Energy policy for the economy of Japan, instead of one protecting the old Electric Power Companies in Japanese

Global markets for solar and wind power technologies are both expected to grow by about one third this year ⅰ . There are very few industries that enjoy that growth rate.

In Europe and the US, wind power now appears as the cheapest source of new power. In Portugal wind is said to produce electricity at a cost of less than 9.5 JPY/kWh, while nuclear, coal and gas all cost between 12 and 13.5 JPY/kWh ⅱ . The Danish Government Energy Agency this summer reported that wind power cost only about half of what coal or gas fired power does. ⅲ 

In 2013, renewable electricity production increased more than fossil fuel based generation and far more than nuclear power. Measured in installed electric generator capacity, wind power alone, will pass nuclear power this year, or next.

The sun and wind provide electricity at zero marginal cost. Once such power plants are built they will outcompete existing power plants based on imported nuclear or fossil fuels. By doing so, they will provide for reduced electricity prices.

This is popular among consumers in the world. In particular it is popular in China where they need energy to make the remaining hundreds of millions of poor people rich, while keeping the electricity prices low for industry to keep internationally competitive. In China, a target of 70 GW of solar power installed by 2017 is set and some 200 GW of wind power by 2020 is discussed.

In Europe and the US solar and wind is also popular among consumers. But power companies are worried, as they are losing income because of the competition.

Where politicians have created a competitive electricity market, and existing power companies are not allowed to hinder new, low cost electricity producers to reach the consumers by restricting access to the grid as in Japan, solar and wind power plants are now build without subsidies outcompeting existing power plants.

As a result existing power companies are losing money. In Europe RWE and Vattenfall had to write off in the order of half a trillion yen each last year. In Texas where wind power now contribute more than 10 percent of electricity, Energy Future Holdings, a company owning gas, coal and nuclear power plants filed for bankruptcy in April.

Barclays credit strategy team in late May downgraded the entire US electric power sector based on how they saw the future of renewable energy technologies. Earlier evaluations depended, they said, on a “regulatory compact” whereby politicians protected the industry from competition ⅳ .

But consumers in western countries will not continue to accept politicians who side with the power companies against the interests of households and electricity consuming industries. Moreover, the industries supplying renewable energy technology now employs more than 6 million people globally and is growing ⅴ . They also benefit from modernization of the electricity sector.

While Japan has seen little progress during the last decade there is one shining piece of recent news: Sharp is back in the top of global solar PV suppliers! ⅵ 

Many other Japanese companies have the capacity to play part in this global industry of solar, wind, geothermal and bio-energy developments. Japan’s policymakers must not wait too long to open up the domestic power sector, and thereby creating a domestic market for Japanese industry. Trying to catch up later, might prove too difficult with China, Europe and US getting far ahead in the industrial competition.

 ⅰ Global Wind Energy Council, “Market Forecast for 2014-2018” , http://www.gwec.net/global-figures/market-forecast-2012-2016/
Solarbuzz, May 20, 2014, “Solar PV Module Shipments to Grow 30% in 2014, According to NPD Solarbuzz” http://www.solarbuzz.com/news/recent-findings/solar-pv-module-shipments-grow-30-2014-according-npd-solarbuzz
 ⅱ REneweconomy, May 27, 2014 “European utility says wind now cheapest form of generation” http://reneweconomy.com.au/2014/european-utility-says-wind-now-cheapest-form-generation-43032
 ⅲ http://www.ens.dk/sites/ens.dk/files/info/tal-kort/fremskrivninger-analyser-modeller/notat_-_2014_07_01_elproduktionsomkostninger_for_10_udvalgte_teknologier.pdf
 ⅳ BARRON’S Income Investing, May 23, 2014, “Barclays Downgrades Electric Utility Bonds, Sees Viable Solar Competition” http://blogs.barrons.com/incomeinvesting/2014/05/23/barclays-downgrades-electric-utility-bonds-sees-viable-solar-competition/tab/print/
 ⅴ Press Release, IRENA, “Renewable Energy Provides 6.5 Million Jobs Globally” http://www.irena.org/News/Description.aspx?NType=A&mnu=cat&PriMenuID=16&CatID=84&News_ID=360
 ⅵ Solarbuzz, May 14, 2014, “After Five-Year Absence, Sharp Solar Returns as Number One PV Module Supplier in Q1’14, According to NPD Solarbuz” http://www.solarbuzz.com/news/recent-findings/after-five-year-absence-sharp-solar-returns-number-one-pv-module-supplier-q114