Hiroshi Hamasaki, an energy expert at Fujitsu Research Institute, estimates that with stable “feed-in” tariffs, which guarantee renewable energy producers a fixed price for their power, renewable energy generation could surge by 200 times over the next three years.
“There will be a boom close to a bubble, with many companies rushing to enter the market over the next three to five years,” Hamasaki said.
Although experts are enthusiastic, green energy in Japan still faces numerous obstacles and headwinds. Besides the nuclear industry’s vested interests, those barriers include stifling regulations, a power grid ill-suited to accommodating volatile solar and wind energy and the huge upfront costs of building solar or geothermal plants. Both are technologies in which Japan is a world leader, although it has lost out to China in solar cost competitiveness.
To help move things along, the government is easing restrictions on land use for solar and wind power. It also is relaxing regulations on small hydropower projects and regulations on drilling for geothermal energy in national parks.
More crucially, last week it approved feed-in tariffs that are expected to spur investment by guaranteeing higher returns for renewable than for conventional energy.
From July, utilities will be required to buy electricity from renewable energy from providers at a rate of ￥42 (US$0.52) per kilowatt hour (kwh) for solar energy, ￥23/kwh for wind power and ￥30-35/kwh for small-scale hydropower. These preferential rates will apply for 10 to 20 years depending on the energy source.
Most of those higher rates will be passed on directly to consumers.
That business incentive is essential, said Masayoshi Son, a telecoms tycoon and leading proponent of renewable energy.
He said the rates were a “good start,” adding that if prices were any lower, “Japan would likely never see a new energy era.”
Son, founder of telephone company Softbank Corp, set up SB Energy Corp in October last year to promote, generate and sell renewable energy.
The company has begun building five mega-solar plants across the country, with output capacity of 2.1 megawatts to 2.8 megawatts. The first will begin operations as soon as July 1. That is still just a fraction of Japan’s 3.5 gigawatts of installed solar capacity.
The Federation of Electric Power Companies of Japan says member companies are building 20 mega-solar facilities capable of providing 103 megawatts by March 2015.
A vocal critic of Japan’s business establishment for years, Son has publicly blasted Japan’s regulators and utilities for working together to block new entrants and keep the power rates consumers pay high.
However, the heavy political influence once exerted by the country’s “nuclear village” of power companies and regulators is waning, experts say.
“Before, many companies were reluctant to move toward renewable energy because they were afraid of displeasing the utilities, but that has changed,” said Koichi Kitazawa, head of an independent commission investigating the Fukushima crisis and former president of the Science and Technology Agency.
Many of Japan’s biggest corporations, from steel mills and automakers to ceramics and electronics makers, are also developing renewable technologies, often incorporating solar and wind power features into their own offices and factories.