INTERVIEW: J-Power conducts feasibility study for clean hydrogen/ammonia projects in Australia, Oman

Japan's Electric Power Development, or J-Power, is conducting feasibility studies for its renewable ammonia project in Oman and low-carbon hydrogen project in Australia, as part of its plan to reach net zero by 2050, a senior executive from the generation and transmission firm told Platts.

With a domestic and overseas generation capacity of 26.05GW, J-Power is among the front-bench Japanese players who have made an early start developing large-scale, global energy transition projects involving low-carbon hydrogen/ammonia and carbon capture for power decarbonization.

"Our energy transition strategy should have the right permutations and combinations so that the transition is smooth," said Akira Yabumoto, executive officer – global energy markets and policies (hydrogen and CCUS projects), at J-Power, on the sidelines of the World Hydrogen Asia conference that concluded in Tokyo on July 10.

"There are too many options, and we have to arrive at the right mix as a strategy," Yabumoto said, highlighting that the feasibility studies were part of broader decarbonization studies the company was engaged in to develop its energy transition strategy.

Platts, part of S&P Global Commodity Insights, last assessed blue ammonia CFR, Far East Asia at $399/mt on July 14, up 8.13% from a month ago. Platts also assessed Japan hydrogen produced via alkaline electrolysis (including capital expenditures) at $5.63/kg on July 15, up 4.84% from a month ago.

J-Power, along with Electricité de France and its subsidiary EDF Renewables and Yamna, won a Hydrogen Oman, or Hydrom, project in 2024, where the Oman government will allow the development of a 1 million mt/year renewable ammonia project.

As of 2023, J-Power had 8.58GW of thermal power capacity in Japan, with the rest being significant capacities of renewables, hydro, and unidentified overseas capacities, its website shows.

Record at Australia project

The company's other significant project is in Latrobe Valley in Australia, connected to the Hydrogen Energy Supply Chain, or HESC, which in 2022 demonstrated the first transport of liquid hydrogen from Port of Hastings in Australia to Kobe in Japan.

The Latrobe Valley project, being developed with Sumitomo, involves producing hydrogen using brown coal. CCUS is supported by CarbonNet, which plans to build a 100 km CO2 pipeline to the Gippsland Basin for CO2 storage.

"We are considering various options for the Latrobe Valley project," Yabumoto said. "The various options are regarding the marketing," of the fuel, he added, suggesting derivatives of hydrogen could be produced, based on demand in the Australian or global markets.

J-Power's studies come as Japan evaluates bids for its Yen 3 trillion ($19.16 billion) price-gap support scheme -- similar to the international contract-for-differences arrangement -- for low-carbon hydrogen and its derivatives based on the Hydrogen Society Promotion Act. Bidders for the plan are under wraps.

J-Power has not announced any low-carbon ammonia co-firing yet but wants to make "individual plans for individual plants" for decarbonization based on the location and age of its nine domestic thermal power plants, Yabumoto said.

For instance, plants that are remotely located would need ammonia storage, but that would need the consent of local people, Yabumoto said, highlighting the challenges the decarbonization strategy must address.

Cost challenge

The most crucial challenge is the cost of producing renewable hydrogen/ammonia, and Yabumoto said, "even with the most competitive blue ammonia or green ammonia," it was significant.

The gap between coal at around $100/mt and low-carbon ammonia at around $600-$650/mt, in current circumstances, was impossible to bridge, he added.

He referred to the Japanese government's Long-Term Decarbonization Auction, or LTDA, noting that its third auction will be conducted around the end of this year or the beginning of 2026, which has the potential to address the funding challenge.

Japan is looking to award a total of 7.244 GW of decarbonized power sources in its second long-term decarbonization power auction in 2025, as part of efforts to decarbonize 120 GW of fossil fuel-based power generation sources, following the award of 9.766 GW in its first auction in 2024.

"The biggest issue is providing support to hydrogen and ammonia, and this [LTDA] is different from the Contracts for Difference, as it is just for power," he said, highlighting the subsidy options the company had.

"We are looking at the support we may get, that means, options can be combined and also applied," he said. "There should be more funding support... There should be policy stability and visibility for the future. Without this, the energy transition won't be feasible."

Yabumoto said carbon price alone may not be sufficient to support various clean energy technologies. Industry sources speculate a carbon price of $100/mt in Japan.

CCS initiatives

J-Power has set up a new CCS department, and they are working on an important Western Japan project with the joint venture with ENEOS and ENEOS Xplora, Yabumoto said.

"In case of CCS, we need to develop the CCS storage type and also the shipping or transportation arrangement," he said.

The Japanese government in 2023 chose the Kyushu offshore north and west for a CCS project being developed by ENEOS, ENEOS Xplora and J-POWER to store 3 million mt/year of CO2 from refineries and thermal power plants in western Japan.