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Utilities limit access as clean energy tests Japan’s grid  

Credit:  By Chisaki Watanabe | Bloomberg | 2014-09-30 | www.bloomberg.com ~~

Shikoku Electric Power Co. (9507) will temporarily suspend grid access to new renewable energy projects, becoming the latest among Japan’s regional utilities to limit an influx that’s testing the nation’s electricity grid.

Shikoku Electric will suspend responding to new applications from clean energy producers beginning tomorrow, the utility said in a statement on its website today.

The decision, and a similar move last week by Kyushu Electric Power Co., threatens to undermine Japan’s push to expand renewable energy supply in the wake of the Fukushima nuclear crisis more than three years ago.

Grid access “has been the largest impediment for clean energy developers in Japan,” Mika Ohbayashi, director of the Tokyo-based Japan Renewable Energy Foundation, said in a statement last week after Kyushu Electric’s announcement.

At the heart of efforts by utilities to limit clean energy access is the design of Japan’s electricity distribution network and whether it’s able to handle the flow of intermittent supplies of power from hundreds of different producers. Like elsewhere, the grid is now being challenged and utilities are starting to balk.

Kyushu Electric, which supplies power to almost 9 million residential and business customers on the southern island of Kyushu, said on Sept. 24 that it will suspend responding to applications by developers seeking access to its grid while it reviews how much more clean energy it can handle.

Peak Demand

Tohoku Electric Power Co. (9506) will also restrict access, it said today. Hokkaido Electric Power Co., which serves customers on the northern island of Hokkaido, and Okinawa Electric Power Co. are also restricting access to varying degrees.

The moves run counter to effort by policy makers to promote and increase renewables.

Japan introduced incentives to encourage renewable energy developments in July 2012, offering some of the world’s most attractive rates to developers through a so-called feed-in-tariff program. A boom in clean energy projects – particularly in solar – resulted.

“The design of the feed-in tariff program could have included clauses to avoid a situation like this,” Takehiro Kawahara, an analyst for Bloomberg New Energy Finance, said by e-mail. “The current design did not take into account any measures on matching renewable energy project development with local electricity demand nor ease of integration of approved projects into the existing grid infrastructure.”

A working group will be set up to review Japan’s grid, including how much access is available for clean energy and how access can be expanded, the Ministry of Economy, Trade and Industry said in a document released today.

Japan has approved about 72,000 megawatts of clean energy projects since the feed-in tariff program’s inception. The bulk of the approvals, or 96 percent, has been solar. Japan had 31,000 megawatts of renewable energy at the end of 2010, according to Bloomberg New Energy Finance data.

Development Decisions

Not all clean energy projects qualifying for incentives have been built, signaling various bottlenecks ranging from the availability of land to the cost of equipment and labor. As of June, 11,090 megawatts of approved projects have begun operating, 15 percent of the total, according to the trade ministry.

Kyushu’s decision is already affecting developers and installers with plans in the region.

Sanix Inc., a solar-panel installer with headquarters in Fukuoka on Kyushu island, said it may shift workers.

“We will inevitably be affected as we won’t be able to install systems in areas covered by Kyushu Electric,” the company said in a statement dated Sept. 25. “We will review our plans for hiring, advertising and adding branches to minimize the impact” of the utility’s decision, the company said in the statement.

Kyushu Electric’s decision may also affect a 430-megawatt solar station under development on Ukujima, an island off Kyushu in southern Japan. The project, touted by developer Kyocera Corp. and its partners as the largest in the world to be built on agricultural land, has yet to secure grid access from Kyushu Electric.

Unanticipated Demand

“We want to continue talks with Kyushu Electric while gathering more information and working with our partners,” Sanae Iwasaki, a spokesman for Kyocera, said on Sept. 25 after Kyushu Electric’s announcement. Orix Corp. and Germany’s Photovolt Development Partners GmbH are among Kyocera’s partners in the Ukujima project.

Some industry officials say the surge in feed-in tariff applications overwhelmed expectations, meaning utilities had difficulty estimating how much additional power they could take on.

Developers rushed at the end of Japan’s fiscal year for approvals before the government lowered tariffs for solar projects. In March, Kyushu Electric received about 70,000 applications for grid access, equaling the amount received in the previous 11 months.

Utililty Pushback

“The way solar expanded so abruptly was something that people in the industry didn’t anticipate, including myself,” said Hiroshi Takahashi, a research fellow at Fujitsu Research Institute who says the tariffs for solar energy in Japan are too high. “The scheme has some problems. Developers rush at the end of fiscal year because the tariffs are only changed once a year.”

For the Japan Renewable Energy Foundation’s Ohbayashi, the pushback from Japan’s utilities is symptomatic of a larger problem. Besides solar, Japan has installed very little in the way of competing clean energy such as wind or geothermal.

“The serious problem is little growth in renewables other than solar PVs,” Ohbayashi wrote in a Sept. 5 column in which she looked at the challenges to the incentives program.

For wind power, grid access is proving a particularly troublesome hurdle for developers in Japan, Ohbayashi wrote.

“Operation of grids by power utilities that own generation facilities is obviously problematic in securing fair management in grid connection,” she wrote.

Source:  By Chisaki Watanabe | Bloomberg | 2014-09-30 | www.bloomberg.com

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

The copyright of this article resides with the author or publisher indicated. As part of its noncommercial effort to present the environmental, social, scientific, and economic issues of large-scale wind power development to a global audience seeking such information, National Wind Watch endeavors to observe “fair use” as provided for in section 107 of U.S. Copyright Law and similar “fair dealing” provisions of the copyright laws of other nations. Send requests to excerpt, general inquiries, and comments via e-mail.

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