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Utility resistance still the biggest obstacle -- Not much cheer in Japan

JAPAN: On the surface, the past year seems to have been a good one for Japan's wind industry. While no official development statistics are yet available -- and government authorities are generally refusing to comment on progress as a result -- 333 MW of new wind capacity was installed to bring cumulative capacity up from 1061 MW at the end of 2005 to 1394 MW by the end of 2006, according to Tetsunari Iida of the Institute for Sustainable Energy Policies. A second encouraging development was the government's announcement that it intends to raise the targets controlling its green power mandate.

An official order on the targets, which utilities must demonstrate they are achieving through the acquisition of green power certificates, is expected this month. The Ministry of Economy, Trade and Industry (METI) says the aim will be for 16 TWh from renewables by 2014, with wind accounting for around half of that, 8.2 TWh, up from the 1.9 TWh it contributed in 2005. The current goal set in 2003 is 12.2 TWh by 2010, which envisages 3000 MW of wind. At current build rates Japan is unlikely to add 1600 MW in the next four years and will almost certainly fall short of that goal by 200-500 MW. A legislative push would seem to be essential.

Even with an increased green power obligation on utilities, the new renewables goal, if confirmed, amounts to just 1.63% of total electricity generation by 2010, up from the previous target of 1.35%. Somewhat conversely, given the intention to raise the target, METI's 2007 budget proposal, unveiled in December, cuts money for renewable energy sources by 10% to JPY 140.8 billion ($1.17 billion), while increasing funding for "a nuclear Japan" by 5.5% over the same period to JPY 177 billion ($1.47 billion).

Haruhiko Ando of METI's New and Renewable Energy Division acknowledges the target increase is modest. "The utilities wanted electricity supply from renewables kept flat, and seen from their perspective, that's understandable," says Ando. "But after long discussion, we managed to convince them of renewables' importance and they have come around to co-operating." If true, that is good news for the wind industry, which sees the utilities as the biggest barrier to more wind power in Japan.

But not everyone is as sanguine as Ando. Iida says in reality there is no change in utility resistance. "Renewables are not cost-competitive, they claim," says Iida. He says utilities claim that even the 12.2 TWh current obligation by 2010 will cost JPY 100 billion ($830 million). "But our estimate is that with the average cost of renewable credits costing JPY 5/kWh ($0.0415/kWh), the cost is at most JPY 50 billion ($415.2 million)," he says.

The national outlook for wind in Japan is "depressing," Iida says. For development to take off, more transmission capacity is needed, government must relax rigid regulation of the flow of power across the grid, and utilities must accept more wind power without also demanding it be accompanied by battery backup. Japanese utilities say that wind's variable supply destabilises the grid, a claim lacking any technical basis, says Iida.

Tokyo bright spot

Still there is one bright light for wind prospectors. Tokyo, with a population of 12.5 million, already sources 2.7% of its energy from renewables. Last April, the Tokyo metropolitan authority upstaged central government, declaring it will ramp up use of renewables to 20% of total energy supply by 2020. In addition, it announced a JPY 50 billion ($415.2 million) budget for renewables, with payouts beginning this autumn and extending over five to ten years with the possibility of renewal should things go well. Immediate implementation is planned mainly for solar, but a wind power committee was established last month to begin research into offshore projects. There are also plans to use green certificates to finance wind farms supplying the Tokyo grid, says Iida, who sits on the planning board of the new initiative.

Moreover, Tokyo's renewable energy masterminds hope to begin challenging restrictions against feeding wind generated electricity into the grid. The strategy, says Iida, is to contract wind power from far flung areas currently kept at bay by utilities. If the corporations balk, Tokyo's bosses plan to argue their case in committee, gradually eroding resistance, he says.

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