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Will Fukushima Push Japan Toward A Renewable Future?

Note: This post was originally published on Earth & Industry

By Silvio Marcacci

On March 10, 2011, Japan was planning on a nuclear power future. Never blessed with a wealth of domestic energy resources, the country was only 16 percent energy sufficient, the third-largest net importer of crude oil in the world, and the largest global importer of liquefied natural gas (LNG) and coal.

By late 2010, nuclear energy represented 29 percent of Japan’s electricity supply and it was the third biggest nuclear power generator in the world. A government master plan aimed to increase this mix to 41 percent by 2017 and 50 percent by 2030.

But on March 11, 2011 when the 9.0 earthquake and tsunami hit and caused the world’s worst nuclear power plant meltdown in 25 years, Japan’s energy sectorabruptly shifted from a nuclear-powered state to one without certainty about how to power its future.

If any good comes from Fukushima, it may be a shift toward clean energy that weans the country off imported fossil fuels, symbolically shown by the wind farms that kept running when most other power sources tripped off or were shut down.

Japan currently generates about ten percent of its electricity from renewable sources, including eight percent from hydropower. It is the world’s fourth-largest solar market with 3.8 gigawatts (GW) installed capacity and has 2.5 GW installed wind power capacity, largely the product of a direct subsidy program.

But that direct subsidy program, which had paid a third of the costs for renewable energy projects, ended in 2010. The reverberations of the program’s end rippled through the wind power industry, evidenced by a 68 percent declinein new wind power installations for the year ending March 2012.

Fukushima quickly shifted the country’s focus to renewables, though, and in August 2011 Japan passed a feed-in-tariff to incentivize development of wind, solar, hydropower, biomass, and geothermal energy. The tariff will take hold in July 2012 and require utilities to buy renewable generation at above-market rates for 20 years, as much as 20 yen (about 26 cents) per kilowatt-hour (kWh).

These rates compare favorably to the average grid electricity price of 14 yen per kWh, according to Japan’s Natural Resources and Energy Agency. The subsidy for solar may be even higher, due to an existing tariff that prices solar energy generated by homes at 42 yen per kWh and solar energy generated by businesses and schools at 40 yen per kWh.

As can be expected with such favorable terms, Japan’s solar market is set to boom. The head of the Japan Photovoltaic Energy Association recently predicted domestic shipments of solar panels may increase ten-fold. China’s Suntech Power Holdings, the world’s largest module maker, expects sales to double in Japan this year. Not to be outdone, U.S. solar developer SunEdison is working on plans to deploy 1 gigawatt (GW) of new solar capacity over the next five years, at an estimated cost of $4.6 billion.

The shift toward renewables is especially focused in the regions hit hard by the earthquake and tsunami. Japan’s Environmental Ministry recently announced a series of feasibility studies for renewables in areas hit by last year’s earthquake and tsunami. The $5 million dollar effort includes eight projects (four wind, three solar, and one geothermal) and the study is expected to be released this Spring.

Distributed generation is also picking up speed. Japan’s natural gas companies expect a 56 percent jump in sales for residential fuel cell systems, and several groups are working on experiments to build self-sufficient neighborhoods. One of the most promising of these projects is the “Eco Town” near Tokyo which aims to build 400 homes powered exclusive by local renewable energy. Each of the homes would include solar panels, a household battery system and smart meters, while the community would be supplied by its own 2-3 megawatt solar array.

Ultimately though, the key to Japan’s clean energy future will likely be an entirely new government master plan that turns away from nuclear power. Proposals are circulating in the national legislature to incorporate a mix of energy conservation, renewable energy, and customer choice in power supply. The master plan options are due by the end of March, and the new plan will take shape over the summer.

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