Recent revisions to the feed-in tariff system have been welcomed by utilities as much-needed government intervention that will ensure safe and stable supply of all forms of electricity by helping to prevent renewable energy from overloading the grid and causing blackouts.
But critics say the move by an agency under the Ministry of Economy, Trade, and Industry does little to solve the basic electricity transmission issues, and hint that the real purpose of the changes is to limit the amount of renewable energy generated so there is enough grid capacity to handle nuclear power once the reactors are turned back on.
The controversy began in September, when Kyushu Electric Power Co. announced it would no longer sign contracts with most companies that were supplying renewable energy. The reason, the utility said, was that its transmission network would be overloaded if it actually purchased electricity from all of the renewable energy suppliers it had signed contracts with.
Since the advent of the July 2012 feed-in tariff system, which obligates Japan’s 10 utilities to purchase electricity made from solar, wind, geothermal, mini-hydro and biomass sources from private firms, there had been something of a gold rush mentality. Firms large and small rushed to take advantage of the tariff, which guaranteed a fixed price per kilowatt hour, and the latest figures show the central government had approved nearly 1.5 million different projects.
About half of these were for solar projects generating under 10 kilowatts, and are primarily rooftop solar panels for homes and small businesses. On the other end of the scale, a total of 1,265 projects had been approved for solar projects generating more than 2,000 kilowatts. Many are “megasolar” projects that generate tens of thousands of kilowatts.
But the larger than expected — by officials at least — number of entrants led Kyushu Electric to announce it would suspend applications from renewable energy suppliers. Four others, including Shikoku Electric Power Co., Hokkaido Electric Power Co., Tohoku Electric Power Co., and Okinawa Electric Power Co., quickly followed suit, sending a shock wave through the industry and sparking warnings that Japan’s nascent moves toward renewable energy were in danger.
In response to the panic, METI looked into the issue. In mid-December, the Agency for Natural Resources and Energy, as part of a general review of the feed-in tariff program, issued a new set of rules for both renewable energy suppliers and distributors (the utilities).
Lax standards in terms of project deadlines meant that, as long as approval for a project had been granted under one tariff price over a fixed period, firms could delay construction by waiting for costs to fall, thus widening their profit margin between the guaranteed price per kilowatt hour they would receive (the tariff price) and the actual generation cost per kilowatt hour.
Under the new rules, however, once project approval is granted, firms are given deadlines for completing construction and connecting to the grid. Missing the deadlines could mean losing the right to grid access.
Also, utilities could previously limit output of renewable-generated electricity for up to 30 days annually, under the assumption the time would be calculated on a daily basis. The basic unit has been changed to hours, which means they can now limit the amount of solar project output by 360 hours annually, and wind power output by 720 hours annually.
This is being done to increase the efficient grid use of renewable energy, the government said.
“By controlling output on an hourly basis, the amount of available capacity can be increased,” the agency said in announcing the rule changes.
A METI study found that seven utilities — Hokkaido Electric, Tohoku Electric, Hokuriku Electric, Chugoku Electric, Shikoku Electric, Kyushu Electric and Okinawa Electric — only accept about 58 percent of the total solar power renewable-energy firms can, or plan to, generate due to grid limitations.
However, renewable energy advocates say the latest decision by the energy agency under pro-nuclear METI fails to address a number of concerns and was based on assumptions about the future of nuclear power in Japan that are, to nuclear opponents, optimistic at best.
“In the basic energy plan approved by the government in April, it states that the fundamental goal is to reduce the reliance on nuclear power as much as possible. But (the agency’s) calculations for the new rules are based on the premise that all of Japan’s nuclear reactors, including those that are 40 years old, will be in operation. The result is nuclear power accounting for between 50 and 60 percent of the supply at Hokkaido Electric and Kyushu Electric during minimum load demand times, and the reduction of available renewable energy,” the Japan Renewable Energy Foundation, a think tank set up by billionaire entrepreneur Masayoshi Son, said in a report released just after the agency’s announcement.
Anti-nuclear activists in Kyushu have questioned the timing of Kyushu Electric’s September announcement that it would not purchase most of the renewable energy generated. Only days before, the Nuclear Regulation Authority had given approval for two Kyushu Electric reactors at its Sendai plant in Kagoshima Prefecture to restart.
“Kyushu Electric says they stopped purchasing renewables to maintain a demand and supply balance, but I really wonder if this is the case”, said Yoshitaka Mukohara, a Kagoshima-based anti-nuclear activist.
All of the utilities have agreed to the new rules. Kyushu Electric is expected to resume purchasing renewable energy this month, but under certain conditions.
But given the ardent efforts of pro-nuclear Prime Minister Shinzo Abe and the ruling coalition, as well as a pro-nuclear lobby that consists of most local politicians, utilities and METI, to restart all safe reactors as soon as possible, it’s clear that renewable energy faces a bumpy road due not only to technical and financial issues, but also political and bureaucratic hostility that makes overcoming the other issues all the more difficult.