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Solar industry beaming; wind sector deflated

Recommended rates for clean energy receive mixed response

by Chisaki Watanabe

Bloomberg

The government’s proposed incentives to boost renewable energies will probably see growth in the solar and geothermal power industries, but have disappointed operators in the wind energy sector, lobby groups said.

A government panel Wednesday recommended that solar power suppliers be paid ¥42 per kwh of their electricity, three times the rate of ¥13.65 industrial and commercial users pay. It also suggested the government’s feed-in tariff system for solar power remain in force for 20 years.

The feed-in tariff system, currently pending approval by the industry ministry, will be introduced in July to spur investment in solar, wind, geothermal, biomass and hydroelectric power.

“The start of the feed-in tariff program will be a major step toward expanding the solar power market,” said Tetsuo Kuba, president of major solar panel maker Kyocera Corp. “We will expand operations in the mega-solar market.”

The panel’s recommendations mark another step in the campaign to scale back atomic energy in view of the Fukushima nuclear disaster, and to reduce carbon emissions linked to fossil fuel use.

As Japan generates only 9 percent of its electricity from renewable energies, the government is looking to make utilities pay above-market rates for electricity generated from such sources to boost the clean energy sector.

On wind-generated electricity, the panel recommended a rate of ¥23.10 per kwh for producers with a capacity of 20 kw or more, and ¥57.75 for smaller suppliers. Both charges would remain in force over the coming 20 years.

For geothermal power, the panel suggested ¥27.30 per kwh for suppliers with a capacity of at least 15,000 kw, and ¥42 for smaller producers, with the rates to stay in effect for 15 years.

“These rates are not that high, but they are not on the low side, either,” Kazuhiro Ueta, who heads the panel, said at a press briefing Wednesday. “The program is designed to create favorable rates for the first three years, so we factored that in.”

The panel will meet again Friday to finalize its recommendations, according to Ueta.

“I hope various players will enter the clean energy market,” Softbank Corp. President and CEO Masayoshi Son told reporters Wednesday.

Softbank, the nation’s third-largest mobile phone company, plans to build solar plants with a capacity of more than 200 megawatts across the nation.

“I want to increase our solar capacity a little more than I earlier planned,” he said, adding that Softbank is also considering several candidate sites for wind power facilities.

But Mitsue Usami, a spokeswoman for renewable energy developer Eurus Energy Holdings Corp., noted that the recommended ¥42 solar tariff includes a 5 percent levy.

This effectively lowers the rate to ¥40 after tax is deducted, less than the ¥42 sought by the Japan Photovoltaic Energy Association, the solar industry’s lobby group, according to Usami.

The Japan Wind Power Association, which had suggested a tariff of up to ¥25 per kwh over 20 years for larger producers, was even more disappointed by the panel’s proposed ¥23.10 charge.

On the other hand, the suggested rate for larger suppliers of geothermal power, ¥27.30 per kwh, exceeded the Japan Geothermal Developers’ Council’s suggestion of ¥25.8 over 15 years.

Also Wednesday, the panel recommended that the rate for hydroelectric power be set between ¥25.20 and ¥35.70 per kwh for the next 20 years, depending on the size of the facility, while its proposed charge for biomass power is between ¥13.65 and ¥40.95 over 20 years, depending on the nature of the materials used.

Last August, the Diet approved legislation over the feed-in tariff system to diversify Japan’s energy sources in light of the Fukushima nuclear crisis. Atomic energy accounted for about 30 percent of the natino’s electricity supply before the triple-meltdown disaster in Fukushima.

Japan’s entire nuclear power operations will most likely come to a complete standstill May 5, when the last of its 50 commercial reactors is scheduled to be shut down for an inspection. It would be the first time in more than four decades for all of the country’s nuclear reactors to be offline at the same time.

Last week, Tokyo Electric Power Co. formally deregistered the four crippled four reactors at its Fukushima No. 1 plant, reducing the number of Japan’s commercial reactors to 50.

Of this total, all 49 units that have been shut down for routine inspections have remained offline, pending stress tests to assess their safety and government approval for a resumption of operations.