Renewables Update

High integration and cost reduction of RES are accelerated - leaving Japan behind in Japanese

28 May 2015 Mika Obayashi, Director, Japan Renewable Energy Foundation

On April 28, the Ministry of Economy, Trade and Industry (METI) presented a draft plan on Japan’s electricity mix for 2030. According to the draft plan, in 2030, 27% of the energy will be supplied by LNG, 26% by coal, 3% by oil, 22-24% by renewables, and 20-22% by nuclear power. The breakdown of renewables is 8.8-9.1% hydropower, 7% solar, 3.7-4.6% bioenergy, 1.7% wind and 1-1.1% geothermal.

Renewable electricity in Japan, including hydropower, is expected to exceed 12% by the end of fiscal 2014. ⅰ  The deployment target, which assumes an increase of only around 10% over this figure in 15 years, is definitely low, and this is clear without even comparing it with the RE deployment targets of leading countries, which are now commonly around 40% or 50% by 2030. And the draft plan says the major reason for this low figure is the high cost of renewables. And it claims that the cheapest energy source is nuclear power.

However, news that we hear day after day from various parts of the world provides facts that are completely to the contrary.

Solar PV capacity increased by 44.2 GW in 2014 alone, bringing the global total to approximately 183 GW. ⅱ  Wind power capacity also increased by 51.4 GW, reaching a global total of about 370 GW. ⅲ  These figures translate to approximately 1 GW capacity added every week for both solar PV and wind power.

Looking at the figures by region, China in particular has shown a remarkable increase, with approximately 13 GW of solar and 23 GW of wind power deployment in a year. The total installed capacity of wind power in China is said to have reached 115 GW, which means that 30% of all wind turbines in the world are operating in China. Meanwhile, Japanese media repeatedly reports that China also plans to expand its nuclear power capacity from the current 20 GW to 58 GW by 2020. But actually for solar and wind power, China has much higher targets of 100 GW and 200 GW by 2020, respectively. Approximately 32 GW of solar and 115 GW of wind power have already been deployed, which indicates that wind power is likely to achieve the target earlier than planned. The amount of electricity from wind power, which has already surpassed that from nuclear power in China, is going to exceed it even further, meanwhile, the current plan for nuclear power is unlikely to meet its target, in view of the fact that downward revisions have been made several times in the past and also looking at the capacities of the plants currently under construction.

Behind the global expansion of renewables is their rapidly declining cost. According to the 2013 report from the US Department of Energy, the average price of wind power was approximately six cents per kWh excluding subsidies. In the 2014 report, this price dropped to 4.5 cents per kWh. ⅳ  Even for the more expensive solar power, the average price of a bidding held in Brazil in November 2014 was nine cents, which was lower than thermal power and nuclear power. And in Brazil, wind power is already excluded from biddings since its cost is too low. Also in India, the price of solar PV was nine cents in a bidding held in 2014, and the price is now cheaper than the market price of electricity sourced from any fossil fuel ⅴ . The International Renewable Energy Agency (IRENA) says in its report published in January 2015 ⅵ  that the average price of solar PV modules has declined by as much as 75% in the five years from 2009 to 2014. In many parts of the world, most types of renewables are already generating power at a cost equivalent to or lower than that of fossil fuel.

With the introduction of the Feed-in Tariff system in 2012, renewable energy has shown rapid expansion in Japan as well. The amount of electricity generated by renewables excluding hydro has also grown dramatically from the previous 1% to 4%. In the two and a half years up to the end of December 2014, 15.8 GW of renewables were deployed. There are still more than 60 GW of capacity that have been registered and wait for development. Most of them are solar PVs, and not all of them will be commercialized due to difficulties of grid interconnection and other reasons. But at least it has become clear that there is a new great business potential for a 75 GW solar capacity in total.

METI estimates the cost of wind power based on “the leveling-off scenario that takes into account the unique conditions of Japan.” But why is the cost five times higher only in Japan, compared to the cost which has become so low in other parts of the world? Isn’t it the Government’s role to surmount the theory that claims “Japan is unique and different from other countries?” This question applies to the cost for constructing transmission lines as well.

Expansion of renewables has accelerated today not just in the countries in Europe known for their deployment of renewables, and in the states of California and Texas in the USA, but also in China, Brazil, India, Chile, and many other places across the globe. These countries and regions have taken a lead in getting safe, cheap and abundant energy that does not contribute to global warming. Energy self-sufficiency will increase in these nations as per the targets.

Japan has great potential compared to other countries in terms of renewable energy resources, technology and funds. It is a resource-poor country in terms of uranium and fossil fuel, but it is rich in renewable energy. It’s not the time for us to be obsessed with figures on paper. It is time for Japan to actually deploy renewable energy in the way the world is showing us.

 ⅰ JREF’s Comments on the METI’s ‘Energy Mix’ Proposal “Japan’s renewable energy target for electricity should be at least 30%,” May 2015
 ⅱ “Top Solar Power Industry Trends for 2015,” March 2015, IHS
 ⅲ “Global Wind Report: Annual Market Update 2014,” April 2015, Global Wind Energy Council
 ⅳ “2013 Wind Technologies Market Report,” August 2014, Department of Energy, the US
“2012 Wind Technologies Market Report,” August 2013, Department of Energy, the US
 ⅴ There are so many reports and news articles on both Brazil and India’s cheap solar bidding result, but one of them with other examples is here: Apricom, November 2014,
 ⅵ “Renewable Power Generation Costs in 2014,” January 2015, International Renewable Energy Agency