Orix to pursue 800 MW Japan PV projects despite grid constraints

Orix Corp., a Tokyo-based finance and leasing company, will continue to pursue the development of its 800 MW solar PV pipeline in Japan, despite recent reports of some utilities restricting grid access for new solar projects.

Half of the company’s 800 MW of megasolar projects are already under development or in operation, and Orix’s head of energy and eco services Yuichi Nishigori has told Bloomberg that the company will not deviate from its goal of connecting its entire pipeline by March 2018, as planned.

pv magazine reported last week that at least five leading utility companies in the country had begun to curtail grid access for new solar projects, blaming the near-constant expansion of solar PV over the past two years for creating a raft of connection problems.

These utilities’ actions could threaten to slow Japan’s solar revolution – which has set the country on course to install more than 8 GW of PV capacity this year – yet Orix is confident that the pace of its own solar development can continue unimpeded.

"We are developing solar in areas where grid access is not becoming a problem," said Nishigori, who revealed that the company has been approached by some non-Japanese developers to either buy their PV projects or jointly invest in order to push them through Japan’s FIT program. Japan has ten regional utilities, and with half making life difficult for solar, Orix is planning on targeting those regions where connection is less problematic.

The company’s hopes to develop both its large-scale ground-mount portfolio and its residential rooftop business, the latter of which currently amounts to 70 MW. Orix is targeting rooftop capacity of more than 100 MW, and hopes to take advantage of Japan’s generous FIT, which has seen more than 72,000 MW of clean energy projects approved since it was introduced in 2012.

Grid troubles, and solutions

However, despite Orix’s bullishness, the move by utilities to restrict grid access has proved troublesome to Orix’s business plans, Nishigori confirmed. Those projects that have yet to be granted full application rights have been affected, while solar developers that purchase solar panels from Orix have also had to curtail their plans, affecting Orix’s sales figures.

For the Japanese grid to effectively overcome the capacity burden brought by two years of unchecked solar growth, Nishigori believes batteries are the answer. "Fluctuating power will be absorbed more with batteries and also with better grid management," he said.

Last year, Orix made progress in this field when it created a venture with Epco Co. and NEC Corp. to provide a battery rental service that solar residents could use in order to store the power their arrays were generating and reduce their energy bills. However, Nishigori added that current battery prices need to fall by around half if the industry is to really thrive in Japan.

As talk of restarting Japan’s idled nuclear power plants intensifies, solar supporters in the country have rounded on Japan’s Ministry of Economic Trade and Industry (METI) for cutting solar incentives and failing to upgrade the grid to handle the intermittent nature of renewable energy.

"A combination of METI and the nuclear lobby is trying to kill the solar power industry," said Pacifica Capital KK president and CEO Seth Sulkin. However, METI fervently denies this, and points to a speech by Japanese prime minister Shinzo Abe last month where he spoke passionately about Japan’s goal to use renewable energy sources "to the greatest extent possible".

Since the lauded introduction of Japan’s generous FIT scheme in 2012, the country has attempted to plug the energy shortfall created by its idled nuclear plants. However, renewables have played only a small part in this new energy mix. Instead, oil, gas and coal imports have increased to the tune of an extra $28 billion a year, according to Japanese utilities.

This month, Japan’s FIT faces a three-year review, with METI widely expected to further curtail the scheme and abolish the guaranteed FIT rate for solar PV.