Published on May 17th, 2014 | by Guest Contributor


Solar Power Booming In Japan

May 17th, 2014 by  

Originally published on Energy Post.
By Rudolf ten Hoedt


Kagoshima Nanatsujima, to date Japan’s biggest solar plant (photo Rudolf ten Hoedt)

A first gold rush driven by generous subsidies led to an uncontrolled boom in solar power projects in Japan, of which, however, only a very small percentage actually got built. Now, however, the government has taken charge and serious developers are entering the market. The liberalisation of the Japanese retail market in 2016 is expected to give another boost to solar power, as consumers will likely drive demand for renewable energy. The Japanese government and the big utilities, however, are hedging their bets: they are not prepared to let go off nuclear power anytime soon. Rudolf ten Hoedt reports from Kagoshima, Japan, home to the largest new solar project in Japan.

In April, Japan published the first update of its Basic Energy Plan since the 2011 nuclear Fukushima collapse. The plan sets policy for the Japanese power sector for two decades. It is updated every three years. The latest revision runs with the hare and hunts with the hounds. Prime Minister Shinzo Abe upholds nuclear power as “an important base-load electricity source” while at the same time calling for expanded use of renewable energy.

The new energy policy tries to please those that are concerned with Japan’s energy security and fossil import dependence and the nuclear lobby which exploits this vulnerability, but is also acknowledges the anti-nuclear sentiment in the country by giving a boost to green energy. Most of the plan is rather vague. It does not contain clear targets for nuclear energy, although it does express the aim to push renewables over the 20% threshold by 2030 (of total electricity production). Japanese newspapers quoted the influential Chief Cabinet Secretary Yoshihide Suga AS saying: “For the next three years, we will make (the development) of renewable energy a top priority.” This will certainly apply to solar power, which is already booming in Japan.

According to recent research from Bloomberg New Energy Finance carried out for Pew Charitable Trust, last year Japan invested more than any other country in solar energy. See the chart below.

Japan Energy Transition slide 1

For Japan, solar obviously has priority over wind power. 6.7 GW of solar capacity was approved in Japan for the feed-in-tariff (FIT) scheme in 2013. Almost half of this was utility-scale solar.

This year, Japan is even expected to install over 10 GW of solar power, with more than half of this being utility-scale solar. The boom in utility scale solar got started by an FIT- program introduced in 2012 by the Japanese government. Under this program, regional utilities have to buy power from solar and other renewable energy producers for non-household use at pre-set prices for a period of 20 years.

When the program was first introduced, it started a gold rush. “In the beginning, there were many developers with a low level of sophistication”, says Patricia Bader-Johnston of Thurlestone Capital, a renewable energy developer that has funded over 500 MW of solar and off-shore wind projects around the globe. “Everybody who had a claim on land applied for FIT pre-purchase agreements.”

Squeezed out

But bringing all these gigawatts from large-scale projects on stream is another story. Of the large volume of FIT-approvals, only a fraction has so far been actually developed. “Only 400 MW of (utility-scale) solar energy had actually been installed after the first year (2012-2013) of development activity”, Bader-Johnston notes.

Ichiro Ikeda, General Manager of the Solar Marketing Division of electronics multinational Kyocera, confirms this picture.“There have been cases in which construction is delayed for projects which were approved with feed-in-tariffs rates”, he says. According to Ikeda, delays are typically due to three reasons. “First, costs turn out to be higher than expected because projects are planned at sites with difficult land conditions, such as in mountainous or forested areas. Secondly, government approvals to utilize land zoned for agriculture or forest for solar power projects have fallen behind. Thirdly, the project cannot be financed or does not pass screening by financial institutions.”

Another reason for delays is that Japanese utilities are often not very keen to connect utility-scale solar plants to the grid, says Whitney Rich, executive advisor of Hergo Sun Japan, the Japanese affiliate of an Italian oil servicing company that has been active in maintenance of renewables sites for 20 years. The Italians came to in Japan 2012, where they now have 10.4 MW of solar capacity under construction and another 90 MW in the pipeline. “Costs to get connected to the grid are very high and it can take 3 to 4 years (to get connected).” As a result, says Rich, “small developers are being squeezed out.”

But things are getting better. The number of projects that actually get connected is rising fast, industry sources tell Energy Post. The government is making efforts now to clean up the debris of inactive pre-purchase agreements that have clogged up the system. This clean-up plus a recent decrease of the FIT rate – which was lowered from 42 JPY in 2012 and 38 JPY per kWh in 2013 to 32 JPY (about €0.22) per KWh now (which is still one of the highest rates worldwide), has started a shakeout among developers, says Rich. “Government has cut several hundreds of projects this month and will do so again in August. With an FIT of 32 JPY, you really have to know what you are doing. Now more professional developers are coming in.”

Kyocera is undoubtedly a professional developer, with deep pockets and enough patience to get connected to the grid. The multinational has been supplying solar power generating systems outside Japan for many years, at more than 30 locations in Asia, the United States and Europe, during times when large scale solar development at home did not stand a chance against the powerful domestic nuclear lobby.

Volcanic sand

On the Island of Kyushu, Kyocera has just built Japan’s biggest solar plant on a flat landfill site without a tree in sight, skipping problems with mountainous or agricultural terrain. The selected spot has other challenges, though. It stretches right into the salt waters of the East China Sea and is staring the 1400 m high Sakurajima volcano in the face. The new 70 MW plant, called Kagoshima Nanatsujima, is as large as 1.27 million m2 (equal to 175 UEFA football fields) and is situated less than 10 kilometers south of the coastal town of Kagoshima.

The city is overlooked by Sakurajima-san across a very narrow passage of Kagoshima Bay. Fine black volcanic sand can be found in every flower bed and crack in the pavement. The permanent white plume rising from the volcano’s cone regularly transforms into a light brown smog that is usually blown away to the North. In the event nature changes plans and the wind blows south during a more serious outburst, the 290,000 Kyocera panels on the nearby solar plant are supposed to withstand the ashes. A 200 ton pool of water and mobile pressurized water cannons are on standby to conduct emergency cleaning operations. The owners, who invested 27 billion Japanese yen (about €192 million) in the facility, installed 140 invertersand 1,260 monitors, manufactured by German market leader SMA, which are designed to weather hostile conditions.

Kagoshima Nanatsujima has been in operation since October 2013 and will produce 78 MWh/y. The owners say they sell all generated electricity to Kyushu Electric, the utility that controls 90% of the market on the island and which used to be heavily reliant on nuclear power generation. Kyushu is home to important steel makers (Nissin/Sumitomo) and a growing chunk of Japan’s automobile and high-tech industry. Kyushu Electric is pushing hard to restart two nuclear reactors by this summer and has planned the construction of a coal fired power plant. The company is said to be reluctant to buy solar power, but it will have to swallow a lot more in the future.

Thanks to its sunny climate and the availability of land, Kyushu island is the main hotspot in Japan’s booming solar energy sector. Kagoshima Nanatsujima will soon be overtaken as the biggest facility in the country by an 81 MW plant built by Japanese trading house Marubeni. In addition, Solar Frontier, a 100% subsidiary of the Tokyo-listed company Showa Shell Sekiyu, in which Shell holds a 35% share, announced on March 31st the construction of a 29 MW solar power plant on land adjoining Nagasaki Airport in the western part of Kyushu.

Solar Frontier has large production facilities in Miyazaki on Kyushu where it manufactures CIS (denoting copper, indium, selenium) thin-film solar modules for customers around the world. The company is facing increasing competition from domestic and foreign module manufactures, such as Chinese panel makers RenaSola and Yingli Solar, seeking to benefit from Japan’s growing market. Sales of solar cell modules in Japan doubled last year.

In a hurry

Elsewhere in Japan, big name investors are also crowding in, seeking to profit from the still-generous support being offered.“We see continued strong demand for utility-scale mega solar installations”, says Kyocera’s Ichiro Ikeda.  After signing a strategic partnership with Hitachi for the construction of two solar projects in Japan totalling 34 MW, Marco Northland of Toronto and Stockholm-listed Etrion declared to the Japanese press: “We continue to target a solar project pipeline in Japan of at least 100MW under construction or shovel-ready by 2015”.

The president of Chinese company Sky Solar, which is currently constructing a 4 MW solar plant in Mibu, was recently quoted by one of the biggest Japanese newspapers (Yumiuri) as saying: “Japan is one of the world’s most promising markets. We’ll invest ¥30 billion (€ 215 million) annually and develop solar power plants with 400 MW total output in three years.”

Investors are in a hurry. They want to have their projects up and running by 2016 when the liberalization of the Japanese retail energy market will step into the next phase, and the market is expected to become more competitive and dynamic, with new suppliers entering the market. One of these is Masayoshi Son, the outspoken president of the successful Japanese telecommunications company of SoftBank, a major shareholder of the famous Chinese e-commerce company Alibaba. Masayoshi Son, who has been called the Buzz Lightyear of corporate Japan by news wire Nikkei, has declared war on nuclear power and is aggressively putting his money where his mouth is. Last February, the company’s subsidiary SB Energy opened its largest solar farm (43MW) yet, in western Japan. Plans for two more solar farms, both in Kyushu, are underway. With its new solar power capacity, SoftBank is planning to force open the power retail market, the company has said.

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  • kristen stewart

    information you shared through your post is functional. I admire your work.
    Wish you all the luck for all your blogging efforts

  • FlyFreelyNow

    Considering that in the Basic Energy Plan Japan calls coal an “important base-load” and that it is now the biggest importer of LNG in the world, #2 of coal and #3 of oil, and now it has officially and drastically lowered their CO2 emissions reduction commitments from a 25% cut between 1990 and 2020 to an increase of 3.1% for that same period, I fail to see how this is anything but a disaster for the planet and makes renewable energy look like a joke.

  • Ronald Brakels

    An interesting thing I just read is Japan has a large feed in tariff for small scale wind. Nothing has really happened there yet as itty bitty wind is still too expensive even with the subsidy to be worthwhile, but engineers are looking into it to see if it is possible to make a go of it, so just maybe, possibly, perhaps, Japanese investment could get the cost of small scale wind down to a point where it is worthwhile in say rural Australia.

  • Senlac

    Curious, wouldn’t off shore wind be good for Japan, it’s long thin shaped land mass with wind farms surrounding it could work well.

    • Bob_Wallace

      Yes, Japan is “test driving” a couple floating turbine designs. As soon as the figure out the platform that works best for them the plan is to build large offshore farms. Better wind out there and it gets away from the opposition to onshore.

    • dango-man

      The problem with offshore in Japan is the water depth quickly descends in too the hundreds of metres and so the only solution is floating turbines which are not developed and even when there are they developed, they will still be expensive compared to other forms.
      Japans best bet for reducing its carbon emissions will always be nuclear, at least while floating turbines and wave power is developed. Its time to reverse the stupid short term sighted political gain of shutting them down and restart them up again. But this time make sure that checks are carried out at nuclear plants, shut the old ones down built more modern and build far safer reactors such as EPR. Though that will require political will power to do that and more willpower to reform Japans energy market which is awful.

      • Ronald Brakels

        At Australian or German installation prices point of use solar is far cheaper for Japanese consumers than nuclear power and at German installation prices utility scale solar is cheaper than new nuclear. New nuclear is simply not competitive in Japan.

        • A Real Libertarian

          point of use solar is far cheaper for Japanese consumers than nuclear power

          Don’t forget faster building.

          • Ronald Brakels

            Well, yes. After Fukushima it is going to take infinity years to get a new nuclear plant approved.

          • A Real Libertarian

            Even without Fukushima nukes take forever.

          • Ronald Brakels

            One day I really have to take off my shoes and socks and come up with a decent estimate of how much more nuclear power costs than wind and solar on account of its long construction time so that simple levelized costs of energy can be appropriately adjusted. Remember, when a Queenslander takes off his shoes and socks he doubles his mathematical ability.

          • dango-man

            Why are you bringing solar into this???? My argument was mainly against offshore floating wind turbines and the problems they face in Japan. I have no issue with solar and I understand well that utility scale is best for households and communities. You also seem to be assuming that solar is competing against nuclear currently, it’s not and shouldn’t be. Japan currently faces the problem that its fossil fuel use has increased dramatically and so it should use both in order to tackle emissions quickly.
            Nuclear isn’t too expensive as long as you keep them running for there ENTIRE design life (about 40+ years for new reactors) and don’t shut them down due to political whims which happens too often in Japan. The main issue for cost in Japan is the energy market and the way its run by the energy companies.
            Ronald Brakels – Agreed, while I think they should, its will never happen.

            A Real Libertarian – Depends on the reactor design and whether its the first few being built. As the main problems is with nuclear plants that there complicated and there can be no room for errors so anytime a new design comes, it takes forever for it be built. Although if they the design is known it can still take a long time to be built if the workforce isn’t skilled enough. Which often happens when a country import other countries designs as it cannot design on itself.

          • Ronald Brakels

            I’m bringing solar into it because it is cheaper than new nuclear. Since it is cheaper than new nuclear it will make building new nuclear plants uneconomical by lowering electricity prices during the day. Wind power will have the same effect by lowering electricity prices when it’s windy. So wind and solar and new nuclear are in competition with each other. But while wind and solar are to an extent complimentary with each other, that is, when it’s cloudy it tends to be windy, nuclear is a baseload energy source and doesn’t really work well with either

          • dango-man

            Wind and solar can only compliment each other if there is sufficient amount of energy storage otherwise there will often be a period of very low production as there will be cloudy periods with very low wind, even its only for a half day. Japan currently uses it gas supply and the small amount of pumped storage it has to deal with these fluctuations but if your increasing renewables the gas power plants shut first which only leaves pumped storage which cannot store enough energy. We are still waiting for an energy storage solution that is cheap and not as dependent upon geographical location as pumped storage. I know there are several potential solutions but many do seem to have a timeframe of building multiply large scale storage in the years 2025-2030, which is far away. Only a few nuclear power stations are needed to cover this but needed they are.

            The energy price people pay is dependent upon the energy mix so while nuclear with solar would indeed be uneconomical at pre-Fukushima levels but it can be economical at lower levels. It all depends on the Japanese governments strategy on energy policy which currently isn’t reliable and is mainly built solar while we think up of a long term policy.
            Basically a sensible DETAILED long term policy (That is stuck too!) is needed so we can then scrutinize the governments predictions and the energy costs.

          • sault

            It’s really hard to come up with an “all in” cost for nuclear power for several reasons:
            1. Construction costs have enormous variance. Some construction goes smoothly, some plants overcome delays and cost overruns to eventually get finished and some plants are either financial nightmares or become financially untenable and are abandoned before completion. What path a new nuclear plant takes is utterly dependent on the company building it, the reactor design and a whole lotta luck.
            2. Nuclear power receives a lot of subsidies, but some of them are hard to quantify. The Price Anderson Act is a prime example. It has never required the government to pay out damages for a meltdown or anything, but the value of the liability insurance backstop it forces the government to provide for industry is immense. It is impossible for a nuclear plant to obtain adequate liability insurance coverage given the potential damages that could arise from a full-on meltdown, but how do you quantify this subsidy? Other subsidies include cost recovery measures and others as well as $60B in R&D since the dawn of nuclear power. And don’t forget the intamate links between nuclear reactors as they were designed and the links to defense applications they were intended to exploit.
            3. Finally, many unforseen costs accrue many years or decades into the life of a nuclear plant. The refurbishments of CANDU reactors, each needed years before anybody thought they would be required and each costing a billion dollars or more made these plants cost way more than anybody could have foreseen. The closure of San Onofre and Crystal river here in the USA were caused by flubbed maintenance / risky cost-cutting efforts and the plant owners hoped to pass on these billions in cost to their ratepayers , but were stopped by state regulators thankfully. What other billion dollar failures are waiting to strike our aging nuclear fleet? It’s impossible to say, but there is a risk premium attached to this threat to be sure.
            The all-in costs for wind and solar are FAR more predictable. That’s got to be worth something on its own.

          • dango-man

            True, I still support them though but if you wanted a quick price quote and low risk there is no denying that solar and wind are the better options.

            Totally agree with point one.

            The subsidies as you say can’t quantify and they vary hugely from different countries and what party where in power when the subsidy’s were created. Although the point about defence is not really the case anymore as new nuclear reactors (at least in Europe) and defence have separated and no longer intertwined as they once were when the industry began.

            The failures already exist for our ageing nuclear sites whether or not they are kept running for a few more years or shut down. Particularly sites that have multiple nuclear reactors built over a 50 year period such as Sellafield where the government mainly has accepted the risk of leaks and decommissioning and now bears the cost. So its really argument of when you deal with it. The construction of new nuclear reactors should be fully financed by the government so that proper oversight can happen and the risk and blame can squarely be laid in front of government officials. I do not know the details of San Onofre case but I assume it could of been far worse if the owners were unable to pay which would of meant the government would have to bear the risk so it’s better for government to accept the risk and build enough capital to deal with risk as soon as construction begins.

          • jeffhre

            ” I do not know the details of San Onofre case but I assume it could of been far worse if the owners were unable to pay which would of meant the government would have to bear the risk”

            Why would the owners have to pay? They have rate payers! A dime here, and a nickel there, added to their bills for the next 30 years. Risk free and done – Bam!

          • jeffhre

            Lets see. 24 months to lobby for, assemble coalition and gain approval of re-start. Three months for site assessment and approval for pre-selected sites to development new nuclear stations. Six months design and final approval. Nine years “fast-track” construction. 18 months testing, final approvals for conditional operation and commissioning. Six months ramp-up to full power.

            Any other exciting plans for the next 13 years? Not a single new watt online for the next 11 years, and rated power won’t be reached for 13 – optimistically, and somehow this is helpful? Solar can be online in six months. Wind in six months to a year.

      • Senlac

        From my understanding floating wind turbines are less expensive since they don’t have to drill into the seabed.

        If they want nuclear, perhaps this company will help since they have so much waste sitting around. That is if they ever get their technology working in the next decade.

        • dango-man

          No, if I remember correctly they currently cost 75% than a typical monopole support. Floating turbines do have the potential to be cheaper but it still has to be proven as the field hasn’t been explored as much compared to conventional substructures. However if they can get it working cheaply it would be brilliant as the entire turbine can be manufactured on land and floated out to sea and then it would just be tied down.

          It would be nice. The prism reactor seems more hopeful.

          • Senlac

            Prism looks interesting thanks. Japan could use a lot of them.

          • sault

            The Russians had a lot of problems with sodium-cooled reactors back in the day. The fact that sodium is explosive when it contacts water and the fact that it burns in air makes the safety precuations to prevent leaks very expensive.

          • FlyFreelyNow

            Sodium is indeed explosive when mixed with water, but the IFR actually includes an intermediate liquid-metal coolant loop between the reactor and the steam turbines to ensure that any explosion following accidental mixing of sodium and turbine water would be limited to the secondary heat exchanger and not pose a risk to the reactor itself. They really thought of everything after 30 years spent perfecting it and that’s why the DOE tasked team Generation IV of 272 scientists named it the #1 option. This is also why so many environmentalists are supporting it, even NASA scientist turned environmentalist Jim Hansen wrote to Obama asking him to support it.

  • JamesWimberley

    Japan still has a remarkably balkanised electricity supply system, with cosy regional monopolies and no retail competition. There isn’t even a single supply standard – half the country is on 50hz, the other half 60 hz. The electricity reform bill passed last year (link) states an intention to unbundle generation from transmission and create a competitive market as in the UK, but it hasn’t happened yet.

    Wind: we’ve discussed here the evidently large obstacles to wind farms in Japan, more than the mountainous and forested terrain can explain. Environmental objections have also blocked exploitation of plentiful geothermal resources. On the plus side, Japan already has massive amounts (25GW) of pumped storage, built as an insurance against nuclear outages, so load balancing for renewables won’t be a problem for a long time.

  • Matt

    Interesting items from your chart
    – I know US is less NRG efficient than many of the G20, but am surprised to see so little spending else where on efficiency.
    – While Japan would likely have to do offshore, I would have expect more progress on the wind front there. But maybe their resources are not that great.

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