From adversity to opportunity: CHP in Japan

Anti-nuclear sentiment in the wake of the Tohoku earthquake and Fukushima nuclear crisis could drive a substantial rise in Japan’s commercial and industrial CHP capacity, now totalling almost 1 GW, writes David Hayes from Tokyo.



Shinjuku business and entertainment district of Tokyo ” the commercial sector is a potential area for CHP growth

The earthquake and tsunami that hit Japan on 11 March last year left in its wake a revived debate over the country’s long-term energy mix, along with enduring power shortages in the hardest hit Tohoku region and neighbouring Kanto, which includes Tokyo.

Electricity supplies dwindled after radiation leaked from Tokyo Electric Power Co’s Fukushima nuclear power complex, triggering an emergency shutdown. Stricter checks for nuclear units that had been taken out of service for regular maintenance further reduced available generation capacity in Tokyo and eastern Japan.

By July, when the government was aiming for a 15% cut in summertime peak load in Tokyo and across Tohoku, Japan’s planned long-term reliance on nuclear was already under serious question. The Japanese press suggested nuclear power could lose its place in the country’s power development programme if public opinion continued to move against it.

A RETURN TO CHP PROMOTION?

Industrial and commercial CHP systems stand to gain from this reignited energy debate. The Ministry of Economy Trade and Industry forecasts that promoting CHP could deliver almost 7 GW of new capacity, including fuel cell applications, by 2030. But this could hinge on a long-term energy review, expected to begin in 2012 once government attention has shifted from rebuilding Tohoku’s shattered communities and economy.

The government’s last energy policy review, completed two years ago, concluded that nuclear power would remain a major energy source, partly to help Japan meet its Kyoto protocol targets but also because nuclear was seen as the most efficient method of generating low-cost electricity.

After the earthquake and tsunami ” and facing a massive economic recovery and regional reconstruction programme ” the government decided against launching a formal review of Japan’s basic power plan in 2011. But it has begun to consider various options.

‘The future of Japanese nuclear power is a difficult subject,’ said Takaaki Fujikake, promotion manager and deputy public relations manager of the Advanced Cogeneration and Energy Utilization Centre (ACEJ).

‘Several government committees are looking at nuclear power scenarios. One scenario is to shutdown all nuclear power plants in two to three years. The second scenario is to continue to use nuclear power, while another scenario is to reduce nuclear power slowly and not replace nuclear plants when they are retired. Many of our nuclear plants are 30 to 40 years old and due to retire.’

Natural gas and coal are other fuel options that offer large potential for power generation development should nuclear energy fall from favour, he added.

‘The Japanese government’s energy policy is uncertain at present. If it changes, then CHP can grow fast. But if it does not change, then CHP development will not change,’ said Fujikake.

Japan is already an important CHP user and has recently seen growing uptake of residential fuel cell micro-CHP systems. But new industrial and commercial CHP installations have slowed. Relatively low prices for electricity exported to the grid also mean that most Japanese CHP operators use their systems for captive use only.

By mid-2010, Japan’s CHP capacity excluding fuel cell applications totalled 9440 MW across 8444 sites, according to ACEJ, which was formed through the merger of the former Japan Cogeneration Centre and the Centre for Natural Gas Development.

Industrial CHP systems tend to be larger than CHP systems in the commercial sector. Over the last 20 years an increase in commercial CHP systems has far outpaced the rise in industrial CHP sites. Yet installed capacity for commercial CHP systems only totals about one quarter of industrial CHP capacity.

In the industrial sector, 7473 MW was installed at 2125 sites countrywide. Meanwhile, the commercial sector’s CHP systems totalled 1967 MW at 6317 sites, according to ACEJ.

CHP in Japan has seen three growth phases. The first began in the late 1980s before the nation’s economy bubble burst. A second short-lived spurt got underway in the mid-1990s and ended with the 1997 Asian Financial Crisis. The last CHP growth phase peaked in 2004 and then slowed until the end of 2008, when new CHP projects plummeted amid the global economic crisis.

Fujikake identifies two factors behind the drop in new cogeneration installations after 2007. ‘The first reason is that the price of oil and LNG rocketed after the 2008 financial crisis and many industrial cogenerators stopped operating their cogeneration units,’ he said. ‘Also, as a result of the global crisis, some companies with cogeneration facilities transferred production from their factories in Japan to Asian countries.’

JAPAN’S INDUSTRIAL CHP BASE

Japan’s largest industrial use of CHP is in chemical and petrochemical manufacturing, although the earthquake and tsunami has already caused a petrochemical company with 38 MW of CHP generation in Chiba Prefecture to stop production, said Fujikake.

In mid-2010 the chemicals and petrochemicals sector had installed CHP units at 386 sites, totalling 2050 MW and providing 27% of Japan’s installed industrial CHP capacity, according to ACEJ. The chemicals and petrochemicals industry accounted for 18% of Japan’s industrial CHP sites. Average CHP generating capacity per installation site was 5.3 MW.

The machinery industry, including vehicle manufacturers, had CHP units installed at 326 sites, totalling 1168 MW and accounting for 16% of Japan’s industrial CHP capacity. Generating capacity per site averaged 3.6 MW.

After the earthquake commercial users now see CHP is an electricity risk hedge for data centres and offices

During the most recent phase of industrial CHP growth, before the onset of the global financial crisis, several automobile assembly plants were built in Tohoku and in the Kyushu region in southern Japan with large-scale gas engine type cogeneration units. These averaged 5 MW to 6 MW in capacity and most of the new plants installed five or six units, providing about 25 MW to 35 MW in each factory.

Japan’s largest CHP generating facilities have been installed by oil refineries and other energy companies, where CHP sites average 8.4 MW. Refineries and other energy companies have installed CHP units at 93 sites totalling 783 MW.

But recent consolidation within the oil industry has cut its use of cogeneration, said Fujikake. ‘Mergers and acquisitions are aimed at building larger, more efficient refining companies,’ he said. ‘Like Japan’s petrochemical companies, some Japanese oil companies have merged with several other companies and consolidated activities on one site. Now they have fewer larger sites and have lost some of their CHP capacity.’

Other industries with CHP units across many sites include steel and metal; electronics; paper, pulp and print; and food. In mid-2010, the steel and metal sector had 229 CHP sites averaging 3.6 MW for a total of 822 MW, or 11% of Japan’s industrial CHP capacity. The electronics industry had CHP units at 203 sites averaging 4.1 MW for a total of 837 MW. Food processing companies had 144 sites totalling 495 MW, while paper, pulp and print companies had installed CHP units at 193 sites, totalling 336 MW.

The outlook for industrial CHP in Japan is uncertain as plant owners, banks and investors assess damage from the Tohoku earthquake and tsunami. But new factories to replace wrecked facilities are expected to incorporate CHP.

‘Big earthquakes can happen anywhere in Japan, so maybe some companies will move abroad to reduce the risk,’ said Fujikake. ‘However, many companies have declared they will build factories in the Tohoku area (to help the region recover) such as Central Auto Co and Kanto Auto Co, which both belong to Toyota.’

CHP FUEL OPTIONS

Companies building new factories in Tohoku are expected to pick heavy fuel oil as their CHP fuel. Piped natural gas is not as widely available as in some other areas of Japan. ‘There is not much natural gas used for CHP in Tohoku,’ said Fujikake. ‘Most cogeneration units in the Tohoku region use oil only. Sendai Gas Co supplies city gas. They stopped supplying piped gas for one day only after the earthquake happened.’

Outside the Tohoku region, Japan’s industrial CHP units are mostly gas-fuelled, using piped gas supplied by local city gas companies. CHP units installed in commercial buildings also use piped gas as their main fuel source.

CHP could play a key role in keeping Japan’s lights on

Piped city gas fuels 4296 MW in industrial and commercial CHP systems, or 45% of Japan’s installed CHP generating capacity. Heavy fuel oil powers 3192 MW, or 34% of Japan’s total CHP generating capacity. Another 176 industrial and commercial CHP units totalling 1952 MW use various other fuel sources including natural gas, LPG and biofuels.

Biofuel fires 112 CHP units at 77 sites totalling 503 MW, said Fujikake. Woody biomass accounts for 477 MW of this figure, or 95% of biofuel-powered CHP. Other fuel sources include sewage sludge, food waste and livestock waste. Direct burning is used in 475 MW of biofuel-powered CHP. Gasification, digestive gasification and methane fermentation feature among other combustion methods.

About 13,075 CHP units are installed across Japan, of which 4162 are industrial and 8913 commercial CHP facilities. About 7500 units ” more than half the total ” feature gas engines, while 4260 units have diesel engines, and 1305 gas turbines. Gas turbine systems account for 4050 MW of Japan’s 9440 MW installed CHP capacity. Diesel units contribute 3054 MW and gas engines systems feature in 2297 MW.

ACEJ is currently assessing how CHP installations have been affected by the Tohoku earthquake and tsunami. ‘Usually when a big earthquake happens, the next issue for a CHP user is how to continue to operate the CHP system,’ said Fujikake. ‘But this time a tsunami followed the earthquake, so for some companies it’s not a question of restarting their factory or CHP. Everything was lost in some areas in Tohoku. But outside Tohoku there was no tsunami, just the big earthquake.’

POST-FUKUSHIMA POWER SHORTAGES

With the Fukushima nuclear plant now shut and other nuclear plants offline for inspection, Japan’s electricity supplies are significantly squeezed. In response, companies are installing standby or back-up power generation facilities, which could include CHP units, according to Fujikake.

‘All factories are trying to reduce their electricity use and cogeneration can help some of them,’ he said. ‘After the earthquake many companies wanted to use district power because cogeneration takes time to set up as you must research how to use the waste heat and also design facilities and application systems. Next year, maybe more factories will order cogeneration systems but this year they have been ordering “mono-generation” units as a risk hedge to ensure continuous power supplies if power cuts happen.’

The quake’s repercussions for electricity supply extend beyond the east of Japan, which felt its direct impact. ‘In the Tohoku and Kanto regions, including Tokyo, people must reduce their electricity use 15% by law but elsewhere in Japan electricity saving is voluntary,’ said Fujikake. ‘Nuclear power plants will be shutdown for checking and some people think they will not restart. In West Japan there was no earthquake damage but if nuclear power plants elsewhere in Japan cannot restart then they will lose huge generating capacity, so Kansai Electric in Osaka has asked customers to reduce power use.’

In their efforts to reduce electricity consumption in Tokyo and earthquake-affected regions, some firms have shifted working hours to off-peak periods. The government has also introduced short-term fuel oil and diesel engine maintenance subsidies ” run from July 2011 until January 2012 ” to help companies install backup power generation facilities.

‘Mono-generators will probably choose diesel generators from 1 MW to 6 MW installed capacity,’ said Fujikake. ‘But many factories do not want to give information about this because if they have in-house generation, they think it shows a weakness ” even though all of them are in the same situation. Maybe they will use the generators in their factories and save mains electricity for office air conditioning.’

TRENDS IN THE COMMERCIAL SECTOR

CHP may also be poised to grow again in the commercial sector, where CHP systems total 1967 MW across 6319 sites.

Hospitals and other care facilities are the sector’s largest cogeneration users, with installed capacity of 358 MW, or 18% of commercial CHP capacity. Restaurants have the second-largest number of commercial CHP sites, although these 1084 sites add up to just 14 MW installed capacity. Most units appear to be micro-fuel cell CHP units.

Commercial buildings host CHP systems at 806 sites with a total of 331 MW in capacity. About 71 district heating systems total 314 MW and average 4.5 MW ” a much larger capacity than for other commercial CHP sites.

Hotels host CHP facilities totalling 255 MW at 806 sites. Schools and other public facility sites have 194 MW in CHP capacity at 247 sites. Sports centre and public swimming pools have CHP units totalling 149 MW across 886 sites.

While commercial CHP has outstripped industrial CHP in terms of site numbers, many commercial CHP systems stopped operating after 2006 as gas prices rose, said Fujikake.

‘But after the earthquake this March users changed their minds,’ he said. ‘Before they thought CHP systems are just for economical electricity use. But after the earthquake they now think that CHP is an electricity risk hedge like using uninterruptible power supply systems for data centres, offices and places such as hospitals. During the earthquake, many companies could not continue to operate without electric power. They may lose light or air conditioning as well but for computers and data security CHP systems provide power continuously.’

CHP for providing back-up power supplies is another application expected to grow in Japan, where the Tohoku earthquake and tsunami severely tested wired and wireless communications services. ‘Communications companies such as mobile phone network operators want continuous power supply for their base stations so they may put small CHP units of about 50 kW to 300 kW at their base station sites,’ said Fujikake. ‘They can use gas engines or gas turbines in areas where there is a gas supply and diesel in other areas that are far away from gas supplies.’

ACEJ expects more commercial CHP systems to be installed in office buildings and commercial complexes in the Kanto area. Many new office blocks now being built in Tokyo are expected to install CHP units for back-up power.

FUTURE POTENTIAL

City gas companies are also interested in promoting combined heat and power for smart energy networks, and have submitted proposals to the government, said Fujikake.

‘The government is interested but the main problem is how to construct heat networks,’ he said. ‘European countries have large city heating systems but not in Japan ” we have about 150 district heating systems but these are small in size, unlike district heating in Denmark, France and the UK. So we propose using CHP and waste heat from several sources in cities, for example, from garbage or waste treatment station biogas.’

Backed by a strong policy network, CHP could generate 199 TWh per year in Japan by 2030, according to the International Energy Authority (IEA). If the Tohoku earthquake has indeed undermined Japan’s confidence in nuclear power, cogeneration seems bound to benefit ” and especially if electricity companies raise purchase prices to buy in more electricity.

David Hayes writes on energy matters in Asia. Email: cospp@pennwell.com

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