Renewables Update

Avoid costs “Made in Japan” in order to vitalize the Japanese Economy in Japanese

16 January 2015 Tomas Kåberger, Chair of Executive Board, Japan Renewable Energy Foundation

The government of Japan is planning to again investigate what the cost of different sources of electricity are. They have another responsibility which is more important. That is to remove the special costs to renewable energy that are home made in Japan. Costs that are often the result of bad regulation. Bad regulation decided by the government and diet of Japan.

A year ago, JREF reported that wind power was the least cost option to produce electricity in many parts of the world. A year ago we provided references to projects in Brazil and Australia where wind energy provided electricity at a cost of about 4 yen per kWh.

Since then the development has continued to bring down the cost of wind power. During 2014 the power company EPD in Portugal reported that on-shore wind power was by far the lowest cost source of electricity. And it was not just a little cheaper than conventional power. Wind electricity cost just two thirds of coal based power. In Denmark, the national Energy Agency reported that new wind on-shore costs only half of what new coal or gas-based electricity cost.

Nuclear is economically out-competed in the world. The 2014 the installation of wind-power was ten times as large as the new nuclear capacity. At the same time at least ten times more nuclear capacity then wind capacity was closed down. Global wind capacity will overtake nuclear capacity during 2015, and it has already done so if just a few of the oldest Japanese reactors are considered permanently closed.

In new industrial countries, like China, wind power not only grows faster than nuclear power, but already produces more electricity during the year. But also some European countries have increased wind power to become the major source of electricity. Supplying well beyond what the operators of fossil and nuclear power plants claimed as the limit of what the “grid capacity” allowed.

Once the ownership of the electricity grid and the ownership of power plants was separated such arguments disappeared. With grid owners having the target to minimize the cost of electricity, the share of wind power increased well beyond the 5-10 % claimed possible. In 2013 Portugal got a quarter of its electricity from wind, and Denmark got a third. Already in the first half of 2014, Denmark got more than 40% of its electricity from wind and the vision in Denmark is to reach 50% wind power by 2020.

In these countries the governments have discovered the opportunity of low cost electricity from domestic wind resources rather than importing fossil or nuclear fuels. Legislation has been introduced that give owners of modern renewable power plats the right to compete on equal terms with other power plants on a grid controlled by a neutral owner.

As a result, environmental permission processes are managed by educated authorities in efficient processes. Connection to the grid is quickly handled by grid owners desiring low cost electricity and not protecting old nuclear and fossil plants against new competitors. Building regulations and standards for the wind power-plants themselves are coordinated with international standards to avoid unnecessary and costly local modifications.

Governments acting in the interest of economic vitalization not only assess the cost of electricity: Such governments also act to reduce the costs of sustainable domestic sources of energy in order to strengthen the nation.