Insights from Tetsuya Suwabe, CEO of Eurus Energy, on Japan's renewable energy landscape
Could you share with us your analysis of Japan's current energy situation? What do you believe to be the main critical challenges to its green energy transition?
Looking at history, there are two major obstacles that Japan has been experiencing. First is the imbalance of renewable energy sources. The Japanese government had emphasized nuclear power generation until 2011. It also made considerable investments in the solar energy sector, so nuclear and solar power were able to grow as industries. Unfortunately, the government had not given the same attention to wind power generation as a source of renewable energy. The supply chain for the wind power business has not grown in Japan. The Japanese government finally has the policy to expand the market to include the offshore wind supply chain, but the Japanese manufacturers are not ready.
In the 1970s, in European countries, like Denmark, the government initiated and led the efforts to emphasize wind generation, which continues to this day.
We started our business in the US and then expanded to Europe before coming to Japan because there was no market in Japan at that time. It is not ideal for a Japanese company like ours to start its business overseas and come back to Japan. It is better to accumulate our expertise in Japan and take that overseas. Sadly, we were not able to do that with wind power generation since the market in Japan was not growing, which was the same reason for major Japanese companies to discontinue their wind turbine manufacturing. Europe has a substantial history of over 30 years in this area while Japan has been trying to catch up for five years to be able to use wind energy as a renewable energy source. This is one of the major challenges.
Secondly, Japan is an island nation, and its population is centralized in urban areas. Solar and wind power generation is often done in the rural areas. Thus, it is very important to create grid connections between the generation farm to the user. Japanese government has to take the lead in building this power transmission network for renewable energy to be effectively distributed to consumers across the nation. This approach of strengthening infrastructure and the advancement & support of the private sector's technological advancement are the necessary steps that the Japanese government should take to achieve the challenging 2030 to 2050 renewable energy mixes. As a private company, we need to take an active part in this field as well.
Shiratori Battery Park was announced last year in November. Could you give us an insight on how your firm is taking this challenge of setting up this kind of infrastructure head-on? How can it help address and stabilize the supply and accessibility of renewable energies in Japan?
As a power generator, it is important to think about our customers or end-users of electricity, particularly as to what kind would be ideal for them to receive. There is a mismatch because the wind-generated power is unstable, but the end users demand to use electricity when they need it as much as they need it.
We have several ways to approach this. One way to deal with this imbalance is through Eurus Green Energy, a power retail company we established in 2018, that procures wind-generated power from the market and delivers that to our customers. Our utmost goal is to provide 100% renewable energy from our wind farm, and storage is the key to doing so. Since we are not a battery manufacturer or research company, we are selecting which batteries are the best solution for our wind farm's output variability. Shiratori Battery Park is one of the testing and prototyping sites that we have.
Recently, we have started to install the battery alongside the wind farm. As part of this effort, we are conducting joint research for our Tashirotai Wind Farm in Akita Prefecture, with our present parent company - Toyota Tsusho, and our previous parent company - TEPCO. We are working together with Toyota in reusing spent batteries from EV/Hybrid cars to store electricity. Through such collaboration, we are striving to give a stable supply of electricity.
When we spoke with Envision AESC which makes EV batteries for Nissan Leaf, they talked about how they can maximize the end-of-life cycle of the spent or retired EV batteries, and what kind of synergies can be created between the two virgin markets in Japan - EV and renewable energy. Can you talk to us in more detail about this demonstration project or new collaboration and initiative? What kind of synergies do you anticipate can be created between the EV and clean energy fields in Japan?
Spent batteries that are down to 70% chargeability may not be good for the automotive field anymore, but if we compile many of them, they can be effective in storing renewable energy. From that idea, our mindset is to reuse spent batteries to store renewable energy. Toyota Tsusho and Toyota create the system, while TEPCO develops an energy management system.
Storage is definitely the operative word in the main challenge of intermittent renewable sources like wind and solar. On one hand, there are very strong or very generous power storage subsidies in Japan, and the government has made it a priority to reform the energy battery storage system (BESS) regulations. Can you tell us more in detail about your initiatives for responsibly storing the excess energy that is created by your plants and power plants?
It is important to take energy security seriously and be able to have made-in-Japan technology within the domestic market. The energy mix is crucial for energy security. Besides storing renewables in batteries, hydrogen may also be a possible option.
The Japanese government is implementing measures to strengthen the grid connection, such as constructing an undersea cable that connects Hokkaido which is suitable for power generation to the mainland, where the majority of power is used. It still takes time to establish this kind of infrastructure. In the meantime, we are looking at hydrogen as an option. Of course, we always have to consider the cost.
It is no secret that Japan has been very big on green hydrogen as being a suitable energy source in the future. It was the first country in the world to introduce a national hydrogen strategy, more than six years ago. In terms of long-term use and role in Japan's energy mix, what are your thoughts on hydrogen as a solution?
Green hydrogen has several applications. Creating and transporting green hydrogen using wind-power-generated electricity to be burned in the power plant is not necessarily cost-effective. However, such high-purity hydrogen can be used in other forms like SAF, fuel for FCV, chemical process, or steel-making process. We believe that the growth of the hydrogen industry will lead to greater demand for electricity.
One of the main challenges in wind power generation, which is your area of expertise, is a very weak domestic supply chain. Also, in terms of energy security, it is important to have a strong, robust domestic supply chain that is the made-in-Japan infrastructure. How are you approaching that challenge? What role can Eurus play in strengthening that domestic supply chain and making wind a really viable option for Japan's energy future?
We are not only a developer but also the operator and the manager of wind farms for the long term. We consider staying in one location for 20 years, and that itself is a success. Not only 20 years, but we want to make it last forever. In this regard, the understanding and consensus of the local people is crucial.
The local people experience many issues and challenges, and they also have high expectations for wind farms being in the area. By working with the local community, we would like to provide prosperity to the region through wind power generation. Local communities often struggle with a declining population due to the lack of jobs and dwindling industries in the area. They express these as concerns that they experience. Since we are energy generators that supply energy and create industries, we always seek to provide potential solutions to the issues of the local community. The hurdle is high, but if we can create a situation where both wind power development and local revitalization can be fulfilled together, many other municipalities would expect it in their town as well, a way that leads to a virtuous cycle of expanding renewable energy. Moreover, through these activities, we can strengthen the industries as well as the local supply chain for wind power generation.
Could you give us some more insight into the role that partnership or collaboration with local companies, like Red Sea Wind Energy, plays in your development process? Are there any new countries or areas in which you are looking for new partners for future projects or ongoing projects?
Transparency and accountability are an absolute must for us to be able to do our operations there. To give the advantage to the locals in our Australian wind farm, we opened a community fund that allows the locals to invest in the wind farm, giving them a sense of ownership. Through this fund, we report the operation status to the local people. We also take active steps domestically and globally in spreading awareness about renewable energy to the future generation, especially children, by visiting and giving lectures in schools.
We have a fully integrated background from the development to the operation of wind farms. For that reason, we can adapt to the requirements of any partnership. Having said that, we have strict criteria for our partnerships. First is receiving an understanding of the local community, especially because we will be staying in the locality in the long term. And also we have to ensure safety. Therefore, it is important for our partners to have the same perspective as us.
Do you have your eyes on any other locations for new plants in the medium or long-term expansion?
Our direct parent company, Toyota Tsusho has a global network, and our overarching parent company, Toyota, has the global demand. By combining these to have a synergistic effect on our overall strategy, we believe that there are many opportunities for our company.
Toyota Tsusho has its eyes on Africa. Although we have to consider the risks and other factors, we think Africa is one of our viable options.
Your company started the business in 1986, and it will be 40 years old in 2026. If we were to come back in three years and do this interview all over again, is there a certain goal or personal ambition that you as a president would like to share with us by then?
Since our business is not about accomplishing something in a short period of time, it is difficult to say what exactly we will accomplish in three years. The goal of the company is to provide clean energy to as many people as possible, not only through electricity but also through another type of power source. Once we can advance the technologies and supply clean energy to a great number of people, it would also be fulfilling my goals.