TOKYO—New minimum price rules for Japan’s renewable-energy sector will likely help solar power shine, but bird strikes and tough environmental assessment needs may make it tough for wind generation to take off.
Japan now needs to import nearly all the fuel it uses to make electricity, and with its nuclear sector still almost entirely offline, it recently introduced a new feed-in tariff system as part of efforts to promote renewable energy, a sector in which it lags far behind the U.S. and the European Union.
However, new environmental rules being applied from October will put new wind projects at a strong disadvantage.
The country now relies on renewables, mostly hydropower, for roughly 10% of its energy needs and wants to see that rise to as much as 35% by 2030. Solar, wind and geothermal energy currently collectively account for just 1.4% of Japan’s total power output.
The feed-in tariff system came into effect in July and obliges Japan’s 10 regional power utilities to buy electricity generated by solar projects around a price of ¥40 per kilowatt-hour for 20 years, and wind-power around ¥23/kWh for 15 years.
Those rules apply to projects either receiving government approvals or finalizing power sales contracts with utilities by June 2015, after which there are no guarantees on future tariff amounts or duration. A rolling back of such tariffs in cash-strapped and debt-laden EU countries has hit orders for new solar and wind equipment.
Despite this underpinning in Japan, prospective wind-farm operators will find it harder to take final investment decisions than those planning solar projects, as they must go through tough and potentially lengthy environment approval processes from October due in part to worries that more wind farms will kill more birds flying into windmill blades.
Japan’s Ministry of Environment found in a 2007-09 study that wind turbines located in areas inhabited by raptors or used by migratory birds are a significant threat to their populations, and the findings prompted it to issue new guidelines for wind farms last year.
Animal-welfare groups argue that the careful siting of wind farms can keep deaths to a minimum. Migratory birds tend to take the same route year after year, while raptors live in specific areas, said Tomoko Shimura, a director of the Nature Conservation Society of Japan.
Solar projects don’t need environmental assessments unless their plans call for significant changes to topography, such as the flattening of a hill.
This and the new tariffs are good news for major or expanding solar players, like Toshiba Corp., Sharp Corp. and Kyocera Corp. as well as for planned new entrants like mobile phone service provider Softbank Corp. and foreign players like China’s Suntech Power Holdings Co.
Worries about environmental approvals are having an impact: In the first month after the feed-in tariffs were introduced July 1, the government signed off on many thousands of mostly small projects, but more than 99% of them were in the solar sector.
“There won’t be a lot of wind-power projects coming online one after another,” said Toshio Hori, president of wind-farm developer Green Power Investment Corp.
Mr. Hori said his company will be able to take advantage of the tariff benefits for a 48-megawatt project in Shimane prefecture in western Japan—as it has already been given regulatory approvals needed to ensure final government acceptance—but future projects could suffer.
Next in the pipeline is a 126.5 MW wind farm in Aomori prefecture in northern Japan.
Mitsue Usami, a spokeswoman for the Eurus Energy Group, the renewable energy unit of Toyota Tsusho Corp. and Japan’s largest wind power producer by capacity, said the two or three years it will take to get environmental approval “is a challenge.”
Write to Mari Iwata at mari.iwata/dowjones.com
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