Clean energy to Japan
(Last updated: 05 Aug 2013)
Trends and opportunities
The market
Energy is the Government of Japan’s (GOJ) top priority in terms of the country’s resource security. Energy procurement, generation, distribution and market operation are subject to heavy government supervision and regulation. In recent decades, the electricity supply mix has moved towards a lower-carbon footprint through the broad adoption of nuclear power generation. Overall, Japan has become a more heavily regulated and less competitive energy market in comparison to other developed countries, where privatisation and deregulation are more the norm.
The Great East Japan earthquake and subsequent tsunami on 11 March 2011 changed everything. Japan is dealing with a serious electricity shortage due to the complete shut-down of all but two nuclear power reactors in Japan.
Electricity generation source in Japan
(Source: The Federation of Electric Power Companies of Japan)
In response to the surging costs from rapidly increased short-term demand for coal and LNG, the GOJ’s policy is to restart the operation of suspended nuclear power plants after they are confirmed to meet revised safety standards.
In order to increase supply from alternative electricity sources, a Feed-in Tariff (FIT) scheme for renewable energy was introduced on 1 July 2012. The prices established are set at very attractive levels for would-be suppliers. Japan’s FIT attracts and increases the number of renewable energy opportunities, particularly for the energy supply sources with higher prices such as solar and biomass. Meanwhile, high electricity prices are driving demand for energy saving technologies and services at both business and consumer levels. The GOJ plans to encourage further development in technologies for energy storage, smart metre and energy-saving fittings.
Following the tsunami and nuclear accident, the GOJ has been forced to respond to regional areas’ need to restructure energy and other infrastructure along market-driven, liberalised structures so that Japan’s transmission and distribution system can accommodate new supplies of renewable energy.
Some regional governments’ plans indicate their intention to deploy independent alternative (including renewable) power generation and smart city projects making use of local renewable resources, and it is hoped these actions will increase opportunities for demonstration of new technologies.
Tariffs, regulations and customs
In July 2012, GOJ introduced a Feed-in-Tariff (FIT) regime for renewable energy power fed into the national grid at fixed prices per kilowatt hour (kWh). The goal of this FIT is to encourage investment in renewable electricity generation by ensuring that providers of such electrical power can run their operation profitably over a certain period of time, and that prices will remain stable for the purchases required by the utilities. The FIT rates are deliberately set at a price higher than the cost of producing renewable energy and are based on the cost of setting up production and distribution systems, thus reducing the investment risks posed by building facilities to generate renewable power. FIT rates are set for five specific renewable sources; solar, wind, small hydro, geothermal and biomass – which are some of the highest in the world. For example, small wind farms (under 20kW) hold the highest tariff rates in the world. FIT rates for larger-scale wind farms and smaller solar tariffs are over twice that paid in France and Germany. For mega-solar power, where many Japanese firms are making plans to operate, the tariff is almost three times higher than in France and Germany.
Feed-in Tariff for each renewable source FY 2012 and 2013
| |
Price
Yen/kWh
(FY 2012)
|
Price
Yen/kWh
(FY 2013)
|
Period
(years)
|
Status of introduction for each facilities (kW) as of December 2012 |
| Solar (10kW or higher) |
42 |
37.8 |
20 |
911000 |
| Solar (less than 10kW) |
42 |
38 |
10 |
208000 |
| Wind (20kW or higher) |
23.1 |
23.1 |
20 |
34000 |
| Wind (less than 20kW) |
57.75 |
57.75 |
20 |
|
| Small Hydro (1,000kW or higher, less than 30,000kW) |
25.2 |
25.2 |
20 |
1000 |
| Small Hydro (200kW or higher, less than 1,000kW) |
30.45 |
30.45 |
20 |
2000 |
| Small Hydro (less than 200kW) |
35.7 |
35.7 |
20 |
|
| Geothermal (15,000kW or higher) |
27.3 |
27.3 |
15 |
0 |
| Geothermal (less than 15,000kW) |
42 |
42 |
15 |
|
| Biomass (Methane Gas) |
40.95 |
40.95 |
20 |
22000 |
| Biomass (Unused wood products) |
33.6 |
33.6 |
20 |
|
| Biomass (General wood) |
25.2 |
25.2 |
20 |
|
| Biomass (Waste-related) |
17.85 |
17.85 |
20 |
|
| Biomass (Recycled wood products) |
13.65 |
13.65 |
20 |
|
(Source: Agency for Natural Resources and Energy)
On April 2, 2013, the Cabinet of the Government of Japan approved the Policy on Electricity System Reform, which will ensure the implementation of electricity system reform by uniting efforts across government agencies. This reform aims to:
- secure stable electricity supply
- control electricity costs
- provide consumers with choices and business operators with opportunities to expand their businesses
To achieve these objectives, the reform focuses on:
- expanding operations of wide-area electrical grids before 2015
- full liberalisation of the retail market and power generation before 2016
- further securing neutrality of the power transmission/distribution sector through the legal structural separation method and fully liberalising electricity rate by 2018-2020
Marketing your products and services
The energy sector in Japan has come into focus as part of Japan’s economic revival plan and social sustainability and further change is likely in the industry. It is expected that the GOJ will revise regulations and supporting plans to restructure power resources and networks on the basis of sustainability and competition. Any such changes will need to be closely monitored for the energy industry.
While Japan is recognised as a technology-oriented market, renewable energy or efficient energy usage will require further development to ensure technology remains competitive.
The time span of technology development is likely to shorten to meet market demand timely and competitively. This trend should provide business opportunities for Australian companies with competitive technologies and services. There are also a number of opportunities for Australia and Japan to collaborate with each other at different phases or stages of technology development including research, demonstration development and commercialisation.
Links and industry contacts
Clean energy-related resources
Agency for Natural Resources and Energy - www.enecho.meti.go.jp/english/index.htm
Japan Council for Renewable Energy - www.renewableenergy.jp/council/english/
Japan Photovoltaic Energy Association - www.jpea.gr.jp/08eng.html
Solar System Development Association - www.ssda.or.jp/
Japan Wind Power Association - http://jwpa.jp/index_e.html
Japan Wind Energy Association - www.jwea.or.jp/
Japan Small Wind Turbines Association - www.jswta.jp/
Japan Bio industry Association - www.jba.or.jp/pc/en/
Japan Geothermal Association - www.chinetsukyokai.com/
Fuel Cell Commercialisation Conference of Japan - http://fccj.jp/eng/index.html
Reconstruction Agency - www.reconstruction.go.jp/english/
The Institute of Energy Economics Japan - http://eneken.ieej.or.jp/en/
The Federation of Electric Power Companies of Japan - www.fepc.or.jp/english/
New Energy and Industrial Technology Development Organization - www.nedo.go.jp/english/index.html
Ministry of the Environment - www.env.go.jp/en/
Japan Wind Power Association - http://jwpa.jp/index_e.html
Ministry of Agriculture, Forestry and Fisheries - www.maff.go.jp/e/
Japan Small Hydro Power Promotion Bureau - http://j-water.jp/conference/
Japan Geothermal Association - www.chinetsukyokai.com/
Government, business and trade resources for Japan
Ministry of Economy, Trade and Industry - www.meti.go.jp/english/index.html
Please note: this list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade. The information provided is a guide only.
Contact details
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