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Japan is not commonly regarded as a significant player in geothermal energy. Yet the country boasts an enormous resource in its thermal regions, spread throughout the country.

In addition, several Japanese companies are among the world leaders in the supply of geothermal energy generating plants and systems.

In May 2011, the Japanese Prime Minister announced that plans to expand the country's nuclear capacity would be put on hold. Instead, the country would seek to develop renewable energy.

The Prime Minister set a target - by around 2021 Japan should be receiving 20 per cent of its power needs from renewable energy sources, more than double the current figure (which mainly comprises hydroelectric power).

As I have already noted, he put the stress on solar energy, in which Japan is a technological leader. He noted that solar power is steadily falling in price, and should cost one third of what it does now by 2020, and one sixth of the present price by 2030.

So geothermal energy is not expected to play a hugely significant role in the new Japanese push into renewable energy. Nevertheless, it is likely that efforts to harness the country's impressive thermal resource will be accelerated over coming years.

Depending upon evaluation methodology, Japan ranks around third in the world in untapped geothermal potential, with an estimated 23.5 GW available.

At present, Japan has 18 geothermal power plants - responsible for 0.3 per cent of the country's electricity - and it ranks eighth in the world for installed geothermal capacity, with about 540 MW. For comparison, the United States ranks first (3,086 MW), followed by the Philippines (1,904 MW) and Indonesia (1,197 MW).

However, by and large its thermal regions have been transformed into onsen – hot spring resorts - which are a hugely significant phenomenon of Japanese culture. Many of the best resources are in national parks and in popular tourist spots.

Indeed, reverence for hot springs is such that one geothermal energy expert declared that they are regarded as almost holy by the Japanese.

In addition, it can take five to 10 years to fully develop a new geothermal project, and Japan is now in a hurry.

Nevertheless, Japanese companies have expertise in this field. In particular, four corporations stand out. They are all large companies, with a wide plethora of activities. Geothermal energy is just one part of their business.

But if the Japanese drive into renewable energy becomes a major stock market theme over the coming decade, then two companies listed in the US will be among the significant beneficiaries.

Toshiba Corporation (OTCPK:TOSBF) is a leading producer of geothermal plants, and has supplied customers in the US, Mexico, Costa Rica and the Philippines.

The company is also heavily involved in other areas of renewable energy. It has become a major supplier of photovoltaic systems for large, megawatt-scale solar projects, a business it launched in 2009. At the time it announced that its target was around $2 billion in annual sales by 2015.

It has since been involved in supplying more than 100 public and industrial facilities.

Among its current projects, it is building one of the world’s largest solar power stations in Bulgaria. The $1.2 billion development is due for completion by March 2012.

Domestically, in 2010 it entered the residential solar photovoltaic business, with systems that include photovoltaic modules, power conditioners and color displays. The modules are supplied by SunPower Corporation of the US.

Toshiba has set a target of winning 10 per cent of the Japanese residential solar system market by 2012.

To date, Mitsubishi Heavy Industries has been the only Japanese company to achieve strong global sales for wind turbines. However, in May 2011 Toshiba announced a new alliance with South Korean wind power equipment manufacturer Unison Company to jointly develop and market advanced new turbine infrastructure.

The other interesting company is Itochu Corporation (OTCPK:ITOCY), which is a partner in the huge $1 billion, 330 MW Sarulla geothermal project in Indonesia with Kyushu Electric Power and Ormat of the US.

In May 2010 Itochu announced an agreement to work with General Electric on a variety of renewable energy projects, including geothermal.

In addition, the company is involved in solar activities, with participation in wafer manufacturing activities in Europe. It is part owner of solar plants in Spain.

It is also the leader in the marketing of solar generation systems in the US through its ownership of SolarNet Holdings, Solar Depot and DC Power Systems.

Source: 2 Geothermal Energy Stocks for Japan's Renewable Resurgence