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.
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. Now, solar,
wind and geothermal energy 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 Y40 per kilowatt-hour for 20 years, and wind-power around Y23/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 result in far more deaths of birds flying
into windmill blades.
Japan
's
Ministry of Environment found in a 2007-2009 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, Tomoko Shimura, a director of the
Nature Conservation Society of Japan, said.
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. (6502.TO), Sharp Corp. (6753.TO) and Kyocera Corp.
(6971.TO), planned new entrants like mobile phone service provider Softbank
Corp. (9984.TO) and foreign players like China's Suntech Power Holdings Co. (STP).
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 these were in the
solar sector.
"There won't be a lot of wind power projects coming online one after
another," Toshio Hori, president of wind-farm developer Green Power Investment
Corp., told Dow Jones Newswires.
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. (8015.TO) 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."
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