Monday 13th January 2014


January 13, 2014

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Wind Watch

In recent weeks, Japanese foreign affairs have dominated international headlines as political tensions escalate with neighbouring China over its territorial waters.

At the heart of the matter lies a dispute over the sovereignty and control of the Senkaku Islands – a remote and uninhabited archipelago in the East China Sea.

It’s a highly politicised debate that has seen a gradual increase in rhetoric and that has already got many international market commentators worried.

As yet, its impact and implications on the energy markets is unclear. However, since the surrounding area has always provided rich grounds for oil exploration and extraction, on that basis alone it’s unlikely that either party will back down.

For Japan in particular, it’s especially important since post-Fukushima, the ability to safeguard and secure future energy needs has quickly risen up the agenda.

Put simply, following the move away from nuclear power, the Asian economic powerhouse cannot afford to be overly reliant on existing energy interconnects and imports. And if that’s the case, then it can’t afford to sit on its hands, either.

That’s just part of the reason why over the past eighteen months we’ve seen such an uptick in Japanese wind energy engagement on the international stage.

And, as the automotive market knows only too well, when the Japanese take an interest in new industry segment, they won’t just dip their toes in the water.

Indeed, for the Japanese, the ability to truly understand and capitalise on a technology, starts with extensive research and development. That means an investment in fostering internal domestic talent. It also means, acquisitions.

Viewed in this light, it’s perhaps a little easier to see why the €300m Vestas-Mitsubishi tie up, that will see the two firms work together on the development of the V164-8.0MW turbine, is so significant.

It’s also why many of the major Japanese energy investors have focussed their efforts of developing a strong, well-diversified portfolio of wind energy assets.

In the medium- to long-term these assets are expected to generate good, steady returns.

While industry insiders have already acknowledged that in the short-term, participation at the deal-making table continues to provide a valuable insight into the mechanics and true workings of the international market.

As developments within the East China Sea demonstrate, tenure, command and control continue to be important negotiating tools for the Japanese, both in commerce and when handling itself in foreign affairs.

And, as the wider wind energy market looks to capitalise on the more immediate benefits that this approach now brings, while the Japanese build out their existing investment portfolios and manufacturing base, the extent to which the two sides can work together will without doubt prove to be paramount.

In the coming weeks the International Monetary Fund looks increasingly set to upgrade Japan’s economic growth forecast. Budgets are being increased. And Prime Minister Shinzo Abe is determined to rescue the country from 15 years of deflation.

In short, optimism abounds. For wind, picking the right partners and establishing strong working relation ships now, will pay dividends in the future.

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