| TOKYO, July 30
TOKYO, July 30 On the second anniversary of a
scheme aimed at boosting Japan's renewable energy after the
Fukushima crisis, its powerful industry ministry is taking steps
critics say will choke off solar investment and pave the way for
a return to nuclear power.
Japan's ambitious plans for solar in the past two years --
if they were to come on stream -- could allow the country to
surpass Germany as the world's biggest consumer of solar power.
But the Ministry of Economy, Trade and Industry (METI) has
cut tariffs for solar power by a fifth in the two years and has
imposed time limits on installations, arguing solar costs have
fallen and projects are running late, with only 13 percent of
approved projects actually installed and operating.
Solar industry participants say METI's actions mean it does
not make commercial sense to invest in the renewables sector.
"I really can't understand what METI is up to. It certainly
appears they are trying to kill or at least severely curtail
solar development," said Seth Sulkin, President & CEO of
Pacifica Capital K.K., a Tokyo-based solar power and commercial
real estate developer.
Prime Minister Shinzo Abe has abandoned the previous ruling
party's nuclear free policy and is now at the forefront of calls
to restart the country's 48 nuclear power plants shut after the
2011 Fukushima nuclear crisis.
METI officials say the solar sector needs reforming, and
industry participants accept mistakes have been made since 2012.
"The new measures were not implemented to discourage solar,
rather they were implemented to make the system fairer," said a
"There have been declines in costs of building solar
projects since the FIT (feed-in-tariff) system started, and the
cost declines have been reflected in the price, while the
internal rate of return has not been changed," the official
added. Feed in tariffs are guaranteed prices paid for the
electricity supplied by solar to attract investment.
PLANS FOR MEGA SOLAR
Japan has registered almost 66 gigawatts of planned solar
power under the renewable energy programme, nominally equal to
about 66 nuclear reactors. But only 8.7 gigawatts of solar power
has been connected to the grid, according to the latest figures
to March 31 provided by METI.
If Japan succeeds in bringing on stream its total approved
solar capacity it would be almost double that of Germany, the
world's biggest user of solar power with installed capacity of
35.7 gigawatts at the end of 2013.
"Japanese policymakers didn't expect this kind of explosive
introduction of PVs (photovoltaics or solar panels) and that
combined with a lack of knowledge of cost, structures and how
PVs work, led to mistakes being made," said Mika Ohbayashi, a
director at the Japan Renewable Energy Foundation.
Solar projects have been hampered by a lack of qualified
technicians, delays in approvals, land titles issues and some
operators have sat on approved projects waiting for equipment
costs to fall and sell off projects, say industry participants.
"The prices for solar were set too high, then since there
was no breakdown by size, nearly everything has been mega
solar," said Hisahi Kajiyama, of the Fujitsu Research Institute,
who advised former prime minister Naoto Kan on renewable energy.
"The initial set up of the system was naive."
When Japan introduced its new renewable energy policy in
July 2012, under which utilities must buy electricity generated
from renewable sources such as wind, solar or geothermal, its
feed-in-tariff rates were among the highest in the world.
METI has since cut its feed-in price to 32 yen per
kilowatt-hour (kwh) in the fiscal year starting April for
projects 10 kwh or more, down from 36 yen in the year ending in
March and lower from the 40 yen in the first year of the
And a panel of outside experts appointed by METI to evaluate
the system are planning to recommend capping the amount of
payouts for electricity bought, local media have reported.
"I don't know of any developers that can make the numbers
work at 32 yen," said Sulkin, arguing that installation costs
were not falling, as stated by METI, with solar panel prices
actually rising due to a weaker yen.
If the total amount of approved renewable energy capacity,
68.6 gigawatts, was all brought online it would lead to an
annual increase in costs of 1.9 trillion yen ($18.66 billion),
says the Central Research Institute of the Electric Power
Industry, which is run by Japan's regional power monopolies.
Some in the solar sector dismiss the cost estimate, saying
Japan will never build all 68.6 gigawatts of renewable energy.
"METI is working to regain the power and credibility it lost
after March 11 with polices like these that marginalise
renewables in order to emphasize industry-friendly energy
sources, like nuclear," said Tetsunari Iida, executive director
of Japan's Institute for Sustainable Energy Policies.
($1 = 101.8000 Japanese Yen)
(Editing by Michael Perry)