Boston, MA -- (SBWIRE) -- 08/24/2012 -- BMI View: The combination of lower base effects and weak construction activity in 2011 have prompted us to revised down our construction real growth estimates for 2011 to 0.5% (from a previous estimate of 2.0%). However, we continue to believe that the robust growth in construction orders following the Tohoku natural disaster in March 2011 would translate into greater construction activity in 2012 and 2013. Economic data for Q112 reflects this view and, as such, we are maintaining our forecasts for Japan's construction sector, with real growth expected to reach 4.1% and 1.8% in 2012 and 2013, respectively.
Key developments in the sector include:
- As of May 5 2012, all of Japan's 50 nuclear reactors have shut down, with the last unit to be shut down being the Tomari No. 3 unit run by Hokkaido Electric Power Co .The construction of new nuclear power plants are also delayed. In April 2012, J-Power had decided to postpone the date for starting commercial operations at its Ohma nuclear power plant, located in Northern Japan. The plant, which was originally scheduled to become operational in November 2014, will have a power generation capacity of 1,383MW. The company has revealed that construction work at the plant is nearly 40% complete; however, work has been on hold since March 2011.
- We have seen several announcements by major Japanese corporations about developing renewable energy, with two of the biggest plans being the construction of a 200-megawatt (MW) solar plant in Hokkaido by telecoms giant Softbank and a 70MW, US$309mn solar plant in Kyushu by a Japanese consortium led by global manufacturer Kyocera.
- The Japanese government is set to provide feed-in-tariffs (FiT) for renewable sources from July 1 2012. These renewable energy FiTs are under review, and rates will be confirmed in May 2012 before being implemented in July 2012. The Minister of Trade and Industry has indicated that utility companies would have to purchase renewable power at a rate of around JPY40 (US$0.50) per kilowatt hour (kWh) for solar and JPY20 (US$0.25) per kWh for all other renewable sources.
- Japanese companies are also considering constructing a new geothermal plant in the area affected by 2011's nuclear incident, reports engineeringnews.co.za. In March 2012, a consortium led by Idemitsu Kosan and Inpex Corporation was deciding whether to build a 270MW facility in Fukushima. The project carries a price tag of US$1.2bn and, if carried out, the facility would become operational in 2020. Japan has excellent potential for geothermal power growth, with a possible 23,400MW of energy available - a massive increase from the 540MW of geothermal power in operation.
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