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Argus Media were at Coaltrans Japan covering key topics and discussions.


New coal role unfolds for Japan’s Jera

04 Oct 16, 14:03 - Coal, Steam coal

Singapore, 4 October (Argus) — Japanese energy company Jera expects to buy 20mn-30mn t/yr of coal for its domestic power generation by 2030, as it aims to significantly increase the proportion of coal it buys on a spot or more flexible basis over the next few years.

Jera, which was created in April last year when state-owned Tepco and fellow Japanese utility Chubu merged their fuel purchase and transport businesses, also expects to buy 30mn-40mn t/yr of LNG for domestic generation by 2030, according to Jera power generation managing director, Tatsunori Miwada.

Miwada, who was addressing the Coaltrans Japan conference in Tokyo last week, provided a range of estimates for Jera's purchases as the share of coal or gas used can be flexible. But he told Argus that current coal purchases are around 20mn t/yr, implying coal could have upside to 30mn t/yr by 2030 as new thermal generation plants start up in Japan.

Jera is diversifying its thermal coal suppliers and grades following the full liberalisation of Japan's electricity sector in April this year. The company's coal trading arm, Singapore-based Jerats, currently buys roughly 40pc of the coal needed by Tepco and Chubu in Japan. This means around 60pc of the utilities' coal is still being supplied through more expensive long-term contracts that specify premium high calorific value coal from a particular mine for a designated generation plant.

This ratio should change rapidly to around 80pc bought through Jerats in 2020, when it expects its overall coal requirement to be unchanged at around 20mn t. By 2030 around 90pc of the coal will be obtained through Jerats in a more cost-effective way, rather than through the traditional "specified" contracts. The shift in its coal contracts, which are still mostly long term, is aimed at securing an optimal mixture of short-term and stable long-term contracts, Miwada said.

Miwada's description of Jera's more flexible, larger scale purchasing strategy and plans for more "third-party" trading is being held up by many as a future model for Japanese utilities, which will face competition from new market entrants and a reduced ability to pass on costs to customers.

Jera is now one of the world's largest coal and LNG buyers, but is going further by investing upstream globally to pursue supply chain integration and supply security. It also took over Tepco and Chubu's overseas power generation business in July this year and became responsible for upgrading, replacing and building new thermal power plants in Japan.

Jera's own domestic generation capacity should rise by 2021 from one 650MW thermal coal project, Hitachinaka Generation, to 12,000MW from 10 coal- and gas-fired sites by 2030. The latter will be a mixture of expansions or replacements of existing generation, as well as new plants.

The 100pc Jera-owned 650MW Hitachinaka Generation plant will cost $130mn and is being built at the site of Tepco's existing generation plants on the Pacific coast in Ibaraki prefecture. The ultra-supercritical Hitachinaka plant is scheduled for start-up in early 2021 and is intended to replace some of the nuclear capacity lost after the March 2011 earthquake and tsunami that led to the Fukushima nuclear disaster.

Jera earlier this month outlined plans to build a 1,300MW coal-fired power plant at Yokosuka in Tokyo bay by 2023. This involves two ultra-supercritical 650MW units to replace a 2,200MW oil-fired power plant that Tepco mothballed in 2014. Jera will also build two new gas-fired power plants with a combined 4,300MW of capacity, under a 10-year electricity supply plan.

Jera expects its equity share of overseas-owned power generation capacity to rise from the current 6,000MW to 20,000MW by 2030. It already has stakes in 22 existing generation plants or planned projects in Taiwan, Vietnam, Indonesia, the Philippines, Thailand, the UAE, Qatar, Oman, Mexico, Canada and the US. These mostly involve gas projects, although it has a few coal investments in Indonesia and Thailand, as well as biomass, wind and solar interests.



This content is provided by Coaltrans Conferences for informational purposes only, and it reflects the market and industry conditions and presenter’s opinions and affiliations available at the time of the presentation.

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