Japan plans to put its largest offshore wind-powered hydrogen plant into operations in the year ended March 2024, reported Nikkei Asia on July 27. The plant, located on the northern island of Hokkaido, will produce about 550 tons of hydrogen per year, equivalent to powering over 10,000 hydrogen-fueled cars, while the wind farm will have an electrical capacity of 110 megawatts (MW). The project involves Hokkaido Electric Power [9509:JP], Green Power Investment, Nippon Steel Engineering, and Air Water [4088:JP]. Moreover, the plant will boost local hydrogen production to 2,500 tons each year. The hydrogen produced in the area will be on sale in Hokkaido and to other parts of Japan through the transport network consist of ports.
Green hydrogen energy could facilitate Japan to achieve its goal of carbon neutrality by 2050. To achieve the target, the Japanese government formulated the Green Growth Strategy last year. The section that mentions hydrogen energy calls for the production capacity of 3m tons of hydrogen for power generation and transportation by 2030 and about 20m tons by 2050. According to a Reuters report on May 18, Japan planned to allocate up to JPY370bn (USD3.4bn) from its green innovation fund for the development of the country’s hydrogen industry based on green electricity. Specifically, the country will create a large-scale hydrogen supply chain and develop a large-scale, low-cost hydrogen production system through water electrolysis in the next decade.
However, the expensive unit cost of hydrogen energy makes Japan’s goal difficult to accomplish. The Ministry of Economy, Trade and Industry estimated that the cost of offshore wind power per kilowatt-hour (kWh) would be around JPY26 (USD0.23) by 2030, about twice the price of solar and 1.5 times that of wind power on land. Japan’s target price is only one-third of the current price. The high price at present means the government may have to spend a large amount of technology and financial resources to reduce costs as well as subsidize hydrogen energy. Last December, Japan already announced to offer tax incentives and other financial supports to companies, along with the JPY2tr green innovation fund for green technology development.