Unanswered replies

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After a rapid increase in applications for grid connection in order to take advantage of the feed-in tariff (FIT) program, one utility after another has announced the suspension of replies to official applications for grid connection contracts by PV power plant developers. In the renewable energy industry including PV, the businesses concerned are getting increasingly worried about how things are going to go.
As of October 1, 2014, the following four electric utilities announced the suspension of replies in their service areas: Hokkaido Electric, Tohoku Electric, Shikoku Electric, and Kyushu Electric. Meanwhile, project developers can still apply for grid connection so that they can secure the FIT at the current FY 2014 level. There will be no impact on the PV projects that have already received notice of approval for grid connection contracts and secured the connection capacity. Under the Renewable Energy Act, it is not easy to “refuse” grid connection. Therefore, electric utilities will comprehensively “suspend” to reply to applications for the time being, in order to review the possible grid connection capacity and to wait for the national government to formulate clear rules of grid connection.
Among the Japanese electric utilities, Okinawa Electric, located on Japan’s southernmost island, announced that “no more grid connection is possible,” due to the fact that their electric grid is independent and the capacity small.
Figure 1 shows the overview of the transmission grids and power generation capacity of each electric company in Japan. As shown in Table 1 (see p. 48), specific scopes of suspending replies to applications for grid connection contracts vary among electric utilities.
Among those that have not announced the suspension, there are some areas in the service regions of Tokyo, Hokuriku,Kansai, and Chugoku Electric Power Companies, where the upper grids are saturated and connection is becoming difficult.
These utilities have not announced the suspension of replies so far, since the installation of renewable energy-based power generation systems are not expected to exceed the demand in all of their service areas.
These measures will have impacts on the <50 kW PV systems connected to low-voltage grids in a comparatively short time since the construction period is shorter. It is likely that these market segments will start contracting earlier than others.
As for systems connected to high and extra high voltage electric grids, a large number of projects have already received notice of approval for grid connection contracts but have not yet started construction. These projects will gradually be installed. Thus, it is expected that there will be little impact on installed capacity on a short-term basis.
However, the issue is that the number of projects in operation is still smaller than the electricity demand. Among a great number of projects which have already received facility approval or approval for grid connection contracts, there are quite a number that are stalled due to difficulties in securing facility cost and financing, excessive land development cost, and so on.
Therefore, it is assumed to be necessary that the government cancels approval for the projects with low possibility of implementation and takes measures to release the open capacity of the electric grids for projects with a higher possibility of implementation. Fairness and transparency are required for such measures.
Under such circumstances, the Ministry of Economy, Trade, and Industry (METI) decided to set up the “Working Group (WG) for the electricity grid” under the New and Renewable Energy Subcommittee of the Advisory Committee for Natural Resources and Energy.
The Working Group, as shown in Table 2 (see p. 49), will check the total capacity of renewable energy-based power generation facilities that can be connected to the electric grid in the service area of each electric utility in Japan, and discuss measures to expand the capacity for grid connection. The WG consists of around five experts with a good knowledge of electric grids, with participation of personnel from manufacturers, renewable energy project developers, and electric utilities as observers. Discussions in the WG will be open to public in principle, except for some cases where the information is notdisclosed due to confidentiality of concerned businesses.
Since this WG is positioned as an important place for forecasting future progress in the deployment of renewable energy, we expect that the discussions will be held on various issues, including: forecast on installed capacity, surcharges, expenses to enhance electric grids, estimated cost for stabilization and adjustment, feasibility of utilizing pumped storage power generation, surcharge tolerance of electricity users, estimates on benefits of utilizing renewable energy (saving fuel consumption and CO2 reduction), the possibility of harmonization with other renewable energy-based power sources, and interviews for knowledge overseas.
The WG is scheduled to hold three to four meetings in 2014 to reach a conclusion by the end of the year. The first meeting took place in October 2014.
Although the FIT program reached the phase of a drastic review in Japan

Table 1: Scopes of suspending replies for official grid connection contracts by Japanese electric utilities
CompanyScopes of suspending replies for official grid connection contracts as of October 1, 2014
Hokkaido ElectricSubject: Projects for which official applications for grid connection contracts were submitted on and after October 1, 2014. All renewable energy-based power generation facilities.Exceptions: PV projects below 10 kW (surplus power is purchased). Applications will be accepted from ?500 kW PV projects that conduct output restriction without compensation. Issues such as installation of storage batteries and output restriction shall be individually discussed.
Tohoku ElectricSubject: Projects for which official applications for grid connection contracts were submitted on and after October 1, 2014. All renewable energy-based power generation facilities except for wind power generation systems (up to 2 GW of wind power generation systems will be accepted).Exceptions: <50 kW renewable energy projects connected to low-voltage grids. A briefing session was held on October 7, 2014 in Sendai, Miyagi Prefecture.*
Tokyo ElectricNo announcements so far (although there are grid connection difficulties in some areas including islands).
Hokuriku ElectricNo announcements so far (although there are grid connection difficulties in some areas).
Kansai ElectricNo announcements so far (although there are grid connection difficulties in some areas).
Shikoku ElectricSubject: Projects for which official applications for grid connection contracts were submitted on and after October 1, 2014. All renewable energy-based power generation facilities. Includes the southern part of Awaji Island which is a service area of Kansai Electric, but receives electricity from Shikoku Electric as needed.Exceptions: PV projects below 10 kW (surplus power is purchased)
Chugoku ElectricNo announcements so far (although there are grid connection difficulties in some areas).
Kyushu ElectricSubject: High- and low-voltage power generation facilities: Projects for which “Notice of approval for grid connection contracts” is not sent out. Low-voltage power generation facilities: projects for which “Invoice for construction fee” is not issued.Exceptions: PV projects below 10 kW (surplus power is purchased). Projects equipped with storage batteries, etc. which stop feeding power to the grid in designated hours and periods. Output restriction without compensation in case remote-controlled output restriction is available shall be individually discussed.Briefing sessions were held from October 1 and 6, 2014 in various places in Kyushu region.*
Okinawa ElectricIn Okinawa Island, grid connection is not possible for renewable energy projects which applied for grid connection on and after August 8, 2014. In Okinawa Island, the following figures have been set as the cap of grid connection capacity:? 300-kW projects: cap of 57 MW – reached on December 24, 2013,< 300-kW projects: cap of 310 MW – reached on August 7, 2014.Additional measure (a): Output restriction without compensation for three months between February and April: 19 MW additional capacity. Additional measure (b): Installation of storage batteries which store electricity during daytime and discharge between 18:00 to 1:00 hours: 59 MW additional capacity.
* For details, contact the respective electric utility directly.

earlier than expected, it does not mean that the market will soon contract. In the Fourth Basic Energy Plan, maximum expansion in deployment of renewable energy is emphasized, and expansion in deployment of renewable energy is supported by the nation. Our immediate issue is to promote a better revision of the program and to create a sustainable market in order to smoothly promote the deployment of renewable energy.

Table 2: Issues to be discussed by the Working Group for electricity grid
Issues to be discussedExpected content of discussions
1. Issues related to the verification of possible grid connection capacity• The calculation method and assumptions for possible grid connection capacity by each electric utility will be reviewed based on local characteristics in each service area.• Verification of output fluctuations of power sources with natural fluctuations, and smoothing effects.• Study of cases where adjustment of supply and demand is difficult.• Status of utilizing an adjustment power source for supply/demand adjustment.• Status of utilizing grid connection lines among service areas.
2. Issues related to expanding the possible grid connection capacityOptions for expanding the possible grid connection capacity:1) Review of operation:• Further utilization of adjustment power source;• Further utilization of output restriction by power sources with natural fluctuations;• Further utilization of grid connection lines among service areas.2) Enhancement of facilities:• Storage batteries, grid connection lines among service areas, local power transmission and distribution networks.3) Other:• Comprehension of fluctuation characteristics of power sources with natural fluctuations.• Utilization and refining of forecast on power generation output.• Measures to address the electricity demand.
Source: Data of the New and Renewable Energy Subcommittee