A government mandate issued in April 2003, obliging the utilities to source 1.35% of their electricity supply from renewables by 2010, has resulted in significant growth in the country's wind market over the last few years. For the year up to the end of March 2005, new wind installations were up 14.4% on the previous year, with 249 MW installed, bringing the country's total wind capacity to just over 900 MW.
But the market now threatens to grind to a halt. The Japanese Wind Power Association (JWPA) says the government's target is expected to be missed by at least 500 MW unless the annual build rate significantly increases.
The utilities argue wind power is unreliable and further growth will destabilise their grid networks. According to JWPA, some 1700 MW of planned wind projects have failed to proceed after failing to secure power purchase contracts from utilities in 2003.
Hardest hit are areas with the best conditions for wind development in the country. Hokkaido Electric Power was the first to set a limit for total wind capacity at 250 MW back in 2002 and has failed to take any action to lift it since the government's April 2003 mandate was issued. Now, three other utilities have joined it. Shikoku Electric Power introduced a cap of 200 MW in February, which wind development is already up against. It has no further plans for additional wind capacity. In August, Chugoku Electric Power announced a cap of 413 MW by the end of 2007. It is committed to buying 243 MW this year and 50 MW in both 2006 and 2007. Last month, Tohoku Electric Power, which currently buys around 40% of all wind generated electricity in Japan, set a 530 MW cap. It has only 50 MW to go before the cap is reached.
Kyushu Electric Power is widely expected to follow suit. The utility committed to buying 365 MW of wind energy up to March this year and has since issued a tender for another 38 MW, due online later this year. The wind industry fears it plans to set its cap at the 403 MW it has already committed to. Japan's five other utilities have not set limits on purchasing wind power, but are restricted in potential due to varying factors such as limited wind resources and lack of available or suitable sites for development.
With the projects already on the table, Japan's total installed wind power capacity is expected to reach 1200 MW by March 2006. Unless the utilities can be persuaded or coerced into changing their minds on how much wind their systems can cope with, the market will stop dead by 2007.
The government says it is considering subsidising the cost of installing equipment to minimise fluctuations in electricity output in areas covered by the Hokkaido, Tohoku, Shikoku and Kyushu electric power companies. If they go ahead, the subsidies are likely to be made available from April 2006, it says.
The plan being considered by the Agency of Natural Resources and Energy is to partially foot the bill for energy storage facilities, which would store electricity generated by wind farms for supply to the utilities as and when required. The agency says such facilities would add a further 50% to the cost of producing wind electricity. JWPA, however, believes it would add a further 100% to the cost. The government already provides about ´70 billion in supporting wind power development. No budget has yet been suggested for the storage plan.