THE JAPAN NEWS


 

Power generation amounts (see below) created through renewable energy sources are growing rapidly around the world, largely due to international efforts to combat global warming and a dramatic reduction in power generation costs. Urgent action is needed in Japan, where delays in measures to expand the use of renewable energy appear likely to have a negative impact on Japan’s business environment.

Rapid growth projected

At an International Renewable Energy Agency (IRENA) assembly in Abu Dhabi in mid-January, IRENA Director General Adnan Amin pointed to the rapid progress of renewable energy around the world, saying the international community has entered a new era of energy conversion.

In the World Energy Outlook released by the International Energy Agency in November, renewable energy sources accounted for 24 percent of global power generation amounts in 2016. This is estimated to increase to 40 percent in 2040 (see chart 1). Renewable energy use is expanding to meet rapidly growing demand stemming from the economic development of emerging nations.

Thermal and nuclear power will still play a major role in 2040, but power generated by renewable sources will be 2.6 times the level in 2016.

 

The rapid increase in power generated by renewables is due to the need to comply with the Paris Agreement, an international framework for combating global warming, coupled with a dramatic reduction in costs.

Converted into Japanese yen, the global average cost of generating solar power was about ¥35 per kilowatt-hour around 2010. This fell to about ¥10 in 2017. Prices for solar panels, among other things, have fallen as a result of technological innovations and mass production, while competition among companies has intensified.

Among large-scale solar power projects in areas like the Middle East, there have been a number of cases in which the winning bid featured a generation cost of as little as ¥3 per kilowatt-hour.

According to IRENA, even if the global average cost of thermal power generation falls to between ¥3 and ¥10 per kilowatt-hour, renewables are expected to become comparable to thermal power — dropping to about ¥3 or lower by 2019 through efficient land-based wind and solar power generation.

Global investment in renewable energy in 2016 totaled about ¥30 trillion, double the about ¥14 trillion (see chart 2) invested in thermal and nuclear power.

Countries such as Britain, Denmark and Germany are devoting efforts to offshore wind power, which efficiently generates a large amount of electricity.

 

The London Array, an offshore wind power station near the Thames estuary that began operating in 2013, has 175 3.6-megawatt (3,600-kilowatt) windmills with a generation capacity of up to 630 megawatts. Europe’s wind power generators have become larger in recent years, and the number of giant windmills with 8-megawatt-class power generation — standing at over 200 meters tall — is increasing.

Unreliability among issues

A major drawback of renewable energy sources, excluding hydro and geothermal power, is that output tends to be unreliable.

Solar power stations can hardly produce any power at night, whereas the capacities of wind power stations fall in weak wind. Momentary shortages of electricity can lead to blackouts, which are a concern for every country.
Germany’s north is suited to wind power generation, yet the power grid linking that area to the south lacks sufficient capacity, resulting in poor distribution in the south, where demand is high. Consequently, Germany sells excess power to neighboring countries.

Nevertheless, European countries are working to upgrade their power grids and plan to utilize large amounts of renewable energy. For example, Spain introduced a system to stabilize its power grid by using IT to predict wind and solar power output based on weather information.
European governments have set targets for large-scale use of renewable energy. It is significant that they are taking a leading role in conducting preliminary surveys for projects and coordinating with relevant local areas.

Through efforts to improve the business environment and promote cost reduction, renewables have become a competitive energy source, creating a cycle that attracts further investment and expands growth.

Countries such as Britain, Denmark and Germany are devoting efforts to offshore wind power, which efficiently generates a large amount of electricity.

 

The London Array, an offshore wind power station near the Thames estuary that began operating in 2013, has 175 3.6-megawatt (3,600-kilowatt) windmills with a generation capacity of up to 630 megawatts.

Europe’s wind power generators have become larger in recent years, and the number of giant windmills with 8-megawatt-class power generation — standing at over 200 meters tall — is increasing.

Unreliability among issues

A major drawback of renewable energy sources, excluding hydro and geothermal power, is that output tends to be unreliable.

Solar power stations can hardly produce any power at night, whereas the capacities of wind power stations fall in weak wind. Momentary shortages of supply can lead to blackouts, which are a concern for every country.
Germany’s north is suited to wind power generation, yet the power grid linking that area to the south lacks sufficient capacity, resulting in poor transmission to the south, where demand is high. Consequently, Germany sells excess power to neighboring countries.

Nevertheless, European countries are working to upgrade their power grids and plan to utilize large amounts of renewable energy. For example, Spain introduced a system to stabilize its power grid by using IT to predict wind and solar power output based on weather information.

European governments have set targets for large-scale use of renewable energy. It is significant that they are taking a leading role in conducting preliminary surveys for projects and coordinating with relevant local authorities.

Through efforts led by the governments to improve the business environment and promote cost reduction, renewables have become a competitive energy source, creating a cycle that attracts further investment and expands growth.

Costs remain high

In contrast, the cost of generating power through renewables remains high in Japan. Foreign Minister Taro Kono lamented this in a speech at the IRENA assembly, saying Japan’s shortcomings so far are the result of short-term, ad-hoc solutions that have continuously missed the mark regarding global trends.

Each country has set a target for increasing the proportion of energy it gets from renewable sources (see chart 3). Japan is aiming for a renewable energy target of 22 percent to 24 percent by the end of fiscal 2030. However, compared to Germany, which has set the target of reaching 50 percent or more by the end of 2030, Kono said Japan’s goal constitutes a “very low number.”

The government has put efforts into expanding renewable energy in response to the nuclear accident following the Great East Japan Earthquake. Using Germany as a reference, the government introduced a feed-in tariff system in 2012, requiring electric companies to buy electricity generated from renewable sources such as solar and wind power at a price determined by the government for an extended period of time.

Most of electric companies’ costs for purchasing renewable energy are added to electricity bills as a surcharge. Many businesses have entered the market because of this system, mainly focusing on solar.

However, competition is not running so smoothly in Japan.
The price of purchasing electricity generated from solar and wind power is double the price in Germany (see chart 4), forcing companies and households to shoulder a heavy burden. Electricity purchases in fiscal 2017 have been estimated to total ¥2.7 trillion. This will balloon to up to ¥4 trillion annually in fiscal 2030 — or ¥34,000 per capita — according to preliminary government calculations.

The government is aware of the problems under the current situation and is taking steps. In addition to introducing a bidding system, it is also considering schemes to maximize the utilization of unused capacity on the existing power grid. Even so, things are moving slowly compared to European countries, which are leading the way with bold energy market reforms.

The use of renewable energy is spreading among global companies. U.S. firm Apple wants all the electricity used by itself and its business partners to come from renewable energy. For as long as the domestic cost of renewable power generation remains high, the global competitiveness of Japanese companies will be negatively impacted.

Britain, an island nation like Japan, announced a new strategy to reduce carbon emissions last autumn. As well as accelerating the expansion of its offshore wind power stations, among other energy sources, it is promoting nuclear power and working to minimize its reliance on thermal power.
From an energy security perspective, Japan must resume operations of its nuclear power plants, once their safety has been ensured, and promote a wider adoption of renewable energy.

■ Power generation amount

The total amount of electricity generated over a certain amount of time. Units such as kilowatt-hour are used. However, if a power station is referred to as a 10,000-kilowatt (10-megawatt) facility, 10,000 kilowatts represents its maximum capacity, which is different from the actual amount of power that is generated.

As the amount of power generated by solar and wind power is affected mainly by the weather, it is estimated that they generate only 10 percent to 20 percent of their full potential.