Balance of power: Shift toward renewable energy appears to be picking up steam
Five years ago, Japan introduced a feed-in tariff system in a bid to promote the introduction of renewable energy on a large scale following the collapse of public trust in nuclear power due to the Tohoku earthquake and tsunami on March 11, 2011, and subsequent triple meltdowns at the Fukushima No. 1 nuclear power plant.
Under the scheme, utilities were obliged to purchase solar, wind, mini-hydro, geothermal and biomass-generated electricity at a fixed rate for a fixed number of years.
Feed-in tariffs have been used in other countries, especially in Europe, to kick-start renewable energy investment by major utilities and start-up firms, and to spur technological innovation, thus leading to lower costs for consumers.
In Japan, however, the powerful “nuclear village” of ruling party politicians, local governments hosting nuclear power plants, bureaucrats in the Ministry of Economy, Trade, and Industry, major energy-consuming businesses, the politically connected utilities, as well as influential pro-nuclear academics and media had long viewed renewable energy as unsafe, unstable and insecure in terms of producing a steady supply of electricity at a competitive cost.
Today, however, more and more people in government and industry are embracing the renewable energy revolution. Trade shows in Japan draw thousands of people nationwide, from hundreds of firms, both small and large, and are often supported by both METI and the major utilities.
There remains a high level of hope for the future — albeit tempered by better-understood technological, financial and political challenges — as Japanese entrepreneurs and corporate leaders check out the latest advances in solar panel technology, wind turbines, biomass generation, battery storage technology and smart grids.
A glance at the statistics shows overall growth in renewable energy since the 2012 feed-in tariffs were introduced. That growth has been slower than advocates originally hoped, but there was a sign last year of what may lie ahead.
Japanese newspaper headlines on May 4, 2016, either touched on long-standing political issues such as constitutional revision and the Upper House election that was due to take place that summer or on economic and financial issues such as the high value of the yen and a fall in Asian stocks. There was nothing to indicate that, at least for Japan’s renewable energy industry, it was a historic day.
For about one hour around noon, some 46 percent of the country’s electricity needs were being supplied by renewable sources, according to an August report by the Tokyo-based Institute of Sustainable Energy Policies and based on utility figures. For the entire day, renewables, including large-scale hydro, provided 27.4 percent of the nation’s electricity. Over the course of the entire month of May 2016, renewables, including hydro, accounted for more than 20 percent of the country’s energy supply.
The May 4 level was unprecedented, but exceptional. Official figures from METI would later show renewable energy nationwide, including that from large-scale hydro plants, accounted for about a 15-percent share of the country’s total electricity production in fiscal 2016. Natural gas was the main electricity source (41 percent of the total), followed by coal (30 percent). Petroleum accounted for about 11 percent of the total, while nuclear power, which the government continues to promote, accounted for only about 2 percent.
Japan introduced the feed-in tariff system in 2012 in the face of strong opposition by the utilities, which had their nuclear power plants shut down after March 11, 2011. The central government, especially METI, had legitimate concerns about the high cost and reliability of renewables, but it was also worried that excessive public enthusiasm for them, plus opposition to nuclear power, would create, to use METI’s favorite phrase during the postwar period when it had strong control over nascent industries, “confusion in the marketplace.”
The result was that only five types of renewable energy (solar, wind, geothermal, mini-hydro and biomass) were chosen for the feed-in tariffs. Prices were set high to encourage investors but the feed-in tariff periods for each energy source were long. Solar prices were initially set at ¥42 per kilowatt-hour (kWh), between ¥23 and ¥57/kWh for wind, depending on output, and ¥27 to ¥42/kWh for geothermal. Different rates were set for different scales of small-scale hydro power (all less than 3 megawatts), ranging from ¥25 to ¥35/kWh. For biomass, the feed-in tariffs ranged from ¥13/kWh for recycled wood products to about ¥41/kWh for biogas.
As all of these rates were set sometimes well above the cost to generate renewable-produced electricity, there was an initial rush of new firms, especially in solar, resulting in a lot more renewable electricity. A September report by the Japan Renewable Energy Institute said the estimated amount of electricity generated by approved installations under the FIT in fiscal 2016 was 57 tetra-watt hours — “equivalent to the annual electricity consumption of all households in Tokyo and six other Kanto-area prefectures (18.89 million households),” the report said.
The percentage of renewable energy, including hydro-generated electricity, jumped from about 9 percent nationwide in fiscal 2011 to 15 percent in fiscal 2016 under the feed-in tariffs. However, certain parts of Japan did even better.
In Kyushu, figures for Kyushu Electric Power Co. compiled by the Institute for Sustainable Energy Policies show that renewable energy accounted for 16.7 percent of its electricity. On May 4, 2016, it made up 37.6 percent of Kyushu Electric’s generation, and over the entire month of May 2016, renewables accounted for 24 percent of Kyushu’s electric power.
In 2015, the government, worried about relying too much on one form of energy and anxious to restart the aging nuclear power plants, drew up a long-term energy policy. It set a goal for renewable energy sources to account for between 22 and 24 percent of the total energy mix by 2030, while nuclear power was to account for 20 to 22 percent, with liquid natural gas (27 percent) and coal (26 percent) as the other major sources. Since 2015, however, discussions have been taking place on revising those figures to rely less on nuclear power and more on renewables.
At the same time, the high tariffs offered in 2012 began coming down, with the central government making adjustments to the feed-in tariff scheme each year. In April of this year, a new series of prices was announced.
For 10kW-2MW nonresidential solar power plants, the tariff was set at ¥21/kWh (excluding tax). For nonresidential solar plants generating more than 2,000 kW, a new bidding system has been introduced, with those in the industry setting the tariffs and the highest bid becoming the purchasing price for all. The first bidding is set to take place in October and no one can bid less than ¥21/kWh.
The tariff for land-based wind power will drop to ¥21/kWh in October, while offshore wind will be ¥36/kWh. The latter’s potential has excited many, and over the past five years, industry experts and local governments have estimated that Japan might have hundreds of nuclear power plants’ worth of offshore wind generation it could tap into.
But according to Noboru Chiba, general manager of the Japan Wind Power Association, there are some very tough problems for that energy source, starting with cost.
“While offshore wind farms have made progress in parts of Europe, the emphasis in Japan has been — and will continue to be for a while — onshore wind power first. Offshore wind power comes at a high cost,” Chiba said.
In order for renewable energy to grow more rapidly, the government, industry experts, local governments and academics have all pointed to technical, economic, financial, environmental, legal and political hurdles that must be overcome or mitigated. Here, by main renewable energy source, are some of the major ones:
Japanese newspaper headlines on May 4, 2016, either touched on long-standing political issues such as constitutional revision and the Upper House election that was due to take place that summer or on economic and financial issues such as the high value of the yen and a fall in Asian stocks. There was nothing to indicate that, at least for Japan’s renewable energy industry, it was a historic day.
For about one hour around noon, some 46 percent of the country’s electricity needs were being supplied by renewable sources, according to an August report by the Tokyo-based Institute of Sustainable Energy Policies and based on utility figures. For the entire day, renewables, including large-scale hydro, provided 27.4 percent of the nation’s electricity. Over the course of the entire month of May 2016, renewables, including hydro, accounted for more than 20 percent of the country’s energy supply.
The May 4 level was unprecedented, but exceptional. Official figures from METI would later show renewable energy nationwide, including that from large-scale hydro plants, accounted for about a 15-percent share of the country’s total electricity production in fiscal 2016. Natural gas was the main electricity source (41 percent of the total), followed by coal (30 percent). Petroleum accounted for about 11 percent of the total, while nuclear power, which the government continues to promote, accounted for only about 2 percent.
Japan introduced the feed-in tariff system in 2012 in the face of strong opposition by the utilities, which had their nuclear power plants shut down after March 11, 2011. The central government, especially METI, had legitimate concerns about the high cost and reliability of renewables, but it was also worried that excessive public enthusiasm for them, plus opposition to nuclear power, would create, to use METI’s favorite phrase during the postwar period when it had strong control over nascent industries, “confusion in the marketplace.”
The result was that only five types of renewable energy (solar, wind, geothermal, mini-hydro and biomass) were chosen for the feed-in tariffs. Prices were set high to encourage investors but the feed-in tariff periods for each energy source were long. Solar prices were initially set at ¥42 per kilowatt-hour (kWh), between ¥23 and ¥57/kWh for wind, depending on output, and ¥27 to ¥42/kWh for geothermal. Different rates were set for different scales of small-scale hydro power (all less than 3 megawatts), ranging from ¥25 to ¥35/kWh. For biomass, the feed-in tariffs ranged from ¥13/kWh for recycled wood products to about ¥41/kWh for biogas.
As all of these rates were set sometimes well above the cost to generate renewable-produced electricity, there was an initial rush of new firms, especially in solar, resulting in a lot more renewable electricity. A September report by the Japan Renewable Energy Institute said the estimated amount of electricity generated by approved installations under the FIT in fiscal 2016 was 57 tetra-watt hours — “equivalent to the annual electricity consumption of all households in Tokyo and six other Kanto-area prefectures (18.89 million households),” the report said.
The percentage of renewable energy, including hydro-generated electricity, jumped from about 9 percent nationwide in fiscal 2011 to 15 percent in fiscal 2016 under the feed-in tariffs. However, certain parts of Japan did even better.
In Kyushu, figures for Kyushu Electric Power Co. compiled by the Institute for Sustainable Energy Policies show that renewable energy accounted for 16.7 percent of its electricity. On May 4, 2016, it made up 37.6 percent of Kyushu Electric’s generation, and over the entire month of May 2016, renewables accounted for 24 percent of Kyushu’s electric power.
In 2015, the government, worried about relying too much on one form of energy and anxious to restart the aging nuclear power plants, drew up a long-term energy policy. It set a goal for renewable energy sources to account for between 22 and 24 percent of the total energy mix by 2030, while nuclear power was to account for 20 to 22 percent, with liquid natural gas (27 percent) and coal (26 percent) as the other major sources. Since 2015, however, discussions have been taking place on revising those figures to rely less on nuclear power and more on renewables.
At the same time, the high tariffs offered in 2012 began coming down, with the central government making adjustments to the feed-in tariff scheme each year. In April of this year, a new series of prices was announced.
For 10kW-2MW nonresidential solar power plants, the tariff was set at ¥21/kWh (excluding tax). For nonresidential solar plants generating more than 2,000 kW, a new bidding system has been introduced, with those in the industry setting the tariffs and the highest bid becoming the purchasing price for all. The first bidding is set to take place in October and no one can bid less than ¥21/kWh.
The tariff for land-based wind power will drop to ¥21/kWh in October, while offshore wind will be ¥36/kWh. The latter’s potential has excited many, and over the past five years, industry experts and local governments have estimated that Japan might have hundreds of nuclear power plants’ worth of offshore wind generation it could tap into.
But according to Noboru Chiba, general manager of the Japan Wind Power Association, there are some very tough problems for that energy source, starting with cost.
“While offshore wind farms have made progress in parts of Europe, the emphasis in Japan has been — and will continue to be for a while — onshore wind power first. Offshore wind power comes at a high cost,” Chiba said.
In order for renewable energy to grow more rapidly, the government, industry experts, local governments and academics have all pointed to technical, economic, financial, environmental, legal and political hurdles that must be overcome or mitigated. Here, by main renewable energy source, are some of the major ones:
