December 3, 2012
By Lucy Birmingham
Despite all the challenges, Japan could become the next frontier in innovative energy efficiency and renewable technologies. The feed-in tariff law, which came in on July 1, has kick-started opportunities for public and private investment in five areas: solar, wind, geothermal, mini-hydro, and biogas/biomass.
The tariff subsidy guarantees that investors can make a profit over a certain period. And, because utilities are required to buy renewables, it also means price stability. This, along with Japan’s move toward smart grid transition, has also created a potentially vibrant market in new smart devices and cutting-edge “demand response” energy management applications.
Until the disaster, Japan’s electricity generation was 30 per cent nuclear. Now only two out of 50 nuclear reactors are working, making alternatives more attractive than ever. The ruling Democratic party supported the change in September by recommending renewable energy make up about 30 per cent of Japan’s total by the early 2030s. Investment in clean energy could jump from $8.6bn in 2011 to $17.1bn this year, says Bloomberg New Energy Finance.
A total shift from nuclear will take time and much depends on next month’s elections. “Since electricity companies in Japan have a monopoly they’re reluctant to buy foreign renewable technologies. They would rather develop it themselves,” says Tetsunari Iida, head of the Institute for Sustainable Energy Policies, a non-profit company he began in 1998.
A former nuclear engineer, Mr Iida has helped many businesses break into Japan’s clean energy market, and helped launch large investments. “Solar is now the most profitable and quickest way to help fill the [nuclear] electricity gap,” he says. “It will be producing over 3GW by March 2013 – equivalent to about three nuclear reactors. The Ministry of Environment predicts solar generation could reach 100-150GW. Projected value of the solar electricity market is $9.6bn.
Green power: a wind turbine in Fukushima prefecture
Mr Iida thinks wind power the most secure investment for renewables long term. Offshore wind capacity is estimated at 1,600GW, with onshore capacity at 30GW. So far limited grid connection and complaints about noisy windmills have hampered development, but new technologies could make those numbers a reality.
Biomass energy, he says, can be developed within two years, but it is unclear how the sector will secure a long-term feed stock supply. Geothermal, however, will take 10 years of negotiating with hot spring interest groups, who fear drilling will deplete spring reserves and ruin tourism.
Some of the biggest geothermal resources are in national parks, requiring a relaxing of restrictions. Japan’s estimated geothermal generating capacity could reach 23.5GW, the equivalent of 20 nuclear plants.
Entrepreneurs have been involving communities in smaller, niche projects. Takehisa Kanamori formed his own company in 2002 to focus on new energy and waste from energy technologies. He has 30 years’ international experience and now promotes biomass and geothermal projects via his company Urban Rejuvenation.
“Our biomass programme is to build up 2MW units connected to small electricity transmission lines adjacent to wood feed stock sources,” Mr Kanamori says. “It’s the minimum size we can make economical.” One unit could service about 1,000 homes in rural communities.
Japan-based geothermal entrepreneur Tom Giuffre has soothed local concerns by using hot spring resort “throw away” heat to generate electricity for the community. His company, Hot Earth Enterprise, uses a US-made, 50kW compact Organic Rankine Cycle heat capturing unit from ElectraTherm. It can be deployed in three to four months and serve about 25 typical homes. Mr Giuffre calls this “light geothermal”, a fraction of the cost and size of borehole projects.
Hot Earth Enterprise has projects in various stages of planning scheduled to go live over the next year. Mr Giuffre says the learning curve has been steep since he co-founded the business with Mark Miles four years ago. He says foreign companies must understand the requirements before entering Japan’s renewables market. Partnering with an established company, he says, is crucial.
Boston-based EnerNOC, the world leader in the field of “demand response”, has partnered with Marubeni Corp to bring its energy-saving technology to Japan through a pilot project with Kansai Electric Power Company. The push to cut electricity consumption by 10 per cent in coming decades, and smart grid transition, are helping fuel interest in this cloud-based technology. David Brewster, EnerNOC’s president, says: “I think this technology is going to be a near-term solution for Japan and a long-term solution to help make the system more efficient and cost effective.”
EnerNOC operates its energy saving platforms from network operations centres in Boston, San Francisco and Melbourne. The company has more than 13,000 commercial and industrial buildings in its network and more than 8,000MW of demand response capacity. It says it has achieved 8m kW in power saving, equivalent to eight nuclear power plants.
With such potential in renewable electricity generation, the forecast for Japan could be for blue skies ahead for innovative and niche technologies.