June 1, 2018

Clear Message Needed to Boost Renewable Energy in Japan

The draft of the government’s new Basic Energy Plan, compiled by the Ministry of Economy, Trade and Industry for Cabinet approval this summer, calls for long-term efforts to make renewable energies such as solar and wind power a “major source of power supply” as the nation pursues the transition to a post-carbon economy envisioned under the 2015 Paris agreement to combat climate change. But it falls short of setting new targets for boosting the share of renewable sources in the nation’s electricity generation — as the 2030 energy mix targets that accompanied the current energy plan set in 2014 are kept unchanged.

In fact, the new plan keeps much of the substance of the current plan intact — and fails to send a clear-cut message as to whether or how the government wants to change the nation’s energy supply structure. Still, it lays out the agenda for what’s needed to expand power generation through renewable sources — in which Japan still lags far behind many other industrialized economies. The sharp increase in solar and wind power in recent years has been subsidized under the feed-in tariff (FIT) system introduced in 2012 to buy electricity generated by renewable sources at pre-determined advantageous prices in order to promote its use — whose cost is added on to consumers’ electricity bills.

The plan calls for turning renewable energy into “economically independent” sources of power that can compete with other sources without relying on a subsidy program, as well as developing technology to stabilize power supply from renewable sources against changing weather conditions. To realize the idea of renewables as a major source of power, the basic plan should be followed up by more concrete programs to put this agenda into actual policy steps.

Updated roughly every three years since the first plan was set in 2003, the government’s Basic Energy Plan sets the guideline on the nation’s medium- to long-term energy policy. The current plan adopted in 2014 — the first one after the March 2011 nuclear disaster changed the nation’s energy landscape — called for reducing dependency on nuclear energy “as much as possible” as well as maximum efforts to increase power generation through renewable sources.

At the same time, nuclear power was positioned as an important baseload source of power supply, and the government has promoted the restart of reactors idled in the wake of the nuclear disaster once they clear the safety screening of the Nuclear Regulation Authority. However, only eight reactors have so far been reactivated — well below the roughly 30 reactors that would be needed for nuclear energy to account for 20 to 22 percent of the power supply by 2030.

The energy mix target dictates that renewable energy will supply 22 to 24 percent of the nation’s power demand in 2030. The introduction of the FIT system in 2012 has boosted the number of solar power generation business operators in particular. However, the total share of renewable sources in the power supply, including large-scale hydro power, remains around 15 percent today — well below the global average of about 24 percent. While the share of renewable energy has increased worldwide as its cost declined, the per-unit cost of solar and wind power in Japan remains about double the global average. And the increase in renewable energy here remains subsidized under the FIT system, placing a large burden on the public each year.

The obvious challenge for turning renewable energy into a major source of power supply will be to transform it into a competitive business even without the support of the FIT system. Also important for expanding the use of renewable energy will be a more efficient use of the power transmission system, which is owned by major power companies that used to monopolize regional markets. A ruling Liberal Democratic Party committee on expanding renewable energy use, in its recent proposal for raising the government’s target for renewables, said the major power companies should take the lead in generating power through renewable sources. The government and the power industry should keep exploring concrete steps to increase the use of renewable energy in Japan.

A problem with the draft energy plan is that it touts the importance of transition to a post-carbon economy in the fight against global warming while viewing coal-fired thermal power plants as a key source of power supply over the long term. The plan calls for a phaseout of “inefficient” coal plants to be replaced by highly efficient ones. But even these are believed to emit twice as much carbon dioxide as natural gas-fired thermal power plants. The 2030 energy mix target of coal accounting for 26 percent of the nation’s power supply remains intact. This should be reviewed.

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