TOKYO -- Japan's Obayashi and Kawasaki Heavy Industries will begin using hydrogen to generate power for part of Kobe in 2018, marking the first-ever use of the alternative low-emissions fuel on that scale.

The duo will work with Kansai Electric Power and the city of Kobe to provide electricity to a roughly 25-hectare area housing hotels and the Kobe International Conference Center. Government subsidies will keep electricity prices around current rates. Operational details will be hashed out between the four partners going forward.

A 1,000kW-class turbine-driven power plant by Kawasaki Heavy will be built in the area. A mix of 80% natural gas and 20% hydrogen will be used as fuel to start. Because hydrogen releases no carbon dioxide when burned, the plant will emit 20% less carbon than current models. All-hydrogen operation will be considered in the future.

The electricity generated would be sufficient to power offices holding around 10,000 workers. The plant will use as much hydrogen in a year as is consumed by around 20,000 fuel cell vehicles.

Construction is set to begin in 2017, with a start to production eyed for some time in 2018. The project is seen costing on the order of 2 billion yen ($18.7 million). Kawasaki Heavy has developed specialized hydrogen-driven turbines, and is testing them in the factory. The Kobe project will help the parties involved gain the knowledge and operational expertise to launch similar projects throughout Japan and abroad.

Heat from power generation will be used to help hotels and other facilities provide hot water as well. Use of heat and electricity at various buildings will be centrally monitored. Hydrogen power is seen supplying around half the energy consumed in the area, with Kansai Electric to provide the rest.

Obayashi plans to make urban development incorporating hydrogen power technology a new source of growth. Because stored hydrogen can be used to generate power even if an area is cut off from the larger grid, hydrogen power plants could help make towns more resilient to earthquakes and other disasters.

Kawasaki Heavy, meanwhile, plans to establish a base for importing low-cost hydrogen at Kobe's port by fiscal 2020. The company is also eyeing more orders for power facilities.

Hydrogen fuel cell cars have already hit Japan's streets. Small-scale household hydrogen generators are on the market as well. The emergence of larger hydrogen power plants could help lower prices of the fuel, feeding further growth in the industry.

(Nikkei)