A feed-in tariff system to accelerate investment in renewable energy sources started on July 1. It is hoped that it will lead to the establishment of renewable energy facilities across Japan, thus helping revitalize local economies and reduce Japan’s dependence on nuclear power.

Under the system, the nation’s major power companies have to buy in principle electricity generated by solar, wind, geothermal and medium- to small-scale hydro power and biomass at fixed prices for up to 20 years. For example, the prices per kWh and the purchase periods are ¥42 for 20 years for a solar power facility with the output of 10 kW or more, ¥57.75 for 20 years for a less than 20 kW wind power facility, ¥42 for 15 years for a less than 15,000 kW geothermal facility, ¥25.2 for 20 years for a more than 1,000 kW hydro power facility and ¥17.85 for 20 years for biomass using waste materials.

In fiscal 2010, renewable energy including large-scale hydro power accounted for only 11 percent of Japan’s total power generation. The government plans to raise that percentage to a maximum 35 percent in fiscal 2030. To achieve the goal, electricity generated by solar, wind and geothermal power must increase 20 to 30 times.

The feed-in tariff rates are reviewed every year. But their relative stability will help encourage the entry of newcomers into renewable power generation. It will be necessary to set the rates at optimum levels to encourage both investment in renewable energy sources and efforts to reduce power generation costs.

Since electricity from renewable sources is relatively expensive, increases in electricity bills are inevitable. This is the cost households and enterprises have to shoulder to help spread renewable energy. In fiscal 2012, the monthly electricity bill for households will rise an average ¥87. The government has not yet estimated how much the bill will rise when the percentage of renewable energy reaches 35 percent of the total electricity generation.

On Oct. 1, the environment tax will be introduced, imposed on fossil fuels in accordance with their carbon dioxide emissions. In three and a half years, the average household’s burden will increase by about ¥100 a month. The government should work out a program to use the revenues to strengthen power generation based on renewable energy sources.

The government also must end the monopoly of power transmission and distribution by the nation’s major power companies so that renewable energy entities can use transmission lines without restrictions. It also should consider how to better utilize Japan’s abundant geothermal power resources. Geothermal has the potential to generating more than 20 million kW nationwide compared with the current 540,000 kW — only the No. 8 in the world.

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