Japanese renewable power producer Renova Inc (TYO:9519) announced on Friday that the 75-MW Omaezakikou biomass plant had its commercial operation date postponed for the second time till March 2025.
Originally, the plant was set to come online in July 2024 and then the milestone was rescheduled for October 2024. The reason remains the same -- Renova needs additional time for final adjustments to the boiler and turbine to ensure stable operation.
Plant's Impact
According to the company's website, the plant will use wood pellets, and palm kernel shells (PKS) as fuel sources. Once completed, it should be capable of generating around 530 million kWh per year, enough to meet the demand of some 170,000 households.
Financial Impact
Japan’s Renova Inc. has announced that the launch of the Omaezakikou Biomass Power Plant has been rescheduled to March 2025 from October 2024 due to additional time needed for final adjustments to the boiler and turbine facilities to ensure stable operation.
The plant is owned by Omaezakikou Biomass Energy G.K., an equity method affiliate of Renova.
In a statement, Renova said it has rescheduled the feed-in-tariff (FIT) period of the 75-megawatt project. It has also received liquidated damages from the EPC for a certain period of time due to the change in the commencement of commercial operation based on the contract.
Due to this change, Renova expects the revenue of Omaezakikou G.K. for the current fiscal year ending 31 March 2025 to decrease by approximately $34.95m (JPY5b). However, the impact on operating income and profits below operating income are expected to be limited.
$1 = JPY143.25
Conclusion: Delaying the Inevitable
While the delay is a setback, it's crucial to prioritize stable operation and ensure the plant's long-term success. The project's potential to provide clean energy to 170,000 households highlights the importance of biomass power in Japan's transition towards a more sustainable energy future.
