Current Situation of Geothermal Power Generation in Japan

Mission

JOGMEC’s Mission and Activities 1

Metals Strategy &

Exploration, and

Technology

Development

Mine Pollution

Control

Stockpiling Coal Strategy &

Exploration, and

Technological

Support

Geothermal

Resources

Development

Oil & Gas

Upstream

Investment and

Research &

Development

Activities

Secure constant and stable supplies of oil, natural gas and mineralresources to support industries and citizens in Japan through variousactivities relating these resources. In 2012 Geothermal function wasadded to the role of JOGMEC.

Matsukawa 23,500kW

Mori 25,000kW

★Ohnuma

9,500kW

Sumikawa

50,000kW

Kakkonda 80,000kWUenotai

28,800kWOnikoube 15,000kW

Yanaizu Nishiyama

65,000kW

Ohtake 12,500kW

Hachijojima 3,300kW★Suginoi 1,900kW

★Kuju 990kW

Takigami 27,500kW

Hacchoubaru 110,000kW, 2,000kW

Ohgiri

30,000kW

Yamakawa

30,000kW ★Kirishima

100kW

Sugawara 5,000kW

in Operation★ for Private Use

Main geothermal power plants in Japan

2

Total Installed Capacity: 525MW

Decreasing gradually

for the past dozen years or soElectricity Generated

Installed Capacity

Source: TENPES,JOGMEC

Geothermal Power Plants in Japan

★Kirishima 100kW

Reserve of Geothermal Resources

0

5000

10000

15000

20000

25000

30000

35000

Resource

Installed Capacity(2015)

3 Japan has the world’s third largest reserve of geothermal

resources(23,400MW), however has only 520MW(2.2%) to have been developed.

Geothermal Potential Area in Japan

Category of Natural Parks Potential (MW)

Special Protection Zone 7,000MW (29.9%)

Special Zone I 2,600MW (11.1%)

Special Zone (II & III) 7,700MW (32.9%)

Ordinary Zone 1,100MW (4.7%)

Outside of Natural Parks 5,000MW (21.4%)

Total 23,400MW (100%)

Approximately 80% of energy potential of geothermal is located within the areas of Natural Parks stipulated by Natural Parks Act.

Consequently, Geothermal Power Plants have been developed mainly outside of these natural parks.

However, after the accident at nuclear power plants in Fukushima, Ministry of Environment issued the guideline which lifted restrictions on drilling at national parks.

4

Japan’s Feed-In-Tariff 5

Japanese government initiated Japan’s Feed-In-Tariff(FIT) in 2012 to accelerate the introduction of renewable energy.

Energy source Solar PV Wind power Geothermal powerSmall- and medium-scale hydraulic

power

Procurement

category

10 kW or

more

Less than10 kW

(purchase of excess

electricity)

20 kW or

more

Less than

20 kW

15,000 kW

or more

Less than

15,000

kW

1,000 kW or

more but less

than 30,000 kW

200 kW or more

but less than 1,000

kW

Less than

200 kW

Cost

Installation cost 280,000 yen/kW 427,000 yen/kW 300,000 yen/kW 1,250,000

yen/kW

790,000

yen/kW

1,230,000

yen/kW

850,000 yen/kW 800,000 yen/kW 1,000,000

yen/kW

Operating and maintenance

costs (per year)

9,000 yen/kW 4,300 yen/kW 6,000 yen/kW － 33,000 yen/kW 48,000

yen/kW

9,500 yen/kW 69,000 yen/kW 75,000 yen/kW

Pre-tax IRR 6% 3.2%(*1) 8% 1.8% 13%(*2) 7% 7%

Pro

cure

men

t

pri

ce p

er k

Wh

Tax

inclusive 38.88 yen 41.04 yen 23.76 yen 59.4 yen 28.08 yen 43.2 yen 25.92yen 31.32 yen 36.72 yen

Tax

exclusive36 yen 38 yen 22 yen 55 yen 26 yen 40 yen 24 yen 29 yen 34 yen

Procurement

period

20 years 10 years 20 years 20 years 15 years 15 years 20 years

Strategic Energy Plan in Japan

0

5

10

15

20

25

Hydro

Solar

Wind

Baio

Geothermal

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2013 2030

Renewable

Nuclear

Oil

LNG

Coal

Geothermal0.3%

Geothermal1%

Ministry of Economy, Trade and Industry, METI, announced “Long-term EnergySupply and Demand Outlook” pursuant to the policies of the Strategic Energy Plan,what mentioned Geothermal energy would be increased to 1.0-1.1% of Primaryenergy by FY 2030.

6

+1,000MW

■Our Big GoalPromote the activation of domestic geothermal development.

■ Action assignments Financial supports for cost issue

Reduce exploration risk (Geological aspect)

■ JOGMEC implements three approaches Financial supports

(Subsidy, Equity Capital, Finance, Liability Guarantees)

Technology development

Regional air-borne geophysical survey

7JOGMEC’s Mission

Subsidy

- Up to 50%~100%*of

necessary funds

Equity Capital Liability Guarantees

Exploration Operation

- Geological Survey

- Geophysical

Exploration

- Structural Boring

- Drilling of

Investigation

Well

- Discharge Test

- Drilling of

Production Well &

Reinjection Well

- Construction, Start-up

& Commissioning of

Power Plant

Potential Survey

- Environmental

Impact

Assessment

EIA

Resource Risk

- Up to 50% of equity capital

(JOGMEC is not allowed to

be the largest shareholder.)

- Up to 80% of loan

provided by

financial institutions

Development

Financial Assistance provided by JOGMEC

Outlines of Financial Assistance 8

Air-Borne

Geophysics

By JOGMEC

Regional Survey

- Commercial

Operation

Musa-Dake

Matsuo-Hachimantai

Kijiyama-Shitanotai

Higashihachimantai

Tsunagionsen

Wasabizawa-Akinomiya

Amemasu-Dake Toyoha

Oyasu

Iwakisan-Dake

Noya

Unazuki

Houreinoyu/Oguni

Okushiri

Tateyama

Ashoro

Kamikawa

Amihari

Bandai

Mutsu/Hiuchi

Hakkouda-Hokusei

Obeno

Adopted Projects form FY2012 to FY2015 9

BieiSobetsu/Bankei

Yakumo/namarikawa

Minamikayabe

IwakisanHakkouda-Seibu/Jyogakura

Itoigawa/oono

Isimatsunoen/Oguni

Hiiji-Dake

Noyahorita

Ohiradani

Arifukuonsen

TanabeshihonguSugawara-Binary

Shimogamo

Tsuchiyuonsen-Binary

Higashiizuchoatagawaonsen

Iwatechinetsu

Subsidized projects (47)

Liability Guarantee projects (3)

Currently, more than 40 exploration projects are on the road by electric companies, oil companies, mining companies, local government and other entities.

Equity Capital projects (1) Lake Toya

EsanShimofuro

Narukoonsen

Sakamakionsen

KaikeonsenHosenjionsen

Asosanseibu

Yunotani

Ibusuki/HigashikataIbusuki/healthy-land

Wasabizawa Geothermal Power Plant 10 Wasabizawa geothermal power plant ( in Yuzawa city, Akita prefecture ) under

construction and will be commenced to operate with a capacity of 42MW in 2019. This is the first large-scale project in about twenty years for constructing such a

plant with a capacity of 10,000 kW or more. JOGMEC provide a liability guarantee for 80% (about 21 billion yen) of the total

loan.

Time DomainElectromagnetic Survey

(HTEM)

Regional Air-Borne Geophysical Survey 11

Hachimantai

Kujyu

Kirishima

Yuzawa・Kurikoma

Air-borne Gravity Gradiometer(AGG)

JOGMEC conducts heli-borne geophysicalsurvey that aims to acquire basic data for theevaluation of geothermal resources in order topromote geothermal development start-up.

No limitation in national

parks!

Niseko

Kamikawa

Musadake

Active volcano

Completed

On going or Planed

Research & Development 12➢ Artificial recharge by river water(EGS

technology)

The research and development to stabilize the geothermal production by improving evaluation accuracy of fluid flow, and optimizing artificial recharge technique

This project is carried out under a collaborative research with EPRI (Electric Power Research Institute in USA)

Technology for Exploration of Geothermal Reservoirs

Improvement of exploration accuracy will be expected by applying the seismic method to image the geothermal reservoir structure by solving these issues.

➢ Drilling Technology

Develop the PDC* bit cutter and body for geothermal well drilling and conduct verification test in order to reduce a drilling cost.

*PDC : Polycrystalline Diamond Compact

Yanaizu-nishiyama power plant

Japanese Government has been trying to expandthe developable area, reduce investment risk andpromote understanding of local people.

JOGMEC has a important role to achieve abovemission.

These measures is expected to bring new interestand new investment in geothermal development inthe future.

13Conclusion

Thank you for your attention!

14