Reporting on Renewable Energies in Japan.

Solar PV Energy in Japan

Spurred by the 1973 oil crisis, Japan led the global field in Green Energy R&D until the end of the 90s, when research budgets for renewable energies were cut. Since then and until the Fukushima accident in March 2011, the Japanese government has concentrated on nuclear and solar power generation, providing little support for other types of alternative energy.

In the present context of policy change, we now can state that:

• the nuclear power production will probably never be back to the pre-Fukushima level,
• with or without nuclear, Renewable Energies will expand,
• diversification of energy sources, as well as quick distribution of technology for peak suppression and back up power, has become important.

As Japan’s hydroelectric potential is nearly saturated, since 2011, the Japanese government has been pushing other types of Renewable Energies (wind, solar, geothermal) by:

• Easing regulations and restrictions on renewable energy projects
• Requiring Japanese Utilities companies to buy electricity from renewable energy providers through a very generous Feed-in Tariff (FIT) system operated since July 2012.
• Encouraging private companies and industries to invest and install solar (photovoltaic) panels.

The government objectives in terms of electricity production from renewable sources in Japan are also very ambitious: triple 2010’s green output by 2030 and reach a share of 30% of the total electricity production in 2030. The bulk of the growth efforts will be born by Solar PV, Wind Energy and to a lower extent, Geothermal Energy. Marine Energy growth seems to be more considered as a long-term project.

As a result, the number of solar PV (Photovoltaic) plant and wind farm Projects has expanded and the whole Renewable Energy Industry has boomed. Japanese conglomerates and shipbuilders, engineering contractors, trading companies and energy companies have moved into the renewable energy business.

However, Grid connection limitations could constitute a serious brake to this growth, as in Hokkaido where, in June 2013, developers of solar projects were forced to rethink their plans, as 70% of received applications for large-scale solar plants (87 projects out of a total of 1568 MW) were turned down.

BRAKE: since early 50s, Japan’s 10 Electric Power Companies (EPCs) reign over their respective geographic areas and networks. The interconnection between their grids are underdeveloped.

“The main regional utilities are named as a key obstacle to a shift to more renewable energy deployment in Japan” (German magazine Der Spiegel)

or, to quote Kosuke Kurokawa of The Japan Council for Renewable Energy,

“Regional power utilities are not interested in competition and simply won’t work together.” (Source: ThinkGeoEnergy.com).

The Wind Energy segment

Japan has more than 20 years of research on floating structures, including for offshore wind. Various designs have been produced at a concept stage. Much of this research has been funded by the Japanese government but has not been commercialized by the Industry, as yet.

The situation has however changed positively now and recent Pilot Projects, under the supervision of NEDO, are looking for alternatives to onshore wind power installations.

(+): Marine Wind is typically strong and steady. Further, Japan’s territorial waters are much larger than its land mass, making it ideal for offshore wind power generation.

(-): Power output is not stable and there are Possible Storm Damages. Further, on land, in Northern Japan, turbines struck by lightning and damaged by earthquakes/typhoons/freezing constitute a serious issue. As accidents and security concerns are increasing, popularity for onshore wind power is in decline. Finally, it is necessary to cut the costs of installing/servicing and repairing wind turbines in order to fully take advantage of the generous FIT incentive system.

There are many Threats to the development of wind power:

Possible price competition from Chinese wind turbine manufacturers. The complex topography of Japan and restrictions on onshore/offshore locations are serious obstacles. Last but not least, there are environmental hazards for humans (health and security), for sea life and for birds.

But there are also opportunities for companies and investors:

About 75% of turbines are imported. There is a demand for high-performance turbines but product adaptation to the harsh Japanese weather conditions is critical. There is also a need to develop cost-effective floating technology. Finally, the lack of local service and maintenance could become a profitable business opportunity for subsidiaries of EU wind power companies.

The Solar Energy segment

Japanese solar energy companies have been making solar panels in Japan for a long time and have been leading the solar markets for the last few years. The country is among the world top countries with the most solar panels installed and connected to the grid.

(+): Modularity, high reliability and low operation costs

(-): High cost of installing solar panels, as well as of producing them in Japan, compared to China and other Asian countries.

There are threats to the development of solar power:

Difficulties in land procurement, possibly leading to speculation and a new bubble. Japanese makers have lost market share worldwide (including within Japan) due to the increase of low cost Chinese solar panels, which are becoming commodities, as they become largely interchangeable.

There is always space for manufacturers with innovative concepts or high-performance products. But there are especially opportunities for large European solar system integrators with extensive know-how on large scale PV systems.

The Geothermal Energy segment

After the first oil shock in 1973, the MITI initiated the “Sunshine Project” in order to promote new energy, including geothermal R&D. Most of the existing plants were built in the 70s, 80s and 90s. In 2002, research and development funding for geothermal energy was severely cut.

However, about 80% of geothermal turbines in the world today are using Japanese technology, mainly from MHI, Toshiba and Fuji Electric. Domestic development has been very slow since then but surveys for new power plants in Japan have been restarted.

(+): Steady supply and important potential. Lower Operating and Energy Costs.

(-): High Capital and Development Costs. High costs and risks of drilling: Potential risk of earthquake as an unwanted effect, while drilling. Environmental Impact: high noise levels (drilling, plant operation), potential pollution of surface and underground waters, as well as air quality, solid waste disposal … Geothermal Projects are very much long-term based and there is potential exhaustion of the geothermal sources one day.

There are many threats to the development of geothermal power:

Slow Environmental Assessment Process. Opposition of regional Hot Spring Unions in Japan against large geothermal plants. Best fields are generally located near or inside National Parks or Spa Resorts.

But there are also opportunities for companies and investors:

In 2013, METI was considering at least 21 geothermal projects and in March 2012, the Bureau of Natural Environment of the Environment Ministry relaxed its regulations permitting geothermal power generation within its designated parks.

There has recently been a lot of interest for Geothermal Heat Pumps (GHP), which could be used within Smart Community Projects for local use energy generation, as well as for micro-binary systems generating electricity from low-to-medium temperature and progressively accepted by some “onsen” establishments.

The Marine Energy segment

Let us focus on Wave and Current/Tidal Energy in Japan. Due to marine testing activities decreased in Japan in late 90s, Japanese Research has unfortunately fallen behind, while other countries like Britain, Norway and Portugal continued their research.

(+): Relatively steady supply and vast potential (Japan is the world sixth largest country in terms of the area of territorial waters and exclusive economic zone).

(-): High Capital Costs, as marine devices have to be robust, able to withstand heavy seas and high winds. Wave and Current/Tidal Power in Japan are still in their infancy. There are limited locations and some design limitations (future marine farms will need many small generators, instead of a few very large generators).

There are many threats to the development of marine power:

Small-scale installations may present hazards to shipping navigation and fishing. There are also environmental hazards for humans and for sea life to take into account.

The absence of long-term testing sites due to the lack of consent of local fishery workers as well as the shortage of funding for small-scale venture firms are critical obstacles.

There are however opportunities for EU investors to fund some Japanese small-s

cale venture firms, in need of cash for their projects to continue or to build prototypes.

Which technology or market segment has most potential?

Japan has specific topography and environmental factors to take into account, when debating Energy Policies for the future.

The limited availability of land may put a hold to the development of mega-solar farms in the long-term, hence the importance of developing Residential and Business PV energy. Solar business might as well be a “short-term fix”, while other technologies are reaching a maturity phase with the help of public funding and industry resources.

Wind Power is probably next in line, especially offshore wind applications, as popularity for onshore wind power is declining. Indeed, turbines struck by lightning and damaged by earthquakes/typhoons/freezing constitute a serious issue, as well as accidents and security concerns are increasing. Even for offshore wind, there are environmental hazards for sea life and for birds to consider.

The solution currently appears to be in the sea, above the sea level (offshore wind/wave power) or under the sea level (current power).

In a more long-term approach, in a country where hot springs flourish, Geothermal Energy may contribute an important role. However, again, Environmental Impact issues have to be taken seriously into consideration: national park preservation, high noise levels (from drilling and plant operations), potential pollution of surface and underground waters as well as air, risk of secondary earthquakes, solid waste disposal …

This is why, technologies like EGS (Enhanced Geothermal Systems), Micro-binary systems and GHP (Geothermal Heat Pumps) are crucial. This would promote big plants outside of national park areas and small plants/systems within protected areas.

At the moment, Marine Energy is the least developed but has the most potential in the future, provided technological improvements are made: marine devices have to be robust, able to withstand heavy seas and high winds over periods of time. As there are some design limitations, future marine farms will probably be made of many small generators, instead of a few very large generators. Sea life protection and cohabitation with existing fishing communities are key.

Therefore, there is no standard solution but a portfolio of solutions, as the “Energy Mix”. Therefore, it is necessary that each region of Japan takes into consideration the various topography and environmental factors.

As a conclusion, let us quote Professor Takeshi Kinoshita of Tokyo University:

“Different communities should adopt the type of renewable energy most suitable for each area.”

Hoping this post has been helpful, I wish you the best in your Green Energy business. Would you need more help, please feel free to contact us at coaching@gbmc.biz for coaching sessions, at seminar@gbmc.biz for cross-cultural seminars, at info@gbmc.biz for consulting or other enquiries.

Philippe and Motoko Huysveld, GBMC

www.gbmc.biz, www.gbmc-blog.biz

Source: Renewable Energies in Japan, Philippe and Motoko Huysveld, Market Report (75 pages) for the EU-JAPAN CENTRE FOR INDUSTRIAL COOPERATION, December 2013.