Osaka Gas to withdraw from coal-fired power station project

FILE PHOTO: The entrance of Osaka Gas' showroom pictured in Osaka, Japan May 22, 2018. REUTERS/Osamu Tsukimori

TOKYO (Reuters) - Japan’s Osaka Gas Co Ltd said on Wednesday that it will pull out of a plan to build a coal-fired power plant in Yamaguchi, western Japan, citing changes in the electricity market and future business risk.

Osaka Gas had planned to build a 1.2-gigawatt (GW) coal-fired power station in the city of Ube in Yamaguchi prefecture, aiming to start operations around 2026. Electric Power Development (J-Power) and Ube Industries Ltd are partners in the project.

J-Power said it and Ube Industries have agreed to continue the plan to build a coal-fired power plant, but they will halt an environment access process to revise the plan.

“We will consider scaling down the size to a single 600-megawatt ultra super-critical (USC) power plant or building a few 300-megawatt integrated gasification combined cycle (IGCC) plants,” J-Power Executive Managing Officer Hitoshi Kanno told a news conference.

IGCC plants reduce carbon emissions by about 15 percent compared with USC units as IGCC’s power-generating efficiency stands near 50 percent, higher than the most advanced USC’s 43 to 44 percent, Kanno said.

J-Power and Ube aim to revise the plan within two years, with J-Power likely taking over the stake owned by Osaka Gas in the project, he said.

A spokesman at Osaka Gas said the company’s decision reflected concerns over tighter regulations on coal power stations after 2030 and intensifying competition after the liberalization of the power market in Japan.

The move by Osaka Gas comes after other Japanese companies have withdrawn from new coal-fired power projects amid growing global pressure for companies to divest coal assets due to environmental concerns.

Reporting by Yuka Obayashi; Editing by Richard Pullin and Tom Hogue