August 7, 2014 6:24 am JST

Major biomass power plant to supply 100,000 homes in Kyushu

TOKYO -- Independent power producer eRex is spending 17 billion yen ($164 million) to build one of Japan's largest biomass power plants capable of supplying electricity to 100,000 households.

     The facility is planned within the premises of an Oita Prefecture plant operated by Taiheyo Cement, one of the company's shareholders. It will have a power generation capacity of 50,000 kilowatts, and is slated to start operation in fall 2016.

     With electricity retailing set to be fully deregulated that year, the company seeks to sharpen its competitive edge by stepping up investment in biomass power.

     Although much smaller than fossil-fuel plants, the facility will be among the largest biomass power plants in the country.

     Until now, the challenge of securing stable supplies of fuels -- such as wood chips from factories or scraps from thinned-out forests -- has prevented biomass power from expanding in scale.

     The new plant will use palm shells, a byproduct of palm oil production in Indonesia and elsewhere, as a primary fuel. Imported in large volumes for low prices, the shells are suitable for large-scale power generation. The company will set up a separate storage facility in Oita to hold 100,000 tons of palm shells.

     The shells will account for 90% of fuel at the plant, and will be burned in mixture with coal. The plan is to recover the investment in several years.

     Thanks to subsidies designed to promote renewable energy, eRex will be able to offset costs, and set electricity prices lower than the rates from plants burning oil and liquefied natural gas.          

     Established in 1999 by a money market dealer and others, eRex sells electricity to 2,000 customers. It counts Hitachi, Toshiba and construction company Maeda among its shareholders. At the end of July, it accepted investment by Taiheiyo Cement for an 8% stake.