Hydropower Could Become More Prevalent in Japan Following Nuclear Crisis

---

Researched by Industrial Info Resources East Asia (Kofu-shi, Japan)--Prior to March 11, Japan imported approximately 80 to 85% of its energy needs, while relying on renewables and nuclear power to make up the difference. Though wind and solar power are being pursued, little is mentioned about hydropower. Hydropower development in Japan is diverse; from small, kilowatt-level waterwheels in Yamanashi prefecture to major, gigawatt-generating projects in Kanagawa prefecture. However Japan's geography is optimal for the employment of small- to medium-scale hydropower plants and currently produces an average of 22 gigawatts (GW) at approximately 1,800 sites. Another 2,700 sites with the potential to generate an additional 12 GW remain undeveloped.

All of Japan's major utility companies, such as Tokyo Electric Power Company Incorporated (TYO:9501) (TEPCO) (Tokyo) and Tohoku Electric Power Company Incorporated (TYO:9506 ) (Tokuden) (Sendai, Japan), along with other firms, and government agencies, both national and local, have a hand in hydropower generation. In 2010, Marubeni Corporation (TYO:8002) (Tokyo), one of the country's largest trading companies, announced that it would be investing in the revitalization of a mothballed small-scale plant in Nagano prefecture, signaling its venture into hydropower as well.

Shortly after March's earthquake and tsunami, which devastated much of northeastern Japan, Hitachi Limited (NYSE:HIT) (Tokyo), Mitsubishi Electric Corporation (TYO:6503) (Tokyo), and Mitsubishi Heavy Industries Limited (TYO:7011) (MHI) (Tokyo) announced the decision to merge their separate hydropower businesses into HM Hydro Limited (Tokyo), which is to be established next month. Each of these companies develop generators and turbines specific to hydropower, and under the new company, Hitachi will hold the majority stake of 98% while Mitsubishi Electric and MHI will each hold 1%.

This decision, however, is not a direct result of the power crisis following March 11, but rather a well-timed announcement. The three companies have been in talks since last year. Nevertheless, a hydropower consolidation of some of Japan's largest players in the power generation industry will help level the field against international competitors. This consolidation will also aid domestic development and maintenance, especially since power generation companies turned to hydropower during the height of last month's power shortage. For more information on the rejuvenation of mothballed hydropower stations, read the March 16 IIR article Mothballed Hydropower Stations to Be Restarted to Compensate for Lack of Electricity in Tokyo Electric Area. Small and medium-scale hydropower could become more prevalent in the near future as the stigma of nuclear energy keeps those respective power stations closed.

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. IIR's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.