Tokai disaster prompts nation to take a new look at alternative power Staff writer

One day in March 1997, Nobuaki Sato, a senior engineer at Toshiba Corp., helplessly watched industrial cranes demolish a fuel cell manufacturing plant, turning it into a heap of scrap.

While it called off the 5 billion yen project because of dim profitability prospects, Toshiba had spent 50 billion yen on fuel-cell development over the last 20 years, hoping to spread the use of fuel cells as small-scale power generator for homes and factories.

Fuel cells generate electricity through a clean chemical reaction using oxygen in the air and hydrogen that is obtained by processing such materials as methanol and natural gas.

But its long-term efforts may finally pay off in the 21st century as environmental concerns are pushing consumers and the industry toward “greener” energy, and small power generation systems are expected to gain a foothold as an alternative to large-scale power plants.

Despite the bitter experiment, Toshiba, which sells fuel cell power generators for factories, is stepping up efforts to develop fuel cell power generators for use in homes.

“We hope to commercialize fuel cell power generators of about 1-kW around 2003 for home-use,” Sato said. “For that purpose, we diverted some engineers from a home electrical appliance section to our fuel cell project because the engineers in home products are very keen on costs.”

The move is consistent with recent social trends. The nation’s electricity demand, which stood at 799 tera-kWh in fiscal 1998, is expected to jump to 977.4 tera-kWh in fiscal 2008.

With that in mind, the national government hopes to raise the supply of the so-called new energy such as solar power and wind power from 1.1 percent in fiscal 1996 to 3.1 percent in fiscal 2010.

On the other hand, the future of nuclear power generation in Japan, once regarded as a “miracle power source” because of its ability to produce huge amounts of electricity, is uncertain.

Concerns over the safety and viability of nuclear energy in Japan were fueled by the nation’s worst peace-time nuclear disaster at a uranium processing plant in Tokai, Ibaraki Prefecture, last September, in which two men were killed. Taking into account the other myriad accidents that have taken place at nuclear power plants in recent years, the government is likely to review its plan to build 16 to 20 new nuclear power plants by fiscal 2010.

Against this backdrop, fuel cells are now seen as one of the most promising candidates for alternative energy, because fuel cells emit much less carbon dioxide, a main cause of global warming, and other harmful gases than the conventional power generation systems.

Fuel cell technology, however, is not new. Fuel cells were used by the United States for space programs in 1960s. In Japan, fuel cells are used only in a few factories. For instance, two Japanese beer makers use fuel cells to generate electricity out of waste water used to brew beer.

Technological breakthroughs in the mid-1990s realized a compact type of fuel cell and opened the door to their use in cars, households and small devices such as mobile phones and lap-top computers.

“The fuel cell technology made a drastic leap. A fuel cell has become so small that one can fit into the engine compartment of a car. Since then, expectations have been mounting and the technology is now entering a stage where we can put form into practice,” said Takuya Homma, executive director at Fuel Cell Development Information Center.

Although power generated by fuel cells was 16,000 KW in fiscal 1996 in Japan, the government hopes to increase that to 2.2 mega-kW in fiscal 2010, about 140 times the level of fiscal 1996.

While the industry is fiercely competing to launch the first fuel cell products for cars and home use around 2004 in the domestic market, pundits say that stationary fuel cell generators will propagate faster than fuel cell vehicles.

Because automakers need to solve the problem of refiling the vehicles on roads where such infrastructure does not exist, they face a higher hurdle.

“When it comes to mass production, we need to work out the issue of (fuel) infrastructure. Since this is not the issue that automakers can solve alone, we can’t say what will happen after 2003,” said Kohei Muramatsu, a spokesman for Toyota Motor Corp., which plans to develop cars powered by fuel cells by 2003.

In contrast, stationary fuel cell power generators can employ existing fuel gas infrastructure that reaches almost every homes in the country. Hydrogen can be obtained by processing fuel gas.

Efforts to develop stationary fuel cell generators coincided with a trend to move toward small-scale and diversified power sources as an alternative to the conventional large-scale and concentrated power sources.

“There is a quite high possibility that the society will move toward the (energy) sources other than large-scale power plants in the 21st century. That is one of the paths we will take,” Homma said.

While most of electricity generated in the country currently comes from thermal, hydroelectric and nuclear power plants that are often located at remote areas, part of electricity is lost in the process of transmitting from those plants to consumers.

But small-scale power sources are attractive because the system generates both electricity and heat where the two are consumed and thus enables efficient use of fuels.

If heat and electricity are combined, fuel cells can turn as much as 80 percent of their fuel into energy, instead of the 40 percent efficiently of thermal plants, Homma said.

One study estimates energy losses during transmission waste 25 percent of the country’s primary energy, Toshiba’s Sato said.

However, it remains to be seen whether the diversified power generation systems, which employ fuel cells, solar cells or wind power, can become substantial energy sources in the country in the near future.

One crucial factor is cost.

Hisashi Iijima, general manager at Ebara Corp., which aims to launch on-site fuel cell power generators to be developed by a Canadian firm in around 2004, estimates the price of a 1-kW fuel cell at 2 million yen at the time of its launch.

But Iijima says that the price of a 1-kW fuel cell for home use must drop to around 400,000 yen to become competitive in the market, although a household can still save about 50,000 yen a year in terms of heating expenses since fuel cells also generate heat.

While proponents of alternative energy call for government subsidies to promote the use of “greener” energy, it is another question whether such government backing can really initiate a consumer trend.

Despite government subsidies that started in fiscal 1994, solar power generated in fiscal 1998 was about 0.01 percent of the country’s total power generation, according to the Agency of Natural Resources and Energy.

Wind power also receives government subsidies as well as support of power companies, which buy electricity generated by windmills at about 11 yen per one kWh. It is almost the same price that power companies charge their customers for retailing electricity.

Mamoru Muramatsu, manager at Tepco, is confident that wind power generation will surely increase in the future because it is useful in areas such as remote islands, and technological progress is improving related facilities.

But he also points out that it would be difficult to promote wind power generation in urban areas without subsidies and power companies’ support to purchase electricity from those who use new types of electricity generators.

Even if electricity supply from those new types generators grows in the future, experts say that it cannot completely replace current large-scale power sources since they are vulnerable to changes in natural conditions, meaning back-up power sources will be necessary.

“It finally comes to the question of how consumers evaluate such factors as energy stability,” said Tsutomu Toichi, director at The Institute of Energy Economics, Japan.

Regardless of whether diversified power sources will spread or not, competition has already begun over the market of on-site power generators, involving both old and new players to energy business.

Gas companies are enthusiastic since fuel cells are expected to increase the consumption of fuel gas. Equipped with expertise in energy business abroad, general trading firms are active in the field.

“Although our power business has focused on thermal and hydroelectric power plants until now, we want to increase the ratio of the so-called new energy. (This is) because the market is almost untouched,” said Seijiro Chiba of Marubeni Corp’s domestic power project department.

On the other hand, the on-going deregulation of the country’s power business is forcing Tepco to enter the stationary power generator business as the first major power company to do so.

As new players are expected to enter the country’s electricity market under the deregulation and eat up a market held by the existing big power firms, Tepco is trying to defend its market by developing small fuel cell power generators on its own and offering the new product as another choice to consumers.

Global warming is an important factor in promoting environment-friendly energy. Japan is committed to cutting its emissions of green-house gases by six percent by 2010 from 1990 levels.

“The current situation is clearly a tail wind for diversified power sources, partly because of the difficulty of building new nuclear power plants. Technological progress and social demand are pushing us to put the use of fuel cells into practice,” said Toshiba’s Sato.

In contrast, Toichi pointed out that at issue is whether consumers can truly agree to cutting back on the emission of greenhouse gases as well as how seriously they can come to grips with the issue.