Cross-border and 'blended': Japan's JERA Nex eyes Asia-Pacific energy transition

JERA Nex, the global clean energy specialist launched earlier this year by Japan's JERA group, is homing in on new opportunities in the Asia-Pacific region around what it sees as a move towards cross-border interconnection and 'blended' options that shift fossil-centric power supplies green-wards.

The Japanese company holds about 3.4GW of renewables capacity today — taking into account projects that have at least reached a final investment decision — and aims to lift this to 20GW by 2035. The company is the renewables arm of JERA, Japan's biggest power company since it was formed by a 2015 merger between a unit of Tokyo Electric Power Company and Chubu Electric Power.

JERA Nex has a broad strategy geared toward owning, operating and developing a broad range of renewable energy projects includes investing in complementary companies and businesses, such as Zenobe, a UK battery storage outfit.

JERA Nex is headquartered in London but is present in 18 different markets, spanning the Asia-Pacific region, including Australia, as well as Europe and the US.

Unsurprisingly, APAC features prominently in these expansion plans, including growth markets such as Bangladesh, the Philippines, Thailand and Vietnam.

“The idea is to look to see how we can leverage existing investment platforms, existing relationships and market presence,” says Mark Leslie, JERA Nex regional director for APAC (onshore).

Leslie notes that this region is home to half of the global population, with broadly younger demographics than Western markets, with a rising demand for electricity and where national climate commitments are proliferating.

He referred also to electricity system reforms happening in locations such as China Malaysia, Taiwan and India. “These really provide good incentives for developers to drive project development and for selling power, especially directly to companies,” he stated.

Cross-border clean power

In his assessment of APAC opportunities, presented at an online briefing, Leslie commented on the diverse range economies across the region and, in many cases, a dearth of interconnections.

He noted, however, that some nations in the region are starting to address this.

“We're really looking to see this growth in cross-border power generation and trading happening in the future, and that's going to create a huge amount of opportunity for newer technologies and newer commercialisation options. JERA already has positions ready long term in a lot of these countries," he added.

Leslie, who is based in Singapore, noted that data centres have proliferated there even though it is a state which has little prospect of meeting these companies' demand for green electrons from domestic sources of renewable power. Internet behemoths such as Amazon, Google, Facebook and AirTrunk are among the companies that have set up data centres in the Lion City.

“There's an issue where the economy and the demand is here, but there isn't really a solution domestically to meet it. So recently the [Singapore government] allocated six cross-border trading licenses, which would allow different companies to import electricity into Singapore from other jurisdictions," he commented.

Similar developments towards cross-border trading capacity are taking place between Vietnam and Laos, and Bangladesh and India.

“So we're starting to see the opportunity where countries that may not have enough resource where they need it, those resources are being filled, potentially through cross-border trading with other countries," says Leslie.

Blended power?

The company forms part of JERA's Group three-pillar approach to the energy transition, which also includes low-carbon fuels and LNG projects.

JERA Nex sees itself as forming part of a response to the diversity of demand in the APAC region that addresses the fact that some markets are moving away from emissions-intensive profiles, where coal and fuel oil have often dominated

Taking this into account, Leslie says that JERA Nex is studying ways that thermal assets such as LNG and combined-cycle gas generation can be brought into play as part of an offer that can complement rather than merely compete with green electrons.

“As we go forward, I think demand is going to be about looking for profiles. Some demand is going to want 100% green profiles, others 85% green. Other profiles will want firm, but with some kind of blend of green attributes and renewable cost structure ," he pondered.

“In the future, and particularly in this part of the world, where there are less interconnected grids and where LNG has to play a role in the energy transition, we really want to look at how we can create these blended profiles to allow the off-takers that need the different firm power, to have the attributes they need,” he said, adding that some of the blending may occur later on, as a result of the different development speeds of different assets".

JERA's new projects included a partnership with United Arab Emirates utility TAQA to develop a industrial steam and electricity cogeneration plant in Saudi Arabia, with provision for carbon dioxide capture.

But Leslie also stressed that renewables are becoming more competitive in the APAC region and can ultimately compete head-to-head with fossil fuels.

"This is not just about doing the right thing, but it's also economically viable now, which is really important for this to make it a sustainable business model,” he said.

It is important to appreciate different perspectives on such topics, argued Richard Scott, VP Global Construction & Development (Onshore). “Whereas it would be anathema to think about introducing a combined offshore wind and LNG project in the UK or other European markets, it actually makes a lot of sense [in regions] where you are potentially displacing much more carbon intensive technologies," he said.

“We are having some really interesting conversations with governments about this specific opportunity in certain countries where there's that still heavy reliance on much more carbon intensive technologies, and by introducing a combination of LNG first then renewables in a blended manner, it can really change the dynamics of how power is sourced, and also the competitiveness of it as well as the cleanliness of it.”

The breadth of its APAC footprint means JERA Nex also sees possibilities for responding the supply chain challenges as the global trade evolves in new directions.

"We have seen it move from a search for the low cost sourcing to a preference for multiple areas, and we're starting to see different markets in Asia-Pacific drive new manufacturing of different renewable products like inverters and solar PV panels and things like that," said Leslie.

"So we think that the localised manufacturing can actually help drive growth and and economic returns in this area." Leslie added.