Japan - Regulatory hurdles slow potential growth

JAPAN: Japan has long been an underperformer when it comes to installed wind power, and its global ranking is likely to slide further as delays in deciding pricing and longer environmental-assessment tests add to the time and expense required to bring wind farms online.

At end-2011, Japan had 2.5GW of installed wind power, an increase of 197MW from the previous year. With no additions to the 25.2MW offshore, the growth rate was the lowest since the fiscal year ending 31 March 2008.

Tetsuo Saitou, bureau director of strategy planning at wind-energy association JWPA, views the introduction of a system of feed-in tariffs as the epoch-making event of 2011. It should open the way to some business feasibility, infrastructure development, more rapid construction and technological development, he says.

Pricing delay

Saitou and the JWPA are hoping the government will set the price at which power firms are obliged to buy wind power in the YEN 20-24/kWh ($0.26-0.31/kWh). But, government approval is expected to be delayed as Prime Minister Yoshihiko Noda grapples with politically sensitive increases in general goods and services taxes that threaten to split his Democratic Party of Japan.

To make things worse, from October the environment ministry will introduce environmental testing requirements that are likely to double the time before construction can start from 18 months to three years. As a result, new fresh wind-power initiatives are expected.

"There are unlikely to be any new wind-power plants for the next three to four years, meaning Japan is likely to slip rapidly from its 2010 ranking of 13th globally," Saitou says. Japan failed to achieve government targets for 3GW of installed wind power by the year ending 31 March 2011. But if the government gets its act together, Saito adds, Japan could still achieve the JWPA target of 50GW installed wind power by 2050 and, as an interim, 12GW by 2020.