(Corrects to clarify utilities, not government, to buy at
pre-set price in para 6)
* Feed-in tariffs will mean higher rates for renewables
* Japan trying to move away from nuclear power after
By Yuko Inoue and Leonora Walet
TOKYO, June 18 Japan approved on Monday
incentives for renewable energy that could unleash billions of
dollars in clean-energy investment and help the world's
third-biggest economy shift away from a reliance on nuclear
power after the Fukushima disaster.
Industry Minister Yukio Edano approved the introduction of
feed-in tariffs (FIT), which means higher rates will be paid for
renewable energy. The move could expand revenue from renewable
generation and related equipment to more than $30 billion by
2016, brokerage CLSA estimates.
The subsidies from July 1 are one of the few certainties in
Japan's energy landscape, where the government has gone back to
the drawing board to write a power policy after the Fukushima
radiation crisis, the world's worst nuclear disaster since
Chernobyl in 1986.
The push for renewables is aimed at cutting reliance on not
only nuclear, but pricey oil and liquefied natural gas for
The scheme requires Japanese utilities to buy electricity
from renewable sources such as solar, wind and geothermal at
pre-set premiums for up to 20 years. Costs will be passed on to
consumers through higher bills.
Utilities will pay 42 yen (53 U.S. cents) per kilowatt hour
(kwh) for solar-generated electricity, double the tariff offered
in Germany and more than three times that paid in China.
Wind power will be subsidised at least 23.1 yen per kwh,
compared with as low as 4.87 euro cents (6 U.S. cents) in
Subsidies have spurred explosive growth in renewable energy
in countries such as Germany, which has nearly tripled its
output in less than a decade.
Still, Japan's aim to accelerate investment in safer,
cleaner and self-sufficient energy is starting from a low base:
renewable sources apart from large hydro-electric dams account
for only 1 percent of power supply in Japan.
Nuclear power accounted for almost 30 percent of Japan's
electricity supply before an earthquake and tsunami on March 11
last year triggered the Fukushima disaster.
About 60 percent came from oil, coal and gas, but that share
has risen to almost 90 percent as safety concerns led to all of
Japan's 50 reactors being shut. The rest of Japan's electricity
comes mostly from hydro.
The government estimates capacity from renewable energy will
increase to 22,000 megawatts by the end of March 2013, up from
19,500 MW now, with 2,000 MW of that from solar panels.
But Japan has huge potential to generate renewable energy
from the sun, wind and geothermal, analysts say.
CLSA Asia-Pacific predicts solar capacity will jump to about
19 gigawatts by 2016 from about 5 GW or less now, while wind
capacity may reach 7.6 GW in four years.
The subsidies will benefit solar panel makers Panasonic Corp
and Sharp Corp and solar project installer
Sekisui Chemicals, along with wind farm developers such
as Toyota Tsusho and Japan Wind Development.
But foreign makers of solar panels - including Chinese
equipment maker Suntech Power Holdings, Trina Solar and
Canadian Solar - are also targeting Japan's market.
"We believe the biggest change in market dynamics in the
coming year will be a flood of cheap foreign panel manufacturers
into Japan," said CLSA analyst Penn Bowers.
POWER CUTS PUSH DRIVE FOR SELF-SUFFICIENCY
Near Sendai on Japan's northeast cost, which was devastated
by the earthquake and tsunami, memories of power cuts are fresh,
prompting a drive for self-sufficiency.
"People had to queue for hours several times a week to
charge their cell phones during the blackouts, which lasted for
up to three weeks," said Naoaki Ando, the manager of an office
near Sendai of Sekisui House, Japan's biggest ho m e builder.
In a suburb of Sendai, Sekisui plans to complete a block of
431 houses fitted with solar panels within two and a half years.
Odawara, a city of 200,000 south of Tokyo, is setting up its
own power company that will install solar panels at public
facilities and sell electricity to Tokyo Electric Power Co
, the operator of the Fukushima Daiichi nuclear plant
that was wrecked in the disaster.
Residents who want to install panels on their homes will
also get subsidies.
"The high purchasing price under the feed-in-tariff system
is great news for us," said Kazuhiko Katano, an official in
Odawara's Energy Promotion Division. "The higher the price, the
faster the penetration of panels will be."
($1 = 78.7300 yen)
(Reporting by Yuko Inoue in Tokyo and Leonora Walet in Hong
Kong; Additional reporting by Yoko Kubota and Risa Maeda in
Tokyo; Editing by Aaron Sheldrick and Ed Davies)