Japan’s Growth in Solar Power Falters as Utilities Balk

Source: By JONATHAN SOBLE, New York Times • Posted: Wednesday, March 4, 2015

The Nanatsushima Mega-Solar Power Plant in Kagoshima Prefecture, Japan, which opened in 2013. The area is also home to the Tanegashima Space Center. CreditKo Sasaki for The New York Times 

Solar use in Japan has exploded over the last two years as part of an ambitious national effort to promote renewable energy. But the technology’s future role is now in doubt.

Utilities say their infrastructure cannot handle the swelling army of solar entrepreneurs intent on selling their power. And their willingness to invest more money depends heavily on whether the government remains committed to clean energy.

“It’s upsetting,” said Junji Akagi, a real estate developer on Ukushima, a tiny island near Nagasaki. Mr. Akagi said he hoped to turn a quarter of the island’s 10-square-mile area into a “mega-solar” generating station, and has already lined up investors and secured the necessary land.

Then last September, Kyushu Electric Power Company, the region’s dominant utility, abruptly announced that it would stop contracting to buy electricity from new solar installations. Other power companies elsewhere in Japan soon followed suit.

Workers inspecting the Nanatsushima Mega-Solar Power Plant in Kagoshima. Prime Minister Shinzo Abe is seeking to restart some of Japan’s 50 nuclear reactors.CreditKo Sasaki for The New York Times 

“It was a shock,” Mr. Akagi said. “Now we don’t know if Kyushu Electric will buy our power.”

The faltering solar boom is threatening an important goal for Japan as a whole: finding clean sources of power to replace the nuclear output lost after the Fukushima disaster four years ago. So far, the country has been relying mostly on fossil fuels like coal and natural gas to fill the gap, leading to sharply higher emissions of greenhouse gases.

Some solar advocates fear the government is retreating from its clean-energy commitments. Prime Minister Shinzo Abe is pushing to bring back into service some of Japan’s 50 nuclear reactors, all of which are now closed as public concern lingers over their safety. If they reopen, it could reduce the need for alternatives like solar power, which many in Mr. Abe’s circle, including the powerful industry ministry, see as expensive and unreliable.

Mr. Abe has initiated a review of the renewable-energy policies introduced after Fukushima by a previous, more left-leaning administration. Environmentalists worry he will gut them. The government recently reduced the amount of clean power that utilities are required to buy from outside producers, and additional measures to curb supply are expected this spring, including cuts to price subsidies.

“It would put a brake on the spread of solar power,” Yuji Kuroiwa, the ecologically minded governor of Kanagawa Prefecture, next to Tokyo, said at a news conference in December, referring to the new restrictions.

Like other countries that have promoted the technology with generous state support, Japan is also struggling with the financial and technical consequences of its rapid solar growth. Solar power here is costly for consumers because of high state-mandated prices, and handling the fluctuating output of thousands of mostly small solar producers is tricky for utilities. Necessary improvements in the infrastructure have not kept pace, experts say.

The problem is especially acute in Kyushu, where relatively plentiful sunshine and low land prices have attracted a disproportionate share of solar development.

Installed solar capacity roughly doubled in the two years from mid-2012, when a law took effect requiring utilities to buy renewable energy from outside producers at rates far above market prices. By last summer it stood at 3.4 gigawatts, about equal to the output of three modern nuclear reactors — at least during those hours when the sun was shining at full strength.

More challenging for electric-company planners is what is in the pipeline. An additional 8.4 gigawatts’ worth of projects, including Mr. Akagi’s on Ukushima, have received government approval but are in limbo after Kyushu Electric’s edict. That is more power than the region consumes on some low-demand days — and far too much for Kyushu Electric’s grid to handle without the risk of failures, the utility argues.

“If we accept everybody’s electricity, the system will become unmanageable,” said Shinichi Futami, an official at the utility. It is laying new transmission cables as fast as it can, he added, but has been stymied by the slow, expensive task of securing land rights.

Solar projects have already changed the landscape and economy in Kyushu. They have taken over reservoirs, bankrupt golf courses and idle industrial parks, as well as the more familiar locations of residential rooftops.

The Nanatsushima Mega-Solar Power Plant, built on a lot set aside for a shipyard but never used, is bigger than 100 football fields. CreditKo Sasaki for The New York Times 

The largest ones, like the Nanatsushima Mega-Solar Power Plant in Kagoshima, which opened in 2013, cover areas bigger than 100 football fields. Its vast lot was set aside for a shipyard more than 30 years ago, but sat empty until the recent solar boom.

In Makurazaki, a remote city in Kagoshima, the local airport went unused for a decade, a victim of economic and population decline. Now its 4,200-foot runway is covered end to end with solar panels, a project under the co-ownership of a leasing company and a subsidiary of Kyushu Electric.

The facility is expected to power 2,500 homes this year, its first full year of operation. And instead of paying to maintain an empty airport, Makurazaki will receive about 85 million yen, or a little over $700,000, in annual revenues, mainly from leasing the land.

“The airport was a burden, but now we’re getting something for it,” said Tadashi Kamizono, the city’s mayor.

For all the frantic building, however, Japan still produces less solar power than many other countries. Nationwide, just 2.2 percent of its electricity came from any renewable source in the last fiscal year, excluding hydropower from dams. The small percentage is the legacy of a narrow focus on nuclear power before Fukushima. The figure was less than half the level of the United States or France, and a fraction of the roughly 20 percent achieved by Germany and Spain.

According to the government, if every solar plant now on the drawing board were actually to be built, it would cost users ¥2.7 trillion a year in special charges, or about $23 billion, four times the premium they’re paying now.

Solar supporters note that the money would at least remain in the Japanese economy, instead of disappearing into the pockets of foreign oiland gas producers. But cost concerns remain.

Higher energy bills related to the nuclear shutdown are already being blamed for squeezing household budgets. That is hurting consumer spending and undercutting Mr. Abe’s efforts to jolt the economy to life, through his stimulus program known as Abenomics.

Rather than curtail the expansion of solar power, advocates for the technology say a broader shake-up of Japan’s electricity market is needed. Utilities like Kyushu Electric, they argue, have little incentive to accommodate outside competitors to their own coal, gas and nuclear plants. Instead of seeking innovative solutions to the oversupply problem, utilities are using it as an excuse for inaction, said Tomas Kaberger, a Swedish energy expert who heads the Japan Renewable Energy Foundation.

“I presume that it’s to protect their economic interests,” he said, “not their technological interests or the interests of their customers.”

A bill now in Parliament is intended to promote competition. It would force Japan’s 10 regional utilities to split their generation and transmission operations into legally separate businesses. The two sides would remain closely connected, however, and some say the plan does not go far enough to even the playing field for new entrants, including those in green energy.

“These 10 monopolies will still own the grid,” said Tom O’Sullivan, a Tokyo-based energy consultant. “It will still be very difficult for independent power companies to get their electricity into the grid.”