that help generators build more windmills, which cost on average more than US$1 billion per 1,000 megawatts.

"These companies are attracting investors because they're benefiting from government policies promoting clean energy," said Hidehiko Hoshino, who analyzes power-generation equipment makers at Deutsche Securities Ltd. "There's not much competition in this business in Japan."

Japan Wind's shares have surged to ¥637,000 on the Tokyo Stock Exchange's Mothers market for new ventures, from ¥200,000 in a March initial sale managed by Nikko Salomon Smith Barney.

Shares of Tokyo Electric have fallen 1 percent in the same period; it gets most of its power from nuclear or fossil fuels and has forecast stagnant sales this fiscal year.

Japan Wind has windmills in Kyushu region, Chiba prefecture, near Tokyo and in Germany. It plans to boost capacity by at least 49 megawatts in the next two years from 30 megawatts, Ouchi said in an interview on Monday.

That reflects growing interest in Japan, Europe and the US in alternatives to nuclear power and fossil fuels such as coal.

Global wind-power capacity rose 28 percent last year to 31,000 megawatts, the American and European Wind Energy Associations estimated -- enough to power 7.5 million US homes.

Capacity, three-fourths of which is in Europe, has quadrupled in five years. Global capacity may more than double to 80,000 megawatts by 2006, said Hoshino.

Most Japanese utilities are falling short of a government-set target for 2010 that requires them to generate 1.35 percent of their total electricity sales by harnessing cleaner sources of energy such as wind-power, bio-mass energy and small hydroelectric turbines.

To encourage more investment, the government provides subsidies equal to 80 percent of the first third of all investments made in such cleaner-power generators.

Japan hopes the incentives will help it emulate the success in attracting wind-power developments of countries such as Spain, which last year overtook the US as the No. 2 wind-energy generator.

"The Japanese government is serious about reaching its wind-power generation targets," said Shinichi Nakakuki, a wind-power analyst at the Institute of Energy Economics, Japan.

The government introduced new rules in April that encourage utilities to buy or produce more power from wind turbines, he said.

Spain installed 1,493 megawatts of new wind-power capacity last year to bring its capacity to 4,830 megawatts, up from just 52 megawatts in 1993.

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