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Reviewing feed-in tarifs for renewables

October 16, 2014

 
 

 

 
Gov't eyes drastic review of renewable energy feed-in system

http://mainichi.jp/english/english/newsselect/news/20141016p2a00m0na015000c.html

 

The Ministry of Economy, Trade and Industry has begun considering a fundamental review of the so-called feed-in tariff system which obliges utilities to purchase power generated from renewable sources at fixed prices.

The potential overhaul of the FIT scheme, introduced in July 2012, is being discussed by the New Energy Subcommittee of the ministry's Advisory Committee for Natural Resources and Energy. Renewable energy suppliers were baffled by recent decisions by Kyushu Electric Power Co. and four other utilities to stop signing new contracts to buy renewable energy from solar power suppliers in their service regions.

The industry ministry has since come under pressure to deal with the problem swiftly. Meanwhile, measures to hold down power prices for regular consumers have also emerged as a major issue. The government is likely to be tested on whether it is truly serious about boosting renewable energy supplies.

At the subcommittee meeting on Oct. 15, a number of committee members called for a review of the FIT system, with some of them saying, "Unless solar power generation is curbed, plans to introduce other renewable energy sources will be adversely affected," and, "To stop accepting renewable energy will undermine the credibility of the (FIT) system."

Five utilities -- Hokkaido Electric Power Co., Tohoku Electric Power Co., Shikoku Electric Power Co., Kyushu Electric Power Co. and Okinawa Electric Power Co. -- have stopped signing new renewable energy purchase contracts. As of June, the industry ministry had certified planned and completed renewable energy facilities with a combined total output of 71.78 million kilowatts -- which would mean oversupplies in the service areas of all five of the above utilities. The electric companies have explained that the excessive renewable supply could destabilize overall power supply and even cause power outage.

In order to expand renewable energy supplies, measures should be taken to improve power transmission networks to allow surplus power to be supplied to other regions, store it in batteries, and curb renewable energy output, among other steps. If such measures are taken, utilities will be able to accept renewable energy even if the output of that energy is increased. In fact, Germany, Italy and Spain are even now maintaining stable local supplies by adjusting power generation and transmission throughout Europe as needed. In Germany and Italy, solar and wind power generation accounts for more than 10 percent of total electricity supply, and about 25 percent in Spain.

Nevertheless, the Japanese industry ministry and power companies failed to take measures to deal with the problem ahead of time. An industry ministry study group suggested in 2010 that battery installations and energy transmission and distribution networks must be improved if solar power output exceeds 10 million kilowatts. But the government and utilities did not take any specific action until June this year, when the renewable energy output was certain to vastly exceed 10 million kilowatts.

On the delay in taking action, the industry ministry said, "Because facilities are designed almost exclusively for solar power generation and the (cost) burden on the people could be increased in the future, we were not able to enhance power transmission lines without reviewing the system."

According to the ministry's estimates, if all the facilities certified under the FIT system by June this year were to go into operation, the cost to purchase renewable energy would amount to 2.7 trillion yen per year, forcing the utilities to put a monthly 935 yen surcharge on electricity bills for an average household. If power transmission cables were to be enhanced to expand the renewable energy supply system, the financial burden on consumers would be increased further.

Because of all this, a proposal was made at the subcommittee meeting on Oct. 15 that a questionnaire be conducted to ascertain how much extra cost consumers could tolerate. The subcommittee will also consider placing priority on introducing low-cost renewable energy by having a bidding system to hold down purchase prices. The subcommittee also discussed the need to address the overemphasis on solar power by promoting geothermal power generation, which is far less vulnerable to weather conditions.

The industry ministry is aiming to make its conclusions by the end of this year, so that it will be able to use them for discussions on purchase prices for next fiscal year. There has, however, been little progress in the question of the future "energy mix" -- the ratios of different energy sources in total generating capacity -- because the target for nuclear power output cannot be set until nuclear reactors are actually reactivated, a senior industry ministry official said. The target for renewable energy output could, in other words, be affected by the ratio of nuclear power output.

As such, some experts say that it will be difficult to promote renewable energy. At the subcommittee meeting, many panel members voiced opinions against a move to return to the policy of nuclear power dependence, with one saying: "I fear that the problems with the (electricity) system will lead to renewable energy bashing." Another commented, "Nuclear power generation costs money, too."

The decisions by the five utilities to stop signing new renewable energy contracts have caused a stir among renewable energy suppliers and local governments.

 

 

 

October 16, 2014(Mainichi Japan)

Government looks to reassess feed-in tariff system for renewable sources of electricity

Green energy tariffs draw scrutiny

 

Staff Writer

 

A committee involved with the nation’s energy policy met Wednesday to discuss revisions to the 2-year-old feed-in tariff system for renewable energy.

It will also investigate a utility that recently halted renewable electricity purchases under the system by claiming it didn’t have the capacity to handle the large amounts being generated.

Since the feed-in tariff system was introduced in July 2012, obliging utilities to purchase electricity generated from solar, wind, geothermal, mini-hydro and biomass sources for a fixed price over a fixed period, growth in renewable energy has been rapid.

As of April, about 10 gigawatts of renewable energy capacity has been installed and is underway. Of this, about 7 gigawatts, mostly in solar panels, was installed in fiscal 2013.

But expansion has brought problems. Last month, Kyushu Electric Power Co. announced it was suspending talks with renewable energy suppliers, except for residential solar arrays under 10 kilowatts.

The reason, the company said, was that its grid doesn’t have the ability to transmit generated power from all of the approved projects if they went online, and that there was a risk of overloading the grid and creating instability in the supply.

A subcommittee of the industry ministry’s Advisory Committee for Natural Resources will look into whether Kyushu Electric really can’t handle more renewable electricity, and review grid capacity at the other major utilities. The committee may also allow utilities to go more than 30 days without purchasing renewable electricity, as a way of making it easier to balance supply, capacity and demand.

Under the feed-in tariff program, over 90 percent of the projects approved have been for solar projects. But concerned about over-relying on one source, the government will look at ways to increase the number of other renewable energy projects, especially wind and geothermal. Kyushu has one of Japan’s largest concentrations of geothermal resources, and the government says it wants to prioritize easier grid connections for this power source.

The committee is expected to issue a final report by the end of this year and suggest possible new legislation.

Also to be discussed are proposals for a bid system that gives priority to approval of renewable energy projects that can provide electricity at the cheapest possible rates, and for shortening the period when feed-in tariff rates are revised from once a year to twice a year.

 

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