Post-Fukushima07 / 2011, Markets & Trends | By: Jonathan Gifford
Japan: Post-Fukushima Japan is a vastly different place to the one which committed to a nuclear energy future. Recent government announcements regarding a drive towards solar research and development and a feed-in tariff scheme with strong political support all indicate Japan’s energy future will result in a commitment to renewable sources with solar and PV at its core.
“During the hot days in August, I use the air-conditioning almost every day,” is how matter-of-factly Japanese student Ami Urushiyama describes her household’s vigorous energy consumption, “but others turn it on whenever they come into a room, when they wake up to when they get home.” Living in a modern apartment on the tenth floor of the southern city of Fukuoka’s many residential tower blocks, this kind of electricity usage is an every day reality for many Japanese. But it’s also a lifestyle that is rapidly being re-evaluated as the summer sets in and as post-Fukushima Japan re-evaluates it’s energy future.
Along with energy austerity measures, many different realms of Japanese society are re-evaluating future energy sources, signaling a new dawn for renewables, with solar leading the way. Public policy and, to a degree, opinion was in concert in pre-Fukushima Japan with the twin energy “pillars” of fossil fuels and nuclear propping up the Japanese electricity and energy policy. This fact was formalized in the government’s Basic Energy Plan, released in June 2010. The Energy Plan broadly stated as a goal that nuclear power was to provide 53 percent of Japan’s electricity needs by 2030. This was to be achieved by building at least 14 new reactors and increase utilization rates of existing reactors by about a third. However, so profoundly has public sentiment shifted in the wake of what energy policy expert Andrew DeWitt from Tokyo’s Rikkyo University describes to pv magazine as “the recent series of shocks” that the nuclear energy pillar has begun to topple. The shocks DeWitt talks of were the combined effects of the March 11 earthquake, tidal wave, meltdown and subsequent failures to contain radiation leaks at the Fukushima Daiichi power plant. These shocks continue to resonate.
Responding to this shift in public opinion away from nuclear, Japanese Prime Minister Naoto Kan ordered a “review from scratch” of the Basic Energy Plan. This review resulted in the undermining of the nuclear pillar and the addition of two further energy pillars, renewables and energy conservation. In light of this change, Japan watchers and the renewable energy world followed Kan’s announcements closely as he took the world stage during the G8 conference in France in May. Speculation abounded as to what commitments Kan would make. Some commentaries suggested he would announce a requirement for new buildings to incorporate solar electricity capacity, while others predicted a 15-fold increase in Japan’s use of solar power by 2030.
While these exact predictions didn’t pan out, on May 25, speaking at a ceremony to commemorate the 50th Anniversary of the OECD in Paris, Kan committed to the country generating 20 percent of their electricity by renewables by 2020, ten years sooner than the former Basic Energy Plan had envisaged. “We will elevate renewable energy to one of society’s core energy sources.” Nandakumar Janardhanan, Energy Policy Researcher in Japan, sees the goal as ambitious, yet attainable: “The government is giving a lot of confidence that they can attain that target.” Janardhanan adds to pv magazine that the influence of statements like this should not be downplayed. “What we see in Japan is that the government has a very big role in creating some sort of action among people.” The key to how the 20 percent by 2020 renewable goal could be reached, lies in big boosts to research and development. At the OECD event, Kan outlined the direction of the plan, “we will mobilize all our resources to break the barrier to practical use due to such aspects as technology and costs.” He then went on to single out solar and photovoltaic technology as being the most promising sector. “As a first step for this purpose, we aim to lower the cost of solar power generation to one third of its current level by 2020 and to one sixth by 2030.” Kan continued, “Moreover, we aim to equip solar panels on all the roofs of 10 million houses capable of doing so.” The landmark announcement caused a minor political row within Kan’s own government, with the Ministry of Trade and Industry (METI) Fukushima Daiichi – the body behind the original Basic Energy Plan – revealing that the Prime Minister had not consulted it before announcing the bold ambition. However, researcher Janardhanan tells pv magazine that both the technological innovation and focus on PV is entirely consistent with the data he’s analyzed. “Currently, if you look at the renewable energy sources in Japan, there’s hydro, bio mass, geo-thermal, PV and wind. Now geothermal is there, biomass, wind but there are certain major issues with these sources. So a lot of importance is given to solar installations.”
Plugging in innovation
Janardhanan sees Kan’s goal of driving down the cost of solar as entirely realistic. The Fukushima disaster, he says, “has to be seen as a constructive destruction.” He continues that Japan could possibly become technology leaders in the photovoltaics and renewable sectors in the next five to ten years. “I don’t know how the government is planning to do it, but there is a lot of potential in technology development and innovation.” It seems that the Japanese PV industry also sees these targets as being in attainable. Brooks Herring, Executive Vice President of Communications and Operations at Solar Frontier, tells pv magazine that while the drive from government is strong, it is in line with their expectations. The PV targets set by the government, he says, “are aggressive, but when the Japanese set aggressive targets like that, they tend to meet them.” Herring continues, “and it’s our plan to continue to drive down the costs of systems within Japan so that grid parity is reached at much faster pace.” Sylvia Tulloch, one of the founders and Managing Director of Dyesol, says, “I think that there’s a realization in Japan that they have to reassert themselves into the industries of the future and they see solar as one of those.” The Australian based dye-sensitized solar cell technology developer has received a government grant allowing them to develop their technology in a Japan-based facility that will open next month.
Goals for reducing energy and electricity consumption have been repeatedly called for by the Prime Minister. However, there appear to be limits as to how big the energy savings on the demand side can be. Japanese industry is already praised for their energy efficiency, with consumption per unit of output half that of America and Europe and only an eighth of China’s. Japan’s industrial sector uses roughly the same amount of energy today as it did in the early 1970s, despite the economy having more than doubled in size. “There is a maximum saving level that any one country can do and Japan must be close to achieving that level,” says Janardhanan. The commercial and domestic side of Japanese energy consumption may have more abilities for cuts but they may also be a valuable source of energy generation through renewable methods and in particular PV.
It’s also not only public sentiment and government policy that is departing the “nuclear village”, says researcher Andrew DeWitt. Prominent business leaders and some major trade unions have done so also. The Japanese Trade Union Confederation (Rengo), the country’s major trade union, had previously been vigorous in its support of future nuclear development. However, last month they announced a reversed position. “Hitherto they had been committed to increasing the number of nuclear facilities,” comments DeWitt, “and now they’ve come out and said that is no longer a part of our agenda, we’re committed to a freeze!” The Rengo is a powerful economic and political base within Prime Minister Kan’s Democratic Party and adds further weight to his solar commitments.
Kan has also had support for the new agenda from influential business leaders. Mayasoshi Son, arguably one of Japan’s most innovative and successful businessmen and unquestionably the country’s richest man, has not only lead the march away from nuclear, but has laid out ambitious plans for Japan’s solar future. Son had a public dinner and the ear of the Prime Minister and no doubt would have raised his plans to build ten large solar plants in partnership with local authorities. Son’s Softbank company has long supported solar through grants and investment and his plan to form an “Eastern Japan Solar Belt” is on the kind of scale he is familiar with: big.
Each plant would cost about 97 million U.S. dollars and during construction would also help revitalize tsunami-affected regions. Exactly how the scheme will be funded is unclear, but some funding is expected to come from Son and his company, in addition to local authorities and borrowed funds. The Director of the non-profit Institute for Sustainable Energy, Tetsunari Iida, worked with Son on the plans for the solar plants and said that Japan should aim at supplying 100 percent of its power from renewable sources. “It’s an ambitious goal, but I believe we should work for it,” he told the Japan Times.
Japan’s new feed-in tariffs
Dramatically enhanced feed-in tariff (FIT) schemes are also a big part of Japan’s increasing solar ambitions. A FIT scheme is before the current session of the Japanese parliament, the Diet, and some believe PV now has sufficient momentum in Japan to see it through. On April 1, a FIT proposal of special interest was announced, which would increase the non-residential FIT by over 50 percent. This indicates the Japanese government sees the non-residential market as key for increasing solar capacity. In 2009, this market comprised only ten percent of the PV market and such a dramatic increase in FIT rates could see the solar plant sector blossom. Japan’s Solar Frontier confirmed with pv magazine that they are receiving increasing numbers of enquiries regarding solar plant size projects and that they are supplying a ten-megawatt project in the Yamanashi Prefecture, the first of its kind in the country.
Goekhan Demirci, Research Analyst with online PV trading platform pvXchange, tells pv magazine that Japanese market growth is likely to be supplied by domestic manufacturers. “They have Sharp, Sanyo, Kyocera, Mitsubishi and Solar Frontier,” Demirci continues, “but what we have seen this year is a trend where manufacturers from China and Taiwan are entering the Japanese market and trying to grab market share.” The new FIT scheme also appears to have inspired major power players in Japan towards developing their PV business. Last month, Toshiba reported that it would postpone the delivery of nuclear technology exports while also investing into solar technology and smart grids and meters. The company also announced it would buy Swiss smart meter manufacturer Landis+Gyr for around 2.4 billion U.S. dollars. Mitsubishi, with significant business in coal fired electricity generation and technology, has been reported in the financial press as looking at building large-scale solar power plants in Japan, the first of which is said to be located in the Kumamoto Prefecture.
Funding the shift to PV
Finance is a crucial factor for PV development and in this field too positive signs are developing in Japan. One of the largest credit unions in Japan has not only officially come out in opposition to nuclear power, but they are actively structuring products to facilitate PV installations. “Johnan Shinkin Bank has made a commitment to design financing initiatives and financing packages to facilitate renewables,” explains Rikkyo University’s DeWitt. Describing the new financing structures as “providing support on equipment investment for alternative energy for our customers,” the Johnan initiative is seen as a bold one in Japan, where finance can be slow to support more progressive environmental measures.
It seems many factors are combining at present within Japan to create a perfect storm, in a positive sense, for PV development. As DeWitt tells pv magazine, “with this [20 percent renewables] target and a ramped up feed-in tariff, probably Japan will blow past the performance of a lot of other countries.” As with all politics and societies, the view to Japan’s solar future isn’t entirely clear, but as DeWitt surmises, if you’re interested in solar, “watch Japan!”