The specter of a power outage affecting millions of households in the Tokyo metropolitan area was averted by a hair’s breadth last week, but it nonetheless served as a stark reminder of the importance of having sufficient backup power supplies to tide over unexpected thermal plant shutdowns when hit by major earthquakes.
But that is easier said than done. While European power producers are planning to go big on expanding solar and wind power to meet the vast majority of the European Union’s carbon-neutral targets by 2050, experts say Japan’s limited availability of flat land and its steep coast lines, as well as frequent quakes and typhoons, will likely make it extremely difficult to rely on solar and wind power alone to achieve net zero.
With that as the backdrop, Japan’s top power producer Jera Co., which accounts for about 30% of power produced in the country, is making the firm’s biggest bet yet on ammonia and hydrogen, which Japan considers key to realizing a carbon-free future, as they do not produce carbon emissions when used as fuel for power generation. And its ambitions are not limited to its home country, as it sees a potential to help some other countries, especially in Southeast Asia, attain net-zero emissions by midcentury as part of common climate goals under the Paris Agreement.
Jera, a unit of Tepco Fuel & Power Inc. and Chubu Electric Power Co., made its biggest investment of $1.58 billion (¥195 billion) last September to acquire a 27% stake in a major Philippine power utility, Aboitiz Power Corp.
About 60% of Aboitiz’s 4.6-gigawatt power plant capacity currently runs on coal. Over the next decade or so, Jera is helping the company roughly double the overall capacity by installing renewables and the country’s first power plant that runs on imported liquefied natural gas (LNG).
But that’s not the only thing Jera has in mind. By dispatching one director to Aboitiz’s management, Jera is keen to deepen its involvement in helping the company transform into a power utility that would also burn at its coal and gas plants ammonia and hydrogen, respectively.
“Aboitiz has a strong desire to supply clean energy to a wide swath of the country, and we saw an agreement in our goals,” Jera President Satoshi Onoda said in a recent interview. “Through our management’s involvement in the whole of Aboitiz, we can help them achieve zero emissions and economic growth at the same time.”
An ammonia tank at Jera Co.’s Hekinan coal-fired plant in Aichi Prefecture, where the company is conducting a demonstration project to mix ammonia with coal for power generation | KYODO
Jera’s goals to help spearhead Asia’s transition to decarbonized power production are shared by the Japanese government, which has pledged large-scale financial support to help Asia achieve sustainable growth and carbon neutrality under the Asia Energy Transition Initiative.
The economies of the Association of Southeast Asian Nations (ASEAN) are seeing some of the fastest-growing economic expansion in the world with robust electricity demand projected for the next two decades or so. But unlike Europe, which has extensive cross-border power networks and the availability of abundant cheap renewables, Asia has no integrated power network and a slimmer potential for utilizing renewables due to frequent typhoons, among other factors. That’s where Jera sees a chance to tap ammonia and hydrogen and realize decarbonized power generation.
Last month, Jera issued what it believes is the world’s first international tender to procure fuel ammonia, and sent a request for proposals to more than 30 companies. It is looking to sign a long-term contract for up to half a million tons per year from 2027 to the 2040s. The aim is to procure greener fuels for its Hekinan coal-fired plant in Aichi Prefecture, where the company is conducting a demonstration project to mix ammonia with coal for power generation. The tender requires carbon dioxide to be captured and stored or not generated when producing ammonia, and that Jera can participate in the proposed production project.
Jera Co. President Satoshi Onoda | JERA CO.
The up to 500,000 tons sought in the tender is enough to achieve a 20% ammonia cofiring at one of the two biggest units at the Hekinan plant for one year, but it is also equivalent to about half of the domestic annual consumption of ammonia, which is mainly used as a fertilizer. The company eventually aims to shift to 100% ammonia as fuel at its coal-fired plants in the 2040s, but the trade ministry says shifting to 100% ammonia fuel at all of Japan’s coal-fired plants would require 100 million tons of greener fuel per year.
But given that the current global annual production of ammonia is around 180 million tons, of which only 20 million tons are allocated for exports, the creation of a supply chain for vast amounts of ammonia would likely represent a significant hurdle to Jera’s ambitions. If ASEAN starts relying on imported ammonia, the required amounts would swell much further. But Onoda said that the company is determined to streamline the supply chain for fuel ammonia and added that it wants prices for it to be priced differently from ammonia used for food production as traded volumes will be much larger.
“LNG was very expensive initially,” Onoda said. “But as more production plants were built, spot volumes grew and prices gradually became cheaper. We are hoping the same thing would happen with ammonia. Ammonia, which can be transported at minus 30 degrees Celsius, will also serve as an excellent carrier of hydrogen, as removing N (nitrogen) from NH3 (ammonia) would produce hydrogen, rather than transporting hydrogen in a liquid form at minus 250 degrees Celsius.”
Some environmental groups have criticized Japan’s adoption of ammonia cofiring because they see it as technology to prolong the life of coal-fired plants, adding that ammonia would not be as cost effective as wind and solar energy. But the use of ammonia and hydrogen remains one of the key themes in the trade ministry’s basic energy policy announced last October, besides relying on renewable energy as a main power source.
The Hirono thermal power plant operated by Jera Co. in Fukushima Prefecture | KYODO
There are two kinds of ammonia: “green” ammonia is produced using renewable energy, while “blue” ammonia is produced with carbon dioxide generated during production, captured via carbon offset technology. As green ammonia remains expensive for now, Jera sees more potential in blue ammonia. It has also teamed up with the world’s biggest ammonia producer, Yara International in Norway, the Abu Dhabi National Oil Corp. in the United Arab Emirates and Malaysia’s Petronas to explore opportunities for cost-competitive ammonia production.
Onoda says the momentum for ammonia output is growing among global upstream producers.
“Dozens of companies across the world have expressed interests in our tender,” he said. “We are also proud of our expertise in the entire supply chain of LNG, and we will for sure use that to streamline the global supply chain of ammonia.”
Regarding Russia’s invasion of Ukraine, Japanese energy firms have been procuring fuel from various countries to ensure energy security since the oil crisis, and Jera does not see any immediate problem with securing the required energy volumes, Onoda said.
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