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Business

SoftBank tapping the Earth to broaden its energy business

TOKYO -- SoftBank Group is expanding its renewable energy business to include geothermal power. The Japanese IT giant already intends to build 27 huge megasolar power plants across Japan by fiscal 2017, and it also has plans for two wind farms. But the move into geothermal energy, a more reliable energy resource, is an effort to ensure more stable growth as an electricity retailer.

     As a first step, group subsidiary SB Energy has begun a field study to build a small 300kW binary-cycle geothermal power plant in the city of Itoigawa in southern Niigata Prefecture. The company expects to begin construction of the plant in one to two years and launch operations by 2020, taking advantage of Japan's feed-in tariff mechanism for renewable energies to sell the electricity.

     SB Energy has also selected several other locations in Japan as candidate sites for small geothermal plants. It will decide whether to go ahead with construction at these sites after determining whether they can provide stable sources of geothermal heat for power generation.

     In the future, SoftBank may partner with other companies to build large geothermal power plants. But for now it will focus on plants that generate less than 7,500kW because these do not require environmental impact studies, which can set back operations by 10 years or more. Since the smaller plants can start up sooner, SoftBank can quickly gain the experience needed to expand the business later.

     Because solar power plants and wind farms are dependent on the vagaries of the sun and wind, they tend to have low operation rates of just 10-20%. In contrast, geothermal plants have operating rates of around 80% because they tap into constant sources of heat from magma and hot springs.

     Another advantage is that the Japanese government supports geothermal energy. It has set a national goal of tripling output of geothermal energy to as much as 1.55 million kilowatts by fiscal 2030.

(Nikkei)

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