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Climate Change

Japan's eRex plans coal-to-biomass power plant conversion

Independent power supplier expects to bring down generation costs

eRex intends to clean up some of Japan's coal-fired power plants by refitting them to run on biomass fuel. (Photo courtesy of eRex)

TOKYO -- A biomass power plant operator in Japan is in the process of purchasing coal-fired plants from a major power company and other parties that it plans to refit so that they burn its cleaner fuel, Nikkei has learned.

eRex has entered into talks with companies that own coal-fired plants in Japan's Kanto, Hokuriku and Shikoku regions. The biomass plant operator is looking to acquire about four coal-fired plants of about 150,000kW to 500,000kW each, for tens of billions of yen.

The independent power supplier would install storage facilities and crushers needed for biomass fuel, then start operations in 2022 or later. Coal would initially be mixed with biomass, which would account for about 30% of the fuel. The plants would run solely on biomass by around 2025.

Biomass fuel -- which can come from tress, plants or municipal solid waste -- is considered a renewable energy source. Purchasing fully depreciated coal-fired power plants would lower costs. The cost of generating a kilowatt with a 30% biomass mix is estimated to be less than 10 yen at the purchased plants, lower than the cost of coal-fired power generation.

eRex plans to use a sorghum-derived biofuel, with the sorghum bred specifically to be made into fuel. The plant can be harvested three times a year and is 20% to 30% cheaper to harvest than other plants used for biomass power generation.

eRex grows sorghum in Vietnam and the Philippines, which helps it ensure stable procurement costs.

The generator plans to sell the electricity directly to companies and other power users.

Renewable power plant operators usually sell their electricity to utilities using Japan's feed-in-tariff schemes, which ensure fixed prices over a certain period. However, FITs are becoming less attractive as guaranteed prices tumble. The FIT price recently fell under 20 yen per kilowatt for biomass.

Japan has about 150 coal-fired thermal plants, but the government is demanding that they achieve a power generation efficiency of 43%.

This is likely to push some older plants into retirement. But it can cost from 5 billion yen to 10 billion yen to decommission a plant, according to a demolition company.

Now utilities, steel-makers and other power plant operators can save these expenses by selling their facilities to companies like eRex.

Companies in Europe have taken the lead in using biomass fuels at old coal-fired facilities. U.K. energy company Drax, which now uses only biomass at four old coal plants, has acquired Canada's Pinnacle Renewable Energy in a bid to secure biomass fuel supplies. Denmark's Orsted has also started burning biomass at coal plants.

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