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Saturday, June 11, 2011
Reactor makers look to green energy amid nuclear allergy
In the three months since the March 11 earthquake and tsunami damaged the Fukushima No. 1 atomic plant, the nation's three reactor makers have started to focus more on renewable energy sources, particularly solar, wind and geothermal power.
Toshiba Corp., Mitsubishi Heavy Industries Ltd. and Hitachi Ltd. say they now have higher sales goals in the alternative energy fields, including pursuit of "energy-smart communities" that can save power consumption as a whole city or village by using energy control systems.
Analysts said the three reactor makers have little choice but to expand their natural energy-related pursuits because of the ever-strengthening aversion both at home and abroad to nuclear power, even though whether the government will act quickly to support such business remains a question.
Various figures point to strong demand for renewable energy in the future, the analysts said.
"No one would be against the country introducing a vast amount of renewable energy," said Hitoshi Ikuma, director of the center for emergence strategy at Japan Research Institute Ltd. "The focus is when it will be introduced."
Ikuma's comments are based on forecasts that the country's nuclear power capacity will decline sharply over the next few decades. Overall capacity in 2030 is expected to be half the roughly 46,000 kw of 2010 because a reactor has a life of about 40 years.
It will also be hard to construct new reactors for the next 20 to 30 years, during which time the crippled Fukushima plant is expected to still be undergoing decommissioning, he said.
Currently, about 30 percent of the country's overall electricity is generated by reactors, compared with only about 3 percent from renewable energy.
Prime Minister Naoto Kan said last month the government will rethink its long-term strategy, which had called for raising the level of nuclear power to account for 50 percent of the nation's overall electricity in the future. He also pledged to boost Japan's use of green energy to 20 percent of total power supply by 2020.
The demand surge has led companies to view renewable energy with optimism.
Hitachi released on Thursday a higher sales target for renewables — ¥280 billion for fiscal 2015 from ¥170 billion for fiscal 2010 — and a lower target for nuclear power — ¥170 billion, down from ¥180 billion.
Toshiba, Japan's biggest reactor maker, is more bullish.
On May 24, Toshiba raised its sales goal for renewable energy, including solar, wind, water and geothermal, to ¥350 billion by fiscal 2015, reportedly six-fold the figure logged for fiscal 2010. The company said it set a goal of ¥900 billion in sales for energy-smart community projects by the same fiscal year, or three times greater than current sales.
A smart community would include such infrastructure as a smart-grid and smart-meters that can help households save electricity by exchanging data with power firms.
Toshiba has meanwhile agreed to buy Switzerland's Landis+Gyr AG, the world's No. 1 smart-meter maker, which operates in more than 30 countries, for $2.3 billion. It will provide the crucial meter for the smart communities that can effectively control generation and consumption of electricity.
"Some countries and companies may want to shift to renewable energy after the (Fukushima) accident. For these customers, we are saying we can also provide renewable energy," Toshiba President Norio Sasaki told reporters on May 24.
In the same news conference, the company said it is possible to delay its plan to achieve ¥1 trillion in sales by building 39 new reactors by the business year to March 2016.
"Hitachi and Toshiba are competitive because they can provide thorough services for energy-smart communities," said Tomohisa Nonomura, an anlyst at Toyo Securities Co.
Mitsubishi Heavy said earlier this month it hopes to reap ¥3 trillion in sales in its green energy business by fiscal 2014, which is 1.7 times as much as the average sales between 2007 and 2009. MHI, which is already one of the world's biggest wind power generator makers, will also focus on water and geothermal generators.
Other electronics makers are also moving toward green energy.
Panasonic Corp., for example, promised in its three-year business plan announced last year to shift its focus to renewable energy.
President Fumio Otsubo said the firm is targeting ¥100 billion in green energy-related business for the next business year to March 2013 and ¥300 billion or more in the business year to March 2016. This goal includes solar panels, fuel cells as well as rechargeable lithium-ion batteries that can store electricity.
Despite the urgent demand for alternative energy, there are hurdles for the nation's green power market to grow.
Analysts said what is important is a legal framework to help introduce a large amount of renewable energy, deregulation to reduce costs to install and operate generators and other equipment, and above all, political initiative to back up the trend for green energy.
"What is most important is political power (to drive the trend)," said Hisashi Matsumoto, an investment analyst at Mitsubishi UFJ Morgan Stanley Securities Co.
To boost demand for such alternative energy, analysts said lawmakers need to pass a bill on feed-in tariffs that require power firms to buy all renewable power-generated electricity in Japan. The bill was submitted to the Diet in March, but its chances of clearing the Diet remain unclear amid the power struggle within the ruling Democratic Party of Japan.
Japan Research's Ikuma also noted that Japanese companies are currently behind Chinese and other overseas firms in the wind and solar power markets.
"Japanese firms should not just sell equipment alone because that would just involve them in price wars. What they will really have to do is sell the system as a whole," he said, referring to projects like energy-smart communities.