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Monday, May 28, 2012
Leveling the field for renewables
The government has drawn up a design for Japan's feed-in tariff system to promote the generation of electricity through renewable energy sources. In a nutshell, it has decided the prices at which the nation's major power companies buy such electricity and the duration of contracts. In principle they must buy all such energy. It is hoped that this system, expected to take effect in July, will help expand the generation and use of renewable energy, and accelerate advances in related technologies. Electricity fees may rise. The government should fully explain the need for the system and how it will work.
The system covers solar, wind, geothermal and small hydroelectric power and biomass. In the past, the power industry opposed and quashed bipartisan lawmakers' attempts to introduce a feed-in tariff system, apparently to protect its vested interests, including nuclear power. The forces pushing for nuclear power have argued that Japan is not rich in energy sources, but it is time for Japan to pay serious attention to utilizing its abundant forest and geothermal resources, and winds and ocean waves along its coasts and in its large exclusive maritime economic zone.
It must be realized that the feed-in tariff system alone cannot greatly expand the generation and use of renewable energy. Power transmission and distribution need to be separated from the nation's 10 major power companies, which constitute regional monopolies. At present, other power-generating organizations must pay high transmission fees to the monopolies that own and manage transmission grids. Renewable energy generation entities also have to pay special fees as the power monopolies argue that their supply is unstable. But these fees lack transparency.
As long as the major power companies own the power transmission and distribution systems, they may refuse to purchase electricity from renewable sources, citing their unstable supply, even if the feed-in tariff system is introduced. Separation of transmission grids from the major power companies is also necessary for increasing price competition among suppliers.
Informed public discussion is a must for establishing a system in which all power-generating firms are able to use the transmission systems under transparent and fair conditions, and for determining the shape of future grid-management entities. These entities will need to be strictly controlled and overseen to ensure stable power supplies and fair competition among power-generating firms.