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Introduction

Just 23 km offshore from Japan’s devastated Fukushima prefecture three floating offshore wind turbines bob up and down in the waves. The biggest turbine, a 7 MW Mitsubishi Sea Angel, together with two others, 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 earthquake and tsunami triggered a chain of events that resulted in a meltdown in the core of one of the reactors at the Fukushima 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 – 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.

Nuclear switch

But in March 2011 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 false dawn?

However, recent policy developments are now starting to make the new dawn 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 with a series on annual cuts to the FIT programme. 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 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.

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?

Just 110 MW of onshore wind capacity was deployed between 2011 and 2014, taking cumulative capacity to just 2.7 GW. This is largely due to the onerous permitting process for wind projects, for which environmental permitting alone up to two years. Overall, project lead times are between two and seven years, some of the longest in the world. In addition, Japan’s difficult topography (much of the country is mountainous and volcanic) and densely populated urban spaces, make suitable sites difficult to source.

Offshore wind, therefore, has been touted as a possible alternative to land-based wind. But, while the technology has benefited from a new FIT tariff in 2014, is still yet to generate a single MWh commercially in Japan. This is mostly due to engineering constraints – the ocean surrounding the archipelago is deep, which limits the opportunity for fixed-foundation turbines, as well as significantly raising the costs.

Japan’s Grid problems

Overall, however, the biggest non-economic barrier for renewables of is certainly the grid, which in Japan is particularly unsuited for a sudden uptake in variable sources of renewables.

While the grid stretches across the length and breadth of the archipelago, it is essentially in two sections, which operate on different frequencies, a legacy of infrastructure procurement being carried out by two separate entities in the 19th century. Eastern Japan, including Tokyo and Fukushima, operates on 50 Hz, while western Japan, including Kyoto and Osaka, operates on 60 Hz. The two grids are connected by three converter stations. However, these have a combined capacity of just 1 GW, meaning that significant interconnection between the two is impossible. For grid operators with a high penetration of variable renewables, the ability to transport power over distance is essential for efficient operation.

In addition, renewable power generators face the prospect of operating in a regulatory environment which is framed for the benefit of the distribution network owners, rather than independent power producers (IPPs). As a consequnce, IPPs have either had their access to the grid restricted (as solar power generators found in 2015), or they are encumbered with very high grid access charges which may render their projects uneconomic.

Hope for the future

However, this does not necessarily mean that renewables growth is about to die back. The need for new, home-grown generation capacity is likely to remain strong, especially if the nuclear re-start does not go as planned.

Overall, the renewables industry may be able to afford some cautious optimism. According to IEA projections, Japan’s renewable energy capacity will grow to 115.5 GW by 2020, up from 77.3 GW in 2014, with the majority of the growth coming from solar. The IEA estimates that solar will exceed its 2030 solar target early, reaching 59.3 GW 2020 and possibly 69.3 GW if Tokyo succeeds in its quest to liberalise the market.

The picture is less rosy for onshore wind, which is set to remain impeded by land restrictions and permitting issues and will see growth of 1.1 GW to 2020, to 3.8 GW. Offshore wind growth will depend on Japan’s success commercialising and rolling out floating turbine technology: the IEA estimates that around 400 MW will be in operation by 2020. Bioenergy will grow slightly by 300 MW to 1.8 GW by 2020, while large-scale geothermal is unlikely to progress significantly. So, while optimism may be the order of the day, there is some way to go and significant structural, network and questions remain.