Japan Sets New Feed-In Tariffs For Renewables; 50¢ per kWh For Solar
- October 4, 2011
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Pinning its hopes on a sustainable recovery from the Fukushima nuclear disaster, Japan’s Upper House of the Diet has enacted feed-in tariffs that take effect July 1, 2012 requiring utilities to purchase electricity generated by commercially available sources of renewable energy for a set price and period.
Reuters reports a ruling party lawmakers “expects” the tariff for solar photovoltaic / electric systems to start at the equivalent of 50 cents per kilowatt-hour. The tariff for win energy is to start at the equivalent of 25 cents per kilowatt hour. Anything close to those levels virtually assures Japan will catapult up the global ranks of active renewable energy economies after lagging behind leaders German, Italy, China and Ontario, Canada.
These tariffs could represent a sea-change in energy policy in Japan that almost certainly would not have occurred were it not for the Fukushima nuclear disaster triggered by the March 2011 earthquake and resulting tsunami which crippled the multiple reactor complex earlier this year. Most importantly, responsibility for the new tariff system was not assigned to the Ministry of Economy, Trade and Industry, or METI.
There are numerous reports that high-ranking officials throughout the Japanese government, along with influential members of the public, lost trust in METI because of its now-faulty response to Fukushima and resulting over-reliance on nuclear at the expense of renewables.
Japan is aiming for 30 gigawatts of new renewable generation within 10 years. Cost recovery will come via surcharges to ratepayers with reductions for heavy industrial users and ratepayers affected by the tsunami.
The tariff schedules are to be reviewed every three years and therein lies some political risk if officials opt to curtail the program and hamstring it with burdensome rules.
Feed-in tariff advocates such as Paul Gipe have expressed hope that Japan’s move could provide impetus for similar laws in U.S. and other parts of Canada. But this is not an apples-to-apples comparison. The U.S. solar industry have been quick to caution against over-reacting. Nuclear plants on the eastern U.S. survived a two closely-watched tests when a 5.8 Richter Scale earthquake forced some reactors in the U.S. mid-Atlantic offline as a safety precaution. This past weekend, reactors there and in the Northeast U.S. appeared to have passed additional tests posed by Hurricane Irene.
As with all feed-in tariff regimes, it will be interesting to see to what extent Japan invokes any “domestic content” requirements on the equipment installed to generated this clean electricity.
Japan once was the world’s leader in solar PV technology. But it has been trumped by Germany and China. Japanese companies no doubt are anxious to catch up. Whether companies based in Germany, China, the U.S. and elsewhere have roughly equal access by mid-2012 remains to be seen.
According to Gipe, Japan installed about 1,000 MW of solar PV in 2010. Germany installed more than seven times as much, and Italy installed more than twice as much. And Japan’s population is 1.6 times greater than that of Germany and more than twice as large as that of Italy.
That would add over 12 percent to Japan’s total generation capacity before the nuclear disaster of 240,000 MW.