Under the feed-in-tariff system introduced in July 2012 by the then Democratic Party of Japan administration, the nation’s major power companies are required by law to buy, in principle, all the electricity generated by solar, wind, geothermal and medium-to-small-scale hydro-power sources and biomass at fixed prices.
The purchase costs are to be added to electricity charges. It was hoped that the system would help revitalize local economies and reduce Japan’s dependence on nuclear power. Recently, however, one power company after another has announced a decision to stop such purchases.
They say the oversupply of green electricity due to the required purchase of all such power could wreck the stable supply of electricity to businesses and households.
The situation has prompted the trade and industry ministry to prepare for a review of the feed-in-tariff system. Given what has happened, it is clear that the system was not well thought out and needs to be redesigned.
But in the review, the ministry should not use the recent development as an excuse to put a brake on the expansion of power generation through renewable sources and to maintain the weight of nuclear power in the supply of electricity. It should uphold the goal of expanding green power generation, and bring together the accumulated knowledge and technologies of the power and other industries to achieve it.
On Sept. 24, Kyushu Electric Power Co. announced that it would halt the purchase of green electricity in the whole Kyushu region, starting the next day, including putting on hold some 70,000 plans for generation of green power by entities that have applied to Kyushu Electric for contracts to sell the electricity.
Kyushu Electric’s decision affected not only the renewable energy businesses but also local governments, including the Kumamoto prefectural government, which had pushed for introduction of green electricity. Okinawa Electric Power Co. had stopped the feed-in purchases in August.
Hokkaido Electric Power Co., Tohoku Electric Power Co. and Shikoku Electric Power Co. followed the Kyushu power firm with a decision to suspend the purchase of green electricity beginning this month. Tokyo Electric Power Co. and Kansai Electric Power Co. have also halted such purchases in some parts of the areas serviced by them.
In making their moves, the power companies have cited a clause in the Law on Special Measures Concerning Procurement of Renewable Electric Energy by Operators of Electric Utilities, which exempts them from the duty to buy green electricity if the purchase of such power poses a danger to stable supply of electricity.
Behind their moves is a rapid increase in the volume of green electricity they have had to agree to buy. Green energy operators rushed to make last-minute applications for electricity sales to the power firms before the government lowered on April 1 the prices at which the utilities must buy power from various renewable energy sources.
The power companies explain that if all the electricity from renewable energy sources is supplied to their transmission grids, the total supply will exceed their capacity, which could lead to stoppage of the power companies’ generators.
They also say that the wild ups and downs in the output of solar and wind power due to weather changes will make it extremely difficult for them to adjust the output of their power generators to cope with the fluctuations. If the adjustments fail, it could damage their power grids.
Both cases could result in blackouts.
The government should be blamed for failing to foresee a large number of applications for sale of green electricity to the power companies.
There may be some entities that have applied to the power firms for the electricity purchase contracts without proper investment plans. However, many entities have already carried out necessary investments for power generation through renewable energy sources on the belief that the power firms will fulfill their duty to buy the electricity from them.
The government and the power companies should realize that power from renewable sources accounted for only 2.2 percent of the total electricity generated in fiscal 2013.
Green electricity has the advantages of emitting very little carbon dioxide in the process of power generation. Severe accidents like the one that may happen at a nuclear power plant are unlikely. Green power generation facilities scattered around the country reduce the risk of severe power shortages. It is clear that green electricity’s weight in total power generation in this country should be sharply increased.
In reviewing the feed-in-tariff system, the trade and industry ministry should not forget this point and should remember that the government’s energy basic plan adopted in April calls for reducing Japan’s reliance on nuclear power as much as possible as well as for aggressive introduction of renewable energy, citing a government advisory body’s document that states that green electricity should account for about 20 percent of the total power generation in 2030.
The Natural Resources and Energy Agency estimates that if all the green energy facilities that have signed feed-in-tariffcontracts with power companies and received approval from the government as of the end of May went into operation, their total output in 2030 would top 20 percent of the nation’s total power generation.
Development of large-capacity and high-efficiency batteries, an increase in the capacity of the power grids, including building of transmission lines across different service areas, and upgrading of the facilities to convert the different frequencies of electric currents — 50 Hertz in eastern Japan and 60 Hertz in western Japan — are needed to solve major technical problems inherent to the supply of electricity generated through green sources.
Trillions of yen are estimated to be needed for such projects, and power companies are reluctant to invest. To stimulate such investments, the government should first declare clear percentages as goals in expanding the share of green electricity in the nation’s total power generation.
Also important for the government would be to clarify what party or parties should shoulder the cost of such investments — which was left unaddressed when the system was introduced in 2012.