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A Rising Sun for Renewable Energy

Japan is desperately trying to replace its nuclear-power capacity with renewables. It still has a long way to go.
April 10, 2012

Japan is a laggard on renewable energy, ranking well below the top 10 countries in both annual installations of renewable equipment and total renewable generating capacity. That, however, is set to change under a new energy policy that’s been taking shape since last year’s meltdowns at Fukushima.

Solar on the upswing: Japanese housewife Mika Hiroshima dries a towel outside her solar-powered house in Ota, Japan.

Some major projects are being planned. Among them are a 200-megawatt solar installation that Tokyo-based Softbank announced late last month. Meanwhile, Japanese nuclear-reactor supply and service firms such as Toshiba, Mitsubishi Heavy Industries, and Hitachi have stepped up their renewable energy sales targets and investments.

The changes are happening because all but one of Japan’s 54 nuclear reactors are off-line. And they are not coming back soon, because municipal and provincial authorities—facing strong anti-nuclear sentiment—must approve the restart of reactors following safety tests. “The Japanese central government has essentially thrown in the towel on getting nuclear restarts,” says Andrew DeWit, an energy policy expert at Rikkyo University.

Whether the country will be able to progress as fast as many would like remains to be seen. Government-mandated premium prices for renewable energy, set to go into effect in July, have yet to be disclosed. Another open question is whether Japan’s electric power sector, including its grid, is prepared to support a massive scale-up of highly variable renewable energy.

Even under its pre-Fukushima energy policy, the country had set a goal of expanding renewables to 21 percent of its power consumption by 2030, up from 9 percent in 2008. Last April, with nuclear power suddenly on its knees, the Ministry of Environment released an assessment of renewable resources suggesting that Japan could move faster and go farther.

The ministry estimates that 150 gigawatts of solar could be installed on public, commercial, and industrial buildings and on low-value urban lands such as capped landfills and abandoned farmlands. That alone is equivalent to nearly three-quarters of Japan’s current power-generating capacity. Wind power potential, meanwhile, was estimated at 280 gigawatts onshore and 1,600 gigawatts offshore. Geothermal and small-scale hydropower could generate 14 gigawatts.

How much will be installed, of course, is a matter of economics. Government incentives should outweigh the higher costs of renewables to a large extent, predicts a report by Bloomberg New Energy Finance last month. Yugo Nakamura, a Tokyo-based analyst for Bloomberg, estimates that generation from the most competitive solar project in Japan will cost $401 per megawatt-hour, nearly double the international average. Japanese wind power, meanwhile, is more than double the international average at $172 per megawatt-hour, according to Nakamura.

But Nakamura and colleagues are betting that Japan’s new pricing system, which guarantees a premium price for every kilowatt-hour of renewable energy exported to the grid, will cover the higher costs.

Investors could invest up to $37.5 billion by 2014, spurring 10 gigawatts of new solar—the energy equivalent of three nuclear power stations. That would make Japan the world’s third-largest solar market. Bloomberg projects 0.7 gigawatts of new wind by 2014, but says growth should pick up thereafter.

The Japanese government is also funding development of novel options for renewable energy. Those include floating offshore turbines adapted to Japan’s deep coastal waters. Marubeni and Tokyo University are leading an industrial consortium funded by the Ministry of Economy, Trade, and Industry that plans to install three floating wind turbines totaling 16 megawatts in capacity some 20 to 40 kilometers offshore of Fukushima Prefecture, as well as the world’s first 66,000-volt floating power substation.

Power experts say that limited interconnections between utilities will become a challenge as renewable energy expands. The 10 utilities that control Japan’s grid have resisted such upgrades, which erode their effective monopoly over power generation in their regions. But DeWit see the utilities’ power weakening. “I haven’t felt this optimistic about Japan for years,” says DeWit.

Change can’t come fast enough. In the short term, Japan is actually moving in the opposite direction, substituting on carbon-heavy coal, oil, and gas. Utilities produced 40.5 percent more power from fossil fuel this winter than they did the previous winter. As a result, consumption of crude oil almost tripled, and natural gas use increased by 34 percent.

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