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The Renewable Energy Development and Related Promotion and Pricing Mechanism in Japan September 26, 2013 APEC Workshop on Renewable Energy Promotion and Pricing Mechanism, Taipei, Chinese Taipei Takao Ikeda The Institute of Energy Economics, Japan (IEEJ)

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Page 1: The Renewable Energy Development and Related Promotion and Pricing Mechanism in Japan September 26, 2013 APEC Workshop on Renewable Energy Promotion and

The Renewable Energy Development and Related Promotion and Pricing

Mechanism in Japan

September 26, 2013

APEC Workshop on Renewable Energy Promotion and Pricing Mechanism, Taipei, Chinese Taipei

Takao IkedaThe Institute of Energy

Economics, Japan (IEEJ)

Page 2: The Renewable Energy Development and Related Promotion and Pricing Mechanism in Japan September 26, 2013 APEC Workshop on Renewable Energy Promotion and

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Generation Mix

Page 3: The Renewable Energy Development and Related Promotion and Pricing Mechanism in Japan September 26, 2013 APEC Workshop on Renewable Energy Promotion and

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Generation Mix Trend in Japan

(Source) METI

§ LNG mainly compensates for the decline of nuclear after 2011

Page 4: The Renewable Energy Development and Related Promotion and Pricing Mechanism in Japan September 26, 2013 APEC Workshop on Renewable Energy Promotion and

Note: “Etc.” of “Renewable energy, etc.” includes the recovery of energy derived from waste, refuse derived fuel (RDF) products, heat supply utilizing waste heat, industrial steam recovery, and industrial electricity recovery.

Source: Prepared based on the Agency for Natural Resources and Energy’s “Outline of Electric Power Development in FY 2010”

Among the total electricity generated in fiscal 2010, renewable energy, etc. accounted for approximately 10%; approximately 9% of which is hydraulic power generation.

Other renewable energy is still cost prohibitive.

Approx. 24%

Approx. 31%

Approx. 27%

Approx. 8%

Approx. 9% Approx. 1%

PetroleumCoal

Natural gas

Nuclear power

Hydropower

Renewable energy

excluding hydropower

4

Natural gas

Coal

Approx. 25%

Petroleum

Approx. 14.4%

Nuclear power

Approx10.7 %

Hydropower

Approx. 9%

Approx. 1.4%Renewable en-ergy excluding hydropower

Approx39.5 %

Composition of annual electricity generated in Japan

FY 2010 FY 2011

4

Current Generation Mix in Japan

Page 5: The Renewable Energy Development and Related Promotion and Pricing Mechanism in Japan September 26, 2013 APEC Workshop on Renewable Energy Promotion and

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Promotion and Pricing Mechanism of New and Renewable Energy

Page 6: The Renewable Energy Development and Related Promotion and Pricing Mechanism in Japan September 26, 2013 APEC Workshop on Renewable Energy Promotion and

Major laws and strategies for Renewable Energy in Japan   #1

1. Sunshine Project (1974) Long-term national project for new energy technology research and development in Japan launched in July 1974.

In 1993, Sunshine project was renewed as the New Sunshine Project consolidated with Moonlight Project ( Energy Efficiency) and other environmental project. The project has finished in 2000.

2. Law Concerning Promotion of the Development and Introduction of Alternative Energy (1980 ) Known as “Oil Alternative Energy Law”. Oil Alternative Energy were developed and introduced for (1)Combustion, (2)heat, (3)energy, and (4)electricity which are generated from other than oil products. In 2009, oil alternative law was renewed as “NonFossil Energy Law”. In this law, energy suppliers (Electricity/Gas/Oil companies) have to use non-fossil energies while using fossil oil efficiently.

3. Law Concerning Special Measures to Promote the Use of New Energy (1997) Known as “New Energy Law”. New Energy is energy which are not price-competitive among Oil Alternative Energy. Hydropower and Geo-thermal power are not included because of their price-competitiveness.(http://www.japaneselawtranslation.go.jp/law/detail/?ft=1&re=02&dn=1&co=01&ky=%E6%96%B0%E3%82%A8%E3%83%8D%E3%83%AB%E3%82%AE%E3%83%BC&page=3) 6

Page 7: The Renewable Energy Development and Related Promotion and Pricing Mechanism in Japan September 26, 2013 APEC Workshop on Renewable Energy Promotion and

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Revision of “New Energy”

(Source) Agency for Natural Resources and Energy, Ministry of Economy, Trade and Industry (METI), Japan (modified by IEEJ)

OilAlternative Energy

Large Hydropower

Ocean Energy

Recycling EnergyNatural Energy

Photovoltaic Power

Wind Power

Solar Thermal

Waste-based Fuels (RDF)

 

(Energy Crops)

Unutilized Energy(Snow Ice)

Biomass

Biomass Power

Biofuels

Renewable Energy

Geothermal(binary)

Natural Gas Nuclear PowerCoal

New Energy

Biomass Thermal

(Black Liquor)(Scrap Wood)

Waste Power

Unutilized Energy(Temperature

Deference Energy)

Waste Thermal

Small Hydropower Geothermal

Innovative High-level Energy Utilization Technology

Development of Renewable Energy

Rapid Advancement of Energy Efficiency

Diversification of Energy Source

PV ( High Efficiency, New Materials ) , Battery for PV and Wind in parallel including capacitor, Ethanol Production Technology from lignocellulosic biomass, BTL ( Biomass to Liquid ) Production Technology, Gasification Power Generation from Biogas

Stationary Fuel Cell, Hybrid Auto, Natural Gas Cogeneration, Heat Pump, Oil Residue Gasification Technology (IGCC, IGFC, etc), Clean Coal Technology

Fuel Cell Vehicle, Electric Vehicle, Plug-in Hybrid Vehicle, CNG Vehicle, Diesel-substitute LP gas Vehicle, Hydrogen Vehicle, High Concentration Bio Fuel Vehicle, GTL Production Technology, DME Production Technology, Non-traditional Fossil Fuel Usage Technology (Methane Hydrate, Oil Sand, etc)

Page 8: The Renewable Energy Development and Related Promotion and Pricing Mechanism in Japan September 26, 2013 APEC Workshop on Renewable Energy Promotion and

Major laws and strategies for Renewable Energy in Japan   #2

4. Special Measures Law Concerning the Use of New Energy by Electric Utilities (2002) Known as RPS (Renewable Portfolio Standard) Law. In this law, the amount usage of renewable energy goals were established with 5 kinds of electricity (wind, solar, small hydropower, biomass power generation , binary geothermal).( http://www.rps.go.jp/RPS/new-contents/top/toplink-english.html)

5. Biomass Nippon Strategy (2002/2006) Comprehensive strategy of utilization of biomass set by Ministry of Agriculture, Forestry and Fisheries in cooperation with Ministry of Economy, Trade and Industry, the Ministry of the Environment, and Ministry of Land, Infrastructure, Transport and Tourism etc.

6. New National Energy Strategy (2006) National energy strategy for 2030. Regarding renewable Energy, (1) promoting innovation in new energy technologies (achievement of PV power cost reduction comparable to thermal power generation etc.), (2) introducing 20% alternative energy in transportation sector etc.

7. Special Measures Law Concerning the Purchase of Renewable Energy Electricity by Electric Utilities (2011)Known as FIT (Feed in Tariff) Law, which will start from July, 2012. In this law, the purchasing price and its duration will be determined separately.

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Page 9: The Renewable Energy Development and Related Promotion and Pricing Mechanism in Japan September 26, 2013 APEC Workshop on Renewable Energy Promotion and

Outline

RPS (Renewable Portfolio Standard) wind, solar, small hydropower, biomass power generation , binary geothermal 8-year target set by every 4 years

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2003

Buyback surplus PV electricity from residence Developed from Utilities’ voluntary Net metering system

2009 Nov

Passage of FIT Law2011 Aug

Commencement of FIT Start from July 1

2012 Jul

Public Comment From May 16 to June 1

2012 May

Proposal from the Advisory Committee Proposal from Advisory committee for the purchasing rate and the duration

2012 Apr

Revision of PV tariff Based on the PV system price decline

FY 2013

Page 10: The Renewable Energy Development and Related Promotion and Pricing Mechanism in Japan September 26, 2013 APEC Workshop on Renewable Energy Promotion and

2003

2004

2005

2006

2007

2008

2009

2010 Wind

Wind

Wind

Wind

Wind

Wind

Wind

Wind

Hydro

Hydro

Hydro

Hydro

Hydro

Hydro

Hydro

Hydro

Biomass

Biomass

Biomass

Biomass

Biomass

Biomass

Biomass

PV

PV

PV

PV

Biomass

PV

PV

PV

PV

PV under Buyback

PV under Buyback

Commencement of RPS

Buyback System for surplus PV electricity from residence

(TWh)

0.0 2.0 4.0 6.0 8.0 10.0 12.0

Renewable Energy Purchased by Utilities under RPS

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Source: METI

Page 11: The Renewable Energy Development and Related Promotion and Pricing Mechanism in Japan September 26, 2013 APEC Workshop on Renewable Energy Promotion and

Buyback System started from Nov 2009(1)

○Of the electricity generated by photovoltaic generation systems, surplus electricity will be purchased.○ The buyback period is within the 10 years from the start of the program. The buyback price is fixed.

( The buyback price may differ depending on the fiscal year in which a panel is installed. In the initial stages, it is \48/kWh for residential ※use [less than 10kW].)

○ Expenses will be born by all electricity users.

Major points of the buyback system

Purchase revenue(\48/kWh for residential use)

as of Nov. 2009

Surplus electricity

Users of photovoltaic generation systems

Solar surcharge(Born by all electricity

users)

Electricity

Electric P

ower

Com

paniesE

lectric Pow

er C

ompanies

Electricity U

sersE

lectricity Users

Purchase revenue(\24/kWh for purposes other

than residential use)

Surplus electricity

※In the initial stages after installation, \48/kWh for residential use (less than 10kW) and \24/kWh for other uses.  In the case where a private electric generator is also installed, \39/kWh and \20/kWh, respectively.

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Page 12: The Renewable Energy Development and Related Promotion and Pricing Mechanism in Japan September 26, 2013 APEC Workshop on Renewable Energy Promotion and

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November 2009- March 2011

April 2011-March 2012 (FY2011)Continued until April 2013 (FY2012)

Residential UseUnder 10kW

48 JPY/kWh(39 JPY/kWh)

42 JPY/kWh(34 JPY/kWh)

Non Residential Use and Residential Use Over 10kW

24 JPY/kWh(20 JPY/kWh)

40 JPY/kWh(32 JPY/kWh)

*Rate increased because of finishing subsidy

Rate inside the brackets are for the houses/ facilities using private generation system (photovoltaic generation plus fuel cells, etc.)

Buybacks rate will be decide each year and the rate continues for 10 years after the start of the program.

Buyback System started from Nov 2009(2)

Page 13: The Renewable Energy Development and Related Promotion and Pricing Mechanism in Japan September 26, 2013 APEC Workshop on Renewable Energy Promotion and

Source: METI

FIT Basic Scheme (Started From July 2012)

Utilities

Power from PV at houses

Power producers utilizing renewable

energy

PV

Middle & Small Hydro

Wind

Biomass

Geothermal

Electricity from Renewable Source

Purchase Electricity

Decide Surcharge rate for FIT every

fiscal year

Collecting Surcharge rate for FIT

With ordinary electricity rate

Advisory committee for purchasing price etc

Decide the tariff rate every fiscal year with respect for the opinion

from advisory committee for purchasing price

Approving power generation facilities

CustomersOrganization for adjusting the surcharge by different region

Supply Electricity

Fund for Purchasing Electricity from

Renewable Energy

Payment of collecting amount

of surcharge

Advice of Rate and Duration

Minister Economy, Trade and Industry

Page 14: The Renewable Energy Development and Related Promotion and Pricing Mechanism in Japan September 26, 2013 APEC Workshop on Renewable Energy Promotion and

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Source: METI

  RPS(PV: Buyback) Feed in Tariff

PV Under about 500kW No Limitation by Capacity

Wind - -

Hydro Under 1MW Under 30MW

Geothermal Only Binary Cycle power plant No Limitation

(Including Flash Steam Plant)

Biomass No category Differentiate the purchase rate by category

Major Revision from RPS to FIT

Page 15: The Renewable Energy Development and Related Promotion and Pricing Mechanism in Japan September 26, 2013 APEC Workshop on Renewable Energy Promotion and

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Electricity Cost Estimation in Japan

Source: National Policy Unit, Cabinet Secretariathttp://www.npu.go.jp/policy/policy09/archive02_shisan_sheet.html

201020202030(Japanese Yen/kWh)

Page 16: The Renewable Energy Development and Related Promotion and Pricing Mechanism in Japan September 26, 2013 APEC Workshop on Renewable Energy Promotion and

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Feed in Tariff started from July 2012

Source: METI

FY 2013; PV 10kW >=: \37.8(36.0+Tax)/kWh, 10kW< \38.0/kWh (Incl. Tax)

Page 17: The Renewable Energy Development and Related Promotion and Pricing Mechanism in Japan September 26, 2013 APEC Workshop on Renewable Energy Promotion and

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Deployment in FY2012 and FY2013(April and May)

Source: METI

Major part of deployment under FIT is PV due to the development Terms

    (MW)

 

Cummulative Deployment Volume as of March 2011

(Approxmate)

Start operation from April 2012 to March 2013

Start operation

from April to May 2013

Development Term

PV (Residential) 4,400 1,269(Apr-Jun: 300) 279 2-3months

PV (Non Residential) 900 706(Apr-Jun: 2) 961 1 Year

Wind 2,600 63(Apr-Jun: 0) 2 4-5 Yrs

Middle and Small Hydro(More than 1MW) 9,400 1

(Apr-Jun: 1) 0 2-3Yrs

Middle and Small Hydro(Less than 1MW) 200 3

(Apr-Jun: 1) 0 2-3Yrs

Biomass 2,300 36(Apr-Jun: 6) 38 3-4Yrs

Geothermal 500 1(Apr-Jun: 0) 0 9-13Yrs

Page 18: The Renewable Energy Development and Related Promotion and Pricing Mechanism in Japan September 26, 2013 APEC Workshop on Renewable Energy Promotion and

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PV System cost revison (residential use)

Source: METI

FIT for PV residential sect which is started from July 2012 was based on the PV System cost of JPY(10 thousand) 46.6 / kW in 1st Q 2012.

Revised FIT for residential PV for FY 2013 should be based on the latest (4th Qtr) cost which is JPY(10 thousand) 42.7 / kW.

About JPY(10 thousand) 4 / kW has dropped

(10thousand JPY/kW)

Oct-Dec,2011

Jan-Mar,2012

Apr-Jun,2012

Oct-Dec,2012

Jul-Sep,2012

Jan-Mar,2013

Apr-Jun,2013

Already Build

Total Ave.

Newly Build

System cost for FY2012 tariff

Latest System cost for FY2013 tariff

Fiscal YearSubsidy

(10Thousand JPY/kW)Condition

(10Thousand JPY/kW)Buy BackTariff

(JPY/kWh)

2010 70 650 482011 48 600 422012 35 475 42

2013 20 410 38

National Government Subsidy   for Residential PV system

Page 19: The Renewable Energy Development and Related Promotion and Pricing Mechanism in Japan September 26, 2013 APEC Workshop on Renewable Energy Promotion and

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Development in the Future

Page 20: The Renewable Energy Development and Related Promotion and Pricing Mechanism in Japan September 26, 2013 APEC Workshop on Renewable Energy Promotion and

20(Source) Agency for Natural Resources and Energy, Ministry of Economy, Trade and Industry (METI), Japan

Mori Geothermal Plant(Hokkaido Electric Power Co., Inc. DonanGeothermal Energy Co., Ltd.)

Onuma Geothermal Plant(Mitsubishi Materials Corporation)

Sumikawa Geothermal Plant(Tohoku Electric Power Co., Inc.and Mitsubishi Materials Corporation)

Uenotai Geothermal Plant(Tohoku Electric Power Co., Inc.and Akita Geothermal Energy Co., Ltd.)

Hacchobaru Geothermal Plant,Unit 1 and Unit 2(Kyushu Electric Power Co., Inc.)

Otake Geothermal Plant(Kyushu Electric Power Co., Inc.)

Takigami Geothermal Plant (Kyushu Electric Power Co., Inc.and Idemitsu Oita Geothermal Co., Ltd.)

Kokonoe Geothermal Plant(Kokonoe Kanko Hotel)

Takenoyu Geothermal Plant(Hirose Trading Co., Ltd.)

Yamagawa Geothermal Plant (Kyushu Electric Power Co., Inc. andJapex Geothermal Kyushu Co., Ltd.)

Suginoi Geothermal Plant(Suginoi Hotel)

Ogiri Geothermal Plant (Kyushu Electric Power Co.,Inc. and Nittetsu KagoshimaGeothermal Co., Ltd.)

Kirishima Kokusai Hotel Geothermal Plant (Daiwabo Kanko Co., Ltd.)

Matsukawa Geothermal Plant (Japan Metals & Chemicals Co., Ltd.)

Kakkonda Geothermal Plant, Unit 1(Tohoku Electric Power Co., Inc. and Japan Metals & Chemicals Co., Ltd.)

Kakkonda Geothermal Plant, Unit 2(Tohoku Electric Power Co., Inc. and Tohoku Geothermal Energy Co., Ltd.)

Onikobe Geothermal Plant(Electric Power Development Co., Ltd.)

Yanaizu-Nishiyama Geothermal Plant(Tohoku Electric Power Co., Inc. and Okuaizu Geothermal Co., Ltd.)

Hachijojima Geothermal Plant (Tokyo Electric Power Co., Inc.)

Geothermal Power Plants (Japan)

Page 21: The Renewable Energy Development and Related Promotion and Pricing Mechanism in Japan September 26, 2013 APEC Workshop on Renewable Energy Promotion and

Governmental support measures FY 2012 budget

[Targets] Cost of test drilling, etc. including geological surveys.

Budget: \9.05 billionSubsidy ratio: 50% to 75%

Subsidy

Exploration (drilling of exploration wells, etc.)

Construction stage Installation of power generation facilitiesGeological survey

Investment Loan guarantee

[Targets] Cost of drilling exploration wells to check whether a sufficient volume of steam can be stably extracted from heat sources.

Budget : \5 billionInvestment ratio: 50%  

[Targets] Cost of drilling wells necessary for power generation

Budget: \1 billionLoan guarantee ratio: 80%

Electric utilities purchase electricity generated from renewable sources including geothermal at the procurement price and for the procurement period.

Feed-in tariff scheme

Risk

Choice of Energy Options:Issued on June 2012

The geothermal amount of introduction is made into 3% of the total electric power production (27,200

millions kwh) at the maximum in 2030. 2010 track record: ※ 0.2% (2,600 millions kwh)

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Page 22: The Renewable Energy Development and Related Promotion and Pricing Mechanism in Japan September 26, 2013 APEC Workshop on Renewable Energy Promotion and

Regulations on geothermal development

1. Natural Park Act  Geological surveys and drillings for geothermal energy in national parks are restricted according to the protection zones.

2. Hot Spring Act Drilling in pursuit of hot springs (hot water, mineral water, steam and other gas from underground) requires a permission of the prefectural governor.

3. Forest Law  Cutting down protected forests for constructing a base for drilling or a power generation plant requires delisting from protected status. Delisting requires a proven necessity for the public interest.

4. Act on Special Measures concerning Reform of National Forest Business Management  Constructing a base for drilling or a power generation plant in a national forest requires loaning. A national forest can be used for public use or within 5ha in area, otherwise it cannot be used.

5. The Environmental Impact Assessment Law  Constructing a power generation plant with output of 10,000kW or over requires EIA. When constructing a power generation plant with an output of 7,500kW-10,000kW, the necessity of EIA is judged by project.

6. Electric Utilities Industry Law Power facilities requires placing chief engineers in charge of supervision of safety matters of construction work, maintenance and operation of the power facilities.

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Page 23: The Renewable Energy Development and Related Promotion and Pricing Mechanism in Japan September 26, 2013 APEC Workshop on Renewable Energy Promotion and

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Offshore Wind demonstration project

Offshore of Choshi, Chiba Pref.(2.4MW) /Offshore of Kitakyushu, Fukuoka Pref (2.0MW)

Wind ResourceWind Speed

Offshore of Fukushima Pref.

METI2MW class Floating offshore wind turbine and

2 set of 7 MW class floating wind turbineFloating substation from FY2013

METI (NEDO)2MW class wind turbine Wind observatory towerdemonstration projects

started from FY2012

Offshore of Goto, Nagasaki Pref.(2.4MW) MOE

100KW class floating wind turbine from FY2012

2MW class floating Wind from FY2013

Page 24: The Renewable Energy Development and Related Promotion and Pricing Mechanism in Japan September 26, 2013 APEC Workshop on Renewable Energy Promotion and

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Renewable Energy Deployment Potential in Japan -19%

Page 25: The Renewable Energy Development and Related Promotion and Pricing Mechanism in Japan September 26, 2013 APEC Workshop on Renewable Energy Promotion and

Grid Framework in Japan

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Tokyo

Tohoku

Hokkaido

KansaiChubu

Kyushu

Hokuriku

Direct current power

transmission

Frequency converter station

Shikoku

Direct current power transmission

Page 26: The Renewable Energy Development and Related Promotion and Pricing Mechanism in Japan September 26, 2013 APEC Workshop on Renewable Energy Promotion and

Solar and Wind Power Deployment Potential in Japan

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Page 27: The Renewable Energy Development and Related Promotion and Pricing Mechanism in Japan September 26, 2013 APEC Workshop on Renewable Energy Promotion and

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Large Battery Demonstration Projects

Lithium-ion Battery NAS BatteryRedox Flow Battery

Hokkaido Electric Company Tohoku Electric CompanyChubu Electric CompanyKansai Electric Company

Type of Battery Redox Flow battery Lithium- ion Battery NAS BatteryCapacity 40MW 20MW 6MW

Project ObjectiveSurplus Electricity from

Wind powerFrequency Fluctuation

Grid Stabilization from PV(Surplus Elec. & Frequency

Fluctuation)

Large Battery Demonstration Projects for Grid Stabilization

R&D Target : Cost reduction of batteries as same level as Pumped Hydro in 2020

Page 28: The Renewable Energy Development and Related Promotion and Pricing Mechanism in Japan September 26, 2013 APEC Workshop on Renewable Energy Promotion and

Demonstration Project on Next-generation Energy and Social Systems in Japan (FY 2010-FY2014)

Demonstration using new technologies in science city

Demonstration in industrial city

Kitakyushu City

Large-scale demonstration in major city

Community-based demonstration in provincial

city

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Yokohama City

Toyota City

Kyoto Keihanna District

Large-scale and cutting-edge pilot projects have been launched in 4 areas. The outcomes to be accumulated through the projects will be utilized to create smart communities and smart cities in Asia and other countries.

Page 29: The Renewable Energy Development and Related Promotion and Pricing Mechanism in Japan September 26, 2013 APEC Workshop on Renewable Energy Promotion and

Information of Smart Community Projects

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http://jscp.nepc.or.jp/en/http://jscp.nepc.or.jp/en/video.shtml

Page 30: The Renewable Energy Development and Related Promotion and Pricing Mechanism in Japan September 26, 2013 APEC Workshop on Renewable Energy Promotion and

Thank you for your attention!

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