Japan Power Rental Market - Strategic Assessment & Forecast 2023-2028

INDUSTRY OUTLOOK

The Japan power rental market by value accounted for USD 206.1 million in 2022, which is expected to reach USD 263.8 million by 2029 growing at a CAGR of 3.59%. The key factors driving the market are the absence and lack of proper grid infrastructure across all regions and the regular power outages in the region. The rising number of infrastructure development projects has created a great demand for consistent and continuous power supply in the market. The government had initiated various road rail and expansion of airport networks across the nation. The growing construction of hotels and shopping malls in the region has positively influenced industry growth. Further, the government's natural disaster prevention measures and infrastructure outlay had escalated the power equipment renting in the Japan power rental market.

KEY HIGHLIGHTS

• Government measures to prevent and mitigate natural disasters will accelerate rental power equipment demand.
• In 2021, the government launched a five-year plan to accelerate emergency measures for national resilience, contributing to the prevention and mitigation of disasters to have a project budget of USD 117.2 billion.
• In March 2022, Japan's Ministry of Economy, Trade and Industry (METI) allotted its first Power Crunch alert after an earthquake hit in Tokyo Region. In June 2022, Mitsubishi and Japanese Utility Kyushu Electric Power Co collaboration stated that they teamed up to use grid-scale battery storage to reduce the impact of solar curtailment on the island of Kyushu in southern Japan.
• The government is taking necessary actions for disaster management, which prompts the demand for power equipment in the Japan power rental market. According to Japan Meteorological Agency (JMA), in 2022, Japan witnessed eight earthquakes of five or more magnitude. Since the country is prone to frequent natural disasters such as earthquakes, storms, and floods, power equipment is necessary to regain access to power during a blackout or an outage in those disaster-prone areas in the country. This will likely create demand for rental power equipment in Japan.
• The earthquake affected nearly 2 million buildings in Tokyo and the northeastern Tohoku region, triggering blackouts. According to Tokyo Electric Power Co, around 33,600 buildings in the Tohoku region were without power. With increasing energy prices and prone to earthquakes, this region requires backup equipment with present standards for operations, which shall be accurate with purchasing rental power equipment instead of buying. These factors are likely to surge the sales of power rental equipment in the Japan power rental market.

Mining Exploration Program Along With Clean Energy Strategies in Japan to Push the Demand for Leasing Power Equipment

• Amazon will purchase green energy from Clean Energy Connect via the Japanese trading business Itochu for its operations. For this reason, Itochu will build renewable energy supply networks in America and Japan. Corporate power purchase agreements (CPPAs) have been signed with Clean Energy Connect (CEC), a member of the Itochu group, to supply Amazon with renewable energy for 20 years. CEC will spend over 10 billion yen in the grand scheme to build Amazon's modest solar power installations. By 2024, there will be roughly 700 solar projects in Japan, producing about 38,000 kilowatts of green energy. One of the largest CPPAs in Japan is anticipated to be the one with Amazon.
• In addition to the former general electricity utilities, electricity retailers include telecommunications carriers, trading companies, gas and petroleum companies, steel manufacturers, and subsidiaries of former general electricity utilities. Currently, 730 entities have attained retail licenses as of August 2021 in the retail electricity sector, per METI’s Agency for Natural Resources and Energy data. In 2020 the net system energy demand was 821 TWh, of which former general electricity utilities accounted for 81%.
• Japan Gold Corp announced in February 2023 the “2023 Exploration Program” over its 2,920 sq km Japanese portfolio of mineral rights. Six projects have been chosen for development with geophysical surveying and drilling proposed in 2023 outside of the Barrick Alliance. Seven additional projects have been selected for work programs to provide a pipeline of targets to drill in 2024.
• Hokkaido Yakumo Wind Power Project is an 184.8 MW onshore wind power project with 48 turbines, each with a 3.85 MW capacity. The project is anticipated to be commissioned by the end of 2023. The projected budget for this project was USD 399.2 million. Construction, installation, and commissioning of wind and nuclear energy projects will contribute to the Japan power rental market.

Infrastructure Investments by the Japanese Government Stimulate Demand for Rental Power Equipment

• The government increased its focus on upgrading the public infrastructure, including developing airports and railway stations. The government invested USD 470 million and USD 490 million in renovating the Kansai International Airport & Shinjuku Station in 2022. The Kansai International Airport expansion project started in May 2021 and is expected to complete by 2025.
• The Japanese government started maintenance and renovation projects in 2022. It planned to renovate 24,458 bridges, 3,761 tunnels, and road renovation projects at 5,296 locations nationwide. Therefore, the increasing concern about renovating roads, bridges, and tunnel renovation & maintenance projects expects to support renting of power generation equipment in the Japan power rental market.
• It is anticipated that in Shibuya, eight key office and commercial development projects will be completed between 2023-2029. The area immediately to the Tokyo station is planned for launch by 2027. Sakura Stage in Shibuya, a 39-story building development, will be accomplished, and commercial buildings will open by 2024.
• In 2023, several construction projects are underway for the upcoming international event, Expo 2025. The event is positioned to stimulate the Japanese economy after Tokyo Olympics. The government is spending over USD 2.6 billion on construction projects for the Expo 2025.

VENDOR LANDSCAPE

• The key players in the Japan power rental market are Kanamoto, Nishio, Aggreko, Caterpillar, Atlas Copco, Cummins Inc.,, and KOHLER Power.
• In July 2021, Kanamoto signed and expressed its support of the Task Force on Climate-Related Financial Disclosure (TCFD) and joined the TCFD Consortium.
• The top 4 prominent vendors, including Kanamoto, Aggreko, Atlas Copco, and Nishio, account for over 56% of the Japan power rental market share.