[Create an eco-friendly society]
Creating Community-Based Biomass Power Generation Business for the Post-Carbon Society
Throughout the world, global warming has led to increased demand for renewable energy. In Japan, the government has announced its aim to realize an energy mix whereby renewable energy accounts for 22–24% of total electric power generation by 2030, and to actively promote renewable energy as the mainstream source of electric power generation.
With this in mind, Mitsui & Co. is working to grow its renewable energy business and reduce greenhouse gas (GHG) emissions. An example of a project where we have taken a leading role is the development of wood biomass power generation as a distributed local power source in Hokkaido, with new biomass power plants having begun operation in Tomakomai in 2017 and in Shimokawa in 2019, and construction of a further plant begun in Tobetsu in May 2020. Establishing small-scale, distributed power plant facilities close to power consumers reduces energy loss during transmission and also reduces GHG emissions. Hokkaido has extensive forest resources, with over 20% of Japan’s total forest area, so there will be a stable supply of unused forest materials such as forest thinnings that can be used as fuel for the biomass power plants, and we believe that biomass power generation—which, unlike solar power or wind power, can consistently maintain more or less stable power output, regardless of the weather—has the potential to make renewable energy the mainstream form of electric power generation.
Whereas most biomass power generation projects undertaken by general trading companies use a business model that involves importing wood fuel from overseas and supplying the generated power to electric power utilities, we have created a unique model in which distributed local power plants are operated using 100% Hokkaido-produced fuel. Forestry is one of Hokkaido’s main industries, and the use of wood biomass power generation facilitates “cascade” type utilization of timber*1. We have Mitsui’s Forests totaling around 44,000 hectares at 74 locations throughout Japan, of which approximately 36,000 hectares are in Hokkaido. We are contributing towards the reinvigoration of the forestry sector not only through our own forests, but also by creating demand for unused forest materials such as forest thinnings, creating new employment opportunities for forestry and logistics sector workers, and enhancing the efficient utilization of forest materials.
Making a difficult experience the springboard for launching projects in new locations
Having overseen new project development in Hokkaido since 2017, I realized that efforts to make renewable energy the mainstream form of electricity generation face a number of problems. One issue is constraints on connection to the electric power system*2. Traditionally, the electric power companies built transmission lines to connect large-scale power stations with areas where there is demand for electric power, so areas with spare electric power system capacity and areas with potential for renewable energy development do not necessarily coincide. Grid capacity constraints have been a problem, and within Hokkaido, the establishment of a new upstream grid system can take 5–9 years and cost huge amounts of money, so the hurdles that need to be overcome are very high.
System connection has also been a problem with the Tobetsu project which began construction this year. After a survey that took nearly six months, we found out that the new project could not be connected to the electric power system at the site we originally thought we would be able to secure in another local municipality. Since we had already spent money on a soil boring survey, I was at a loss as to how to explain the situation to other project stakeholders. However, we did not give up, and in the end we were able to receive support from the town of Tobetsu and the staff of the town office, who were hoping to adopt renewable energy, to allocate suitable land to use. After the allocation of a suitable site, as the main project manager, I had a to-do list of nearly 500 items including having to confirm over 70 permits and authorizations from central government ministries and local government authorities, sign nearly 30 contracts with EPC*3 contractors and other external partners, engage in financing negotiations with regional banks, arrange O&M*4, undertake raw materials procurement, build consensus with the local community, and also liaise with joint investor Hokkaido Electric Power Co., Inc. and complete approval processes within Mitsui. When the groundbreaking ceremony was held, there was a real sense that it had all been worth doing.
Using German gasification technology and U.S. IoT technology to support power plant establishment
Both the Shimokawa and Tobetsu power plants were designed as compact facilities, which offer advantages in terms of system connection. However, when conventional steam turbine type generators are built on a small scale there can be problems with reduced generating efficiency. While on assignment in Germany to research technology that could be used to address this problem, I was impressed by the technology of Burkhardt GmbH, which generates electricity using a unique type of gasification furnace with wood pellets*5 as the fuel. As the gasifiers require high-level pellet quality management, even after commencing power plant operation, we continued to make steady improvements of 1% or so in terms of the water content of pellets. We also adopted the PI System developed by OSIsoft, LLC., a company that our IT & Communications Business Unit has invested in, to realize real-time data aggregation and visualization, thereby facilitating effective management decision-making to optimize operation and enhance availability, representing a DX*6 initiative based linkage that a general trading company like Mitsui excels in.
In terms of environmental contribution, the gasifier technology has the additional advantage of requiring less wood than conventional steam turbine technology. Additionally, at the Shimokawa Plant the heat generated during electricity generation with gasifier technology is reused in the drying process during pellet manufacturing, realizing an improvement in overall energy efficiency. At Ladbergen, a village in Germany that Mitsui visited to examine the generators in use there, the power plant supplies hot water to an airport located 3 kilometers away and to local factories. This has made it possible to bring down expenditures on heavy oil and kerosene, thereby reducing the flow of funds out of the village, and the money that is saved can be used to support the health of local forests, creating a “virtuous circle” of fund utilization. We would like to adopt similar business model whereby hot water is supplied by power plants to agricultural facilities that have been invited to operate nearby so that none of wood material is wasted.
Using the integrated capability of a general trading company to develop locally-rooted businesses
We have committed ourselves to strengthening domestic business development within Japan, and in July this year the Energy Business Unit I&II established the new Local Business Origination & Innovation Division, with the aim of expanding businesses that are rooted in local communities. In the case of the current project, we are considering beyond horizontal dissemination, and are discussing how we can meet the needs of individual municipalities using the experience acquired in collaborating with local government authorities, so that we can generate opportunities for cross-business-unit development of local projects. Our good relationship with the town of Shimokawa has led to another local project, and we have begun industry/university/government collaboration to develop new products that make effective use of agricultural produce cultivated in Shimokawa, in partnership with the municipality of Shimokawa, Sapporo Ueshima Coffee Co., Ltd., and Fuji Women’s University.
Hokkaido is blessed with extensive land and diverse natural resources, while also requiring large amounts of energy to cope with its severe winters; as such, it has great potential for renewable energy development. In line with my initial vision of wanting to create a village like Ladbergen in Japan, I will continue working towards the realization of an eco-friendly society.
*1: With the “cascade” model, after timber has been used as construction material, the left-over material can be used to manufacture paper pulp, and in the final stage it is used as fuel, so that no material is wasted.
*2: “Electric power system” is used here to refer collectively to the electricity generation, transformer operation, transmission, and distribution needed to supply electric power to customers’ equipment.
*3: Engineering, Procurement and Construction (EPC) agreement is negotiated between the project company and the contractor.
*4: Operation & Maintenance (O&M)
*5: Wood pellets are a form of solid fuel that is made by crushing round raw timber into small pieces and then compressing these to form small, rod-like pellets.
*6: Digital Transformation (DX) represents the transformation to a new model which emphasizes the role of ICT in business infrastructure, through the utilization of AI and IoT.
Posted in August 2020