Just 23 km offshore Japan’s blighted Fukushima prefecture, which four years ago suffered the worst nuclear disaster in a generation, two floating offshore wind turbines bob up and down in the waves. The biggest turbine, a 7 MW Mitsubishi Sea Angel, was installed in July this year and is the largest floating turbine of its kind installed anywhere in the world. Together with the 2 MW turbine installed in November 2013 and a 5 MW machine due to be installed in 2016, they comprise the Fukushima Offshore demonstration project, a consortium led by Marubeni and funded by Japan’s Ministry of Economy, Trade and Industry (METI).
The project shows just how far Japan has come in the years since the Tohoku earthquake and tsunami triggered a chain of events that resulted in a meltdown in the core of one of the reactors at TEPCO’s Fukushima Dai-ichi nuclear power plant. Pre-Fukushima, Japan’s dependence on fossil fuels, hydro and, above all, nuclear, was absolute, and non-negotiable. There had been some progress in solar PV, largely due to the fact that several of Japan’s powerful electronics giants – Sharp, Panasonic and Kyocera to name but three - had moved into solar module manufacture in the 1990s. But the significant contribution of onshore wind and biomass, let alone offshore wind, was simply a pipe dream.
But in March 2011 came Fukushima, and Japan’s energy landscape was flipped upside down. Gone were the country’s 48 nuclear reactors, forced to shut down, and Japan found itself even more dependent on expensive coal and liquefied natural gas (LNG) imports to fuel its power sector, at a time when oil prices were still at their peak.
In desperation, the then-Japanese prime minister Naoto Kan took the first steps towards a proposed transformation of Japan’s power sector. By 2020, he said, renewable energy would account for 20% of Japan’s power mix, up from 10% in 2010, almost fully accounting for the 27% contribution nuclear made pre-Fukushima. Moreover, the country’s feed-in tariff (FIT) regime, at that time limited to solar PV, would have to be overhauled, boosted and expanded to include all technologies.
A few months’ later, in the face of hostile opposition from Japan’s powerful business sector and the Ministry of Trade Economy and Industry (METI), Kan’s successor Yoshihiko Noda successfully legislated Kan’s proposal to boost the feed-in tariff and expand six-fold the country’s generation capacity in wind, geothermal, biomass and tidal.
Certainly, solar has been the main beneficiary. The ensuing FIT reboot – JPY 42 kW/h ($0.34/kWh) for 20 years when it was first introduced in 2012 – has fostered a renaissance in solar PV in Japan, and a boom in utility-scale solar in particular. Between 2012 and March 2014 around 2.3 GW of residential and 6.4 GW of non-residential solar was deployed in Japan. Under the previous FIT, introduced in 2009, residential solar had grown by 4.7 GW but non-residential installations had stalled at 900MW.
In addition, Japan has ambitious solar targets in place. By 2030, the country wants to more than double its solar capacity to 53.3 GW, from 23.3 GW at present.
A false dawn?
However, recent policy developments are now starting to make the new dawn heralded by the generous feed-in tariffs look a little fragile. The election in December 2012 of a new Liberal Democratic Party (LDP) government, headed by Shinzo Abe, saw a pronounced cooling of policy towards renewables, and solar in particular. In 2013, the government cut the FIT for new solar installations above 10 kW by 10%; in 2014 it was cut again, this time by 11% and a further 16% cut was announced in 2015. Further cuts are anticipated, as officials at METI announced that the FIT would now by subject to another in a series of regular reviews.
All of which has caused significant uncertainty in the renewables sector, with some industry experts warning that the FIT revisions will stifle the country’s booming solar power sector off in its prime.
So why has the government chosen to pare down the solar FIT? The METI claims that the decision is rooted in falling cost of solar PV installation – an argument that certainly has some merit. Rooftop system costs in Japan have fallen by 11% in the residential sector in the past year. However, the reduction in costs for commercial rooftop and ground-mounted systems has been markedly smaller, around 7 and 3% respectively.
More likely, the decision has its roots in the technical difficulties experienced by Japan’s ten electric power companies (EPCOs), which operate as monopolies in their respective regions. Overwhelmed by applications from solar power operators for grid connection and concerned about integrating the pipeline of approved projects into the grid, five of the EPCOs stopped accepting applications in 2014. The process was only restarted after METI agreed a rule change which allows EPCOs to curtail variable renewables at times of peak supply or low demand.
The FIT cut also comes against a – more worrying – backdrop of increasingly political ambivalence towards renewables. Under pressure from the EPCOs and in an effort to wean Japan off fossil fuel imports, Abe’s government has opted to de-emphasise the importance of renewables and re-start the country’s nuclear power fleet.
Accordingly, the power mix targets Fourth Basic Energy Plan, unveiled by the government in April this year, included a target for nuclear power to produce 20-22% of Japan’s electricity by 2020. The renewables target remains at 20% (with hydro producing 10%, and solar producing 5%), despite the Ministry of Environment’s assertion that Japan could achieve as much as 35% renewables penetration in the power mix.
Moreover, Japan’s Intended Nationally-Determined Contribution (INDC) to climate change control, submitted by the Abe government to the UN this year, contained an emissions reduction target of just 26% on 2013 levels, a pledge deemed “inadequate” by the Climate Action Tracker initiative.
The question is: does this political back-tracking matter? And is the FIT cut going to have a significant impact on Japan’s renewables renaissance? “In the short term, yes [the FIT cuts will have an impact]”, Holly Hu, senior analyst at IHS Energy tells Renewable Energy Focus. “The shipment of inverters and modules in Japan market declined in 2Q15 compared with 1Q15.”
However, Hu noted that installations at the end of June (shortly after the third and most aggressive FIT cut) remained buoyant, at around 5.82 GW for the first six months of the year.
Meanwhile, Farah Saeed, principal consultant at Frost and Sullivan, believes that project economics for solar PV developers may be strong enough to weather the FIT cut.
“Given the boost the industry has received since 2011 along with overall price drop it is possible that the market might not even need FIT going forward to promote adoption,” she says, adding that competition with nuclear is likely to be far more damaging than changes to the support regime.
Indeed, while the FIT cut has garnered the most publicity, it is actually the less glamorous non-economic barriers which present the biggest hindrance to renewables. It’s worth noting that, despite reasonably generous FIT allowances, non-solar renewables have yet to flourish significantly.
ABOUT THE AUTHOR
Rachel Parkes is a freelance journalist and copywriter, with expertise in the Energy and Environment fields. She is a long-time contributor to Renewable Energy Focus magazine.