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Friday, Sept. 24, 2010


Competitive renewable energy

The trade and industry ministry has drafted a plan to have power utility companies buy all electricity generated from renewable energy sources. Currently they only buy surplus solar-generated electricity from photovoltaic (PV) panels installed at homes. In addition to this, power companies would have to buy all electricity generated by wind power, geothermal power, hydropower and biomass, plus electricity from solar PV panels installed by enterprises.

The government hopes to introduce a new system based on the plan from fiscal 2011. Power companies will pass the cost of electricity from renewable sources on to electricity bills. Ten years after the introduction of this plan, an average family would be expected to pay ¥150 to ¥200 more a month.

The government may face difficulty in getting cooperation from opposition forces to pass a related bill through the Diet. But the plan is a step forward in expanding renewable energy capacity in Japan. The government and the power industry must realize that Japan is lagging far behind other countries in expanding renewable energy capacity.

According to the Renewables 2010 Global Status Report issued in July by REN21 (Renewable Energy Policy Network for the 21st Century), globally in 2009, nearly 80 million kW of renewable energy capacity was added — including 31 million kW from hydro sources and 48 million kW from nonhydro sources. As of the end 2009, Japan was No. 6 in the world in total renewable energy capacity — about one-seventh of China's, which is No. 1. Japan's solar PV capacity, which used to be No. 1, was about one-eighth of current leader Germany's. Japan's wind-power capacity is much less.

The ministry plan has a problem. Except for solar PV power, whose cost is high, a uniform purchase price is set for electricity from renewable sources. The price should vary in accordance with technological levels, local situations and market size. The government must design a system that will contribute to developing competitive and efficient markets for renewable energy and creating new economic growth and employment.

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