Japan Seeks to Rein In a Solar Juggernaut

Clashing energy interests on the Japanese island of Kyushu have prompted Japan's government to clamp down on solar power development nationwide. While the government calls it a necessary revision to assure grid stability amidst rapidly rising levels of intermittent solar energy, critics see a pro-nuclear agenda at work—one that could stunt Japan's renewable energy potential.

Solar development in Japan has exploded since the Fukushima nuclear disaster of 2011. Thanks to an attractive feed-in tariff (FIT) program that guarantees premium rates for renewable power generation pushed through in the disaster’s aftermath, developers have since installed over 10 gigawatts of solar capacity. The solar surge marks a return to glory for the country that once dominated the global PV industry.

But Japan’s solar revival has occured under a cloud. The pro-nuclear Liberal Democratic Party regained power in late 2012, intent on restarting idled nuclear reactors that once generated nearly one-third of Japan’s electricity. The nuclear cloud produced its first lightning bolts on Kyushu in September, and has now spread nationwide.

The conflict between the solar revival and hopes for a nuclear revival burst into the open on Kyushu just a few weeks after island utility Kyushu Electric Power had been given a green light to restart a pair of 890-megawatt reactors (the first restarts approved by Japan's nuclear regulators). On 28 September, Kyushu Electric announced that it had frozen the interconnection of large solar developments.

Kyushu Electric argued that rising solar power capacity threatened the stability of its grid. Since the FIT’s introduction, solar capacity on Kyushu had grown more than 40-fold to 3.4 gigawatts, and Japan’s Ministry of Economy, Trade, and Industry (METI) had qualified a further 8.4 gigawatts of solar projects for FIT pricing. If all of the latter were built, argued the utility, solar generation on Kyushu could at times exceed the island’s 8-GW minimum daytime power demand.

At least four more utilities followed Kyushu Electric’s lead and froze solar interconnections on their grids, arguing that the solar surge threatened their ability to balance supply and demand.

METI came to the utilities’ defense last month, affirming their argument that solar threatened grid stability and proposing new rules for solar and wind power installations aimed at combatting that supposed threat.

The proposals, to be formally adopted early this year, provide a slate of conditions under which utilities are empowered to refuse new interconnections. These include limits to how much renewable energy seven of Japan's 10 vertically-integrated utilities must accept under the FIT.

For Kyushu, it means the island's utility has METI's blessing to limit total solar installations to 8.17 GW. That means Kyushu Electric can refuse interconnections for 5 GW of pending solar projects already certified by METI and further gigawatts awaiting FIT certification.

The new rules also expand all utilities’ power to temporarily turn off PV systems without compensating solar developers.

Many analysts viewed the new rules as a game-changer for solar development in Japan. "It appears likely that a sizeable part of the 69.4 GW of projects that have gained approval under the country’s FIT will not be built," wrote PV Magazine in late December.

Gordon Johnson of Axiom Capital Research told stock market news outlet Benzinga that the utilities’ expanded curtailment powers would deal the solar market a “drubbing” this year. Previously utilities could curtail output from solar arrays on as many as 30 days per year. The new rules allow curtailment for up to 360 hours per year—a reformulation that would allow a utility to clip most of the output from a solar farm for over three months, according to Johnson. As a result, he said, solar project financiers would have difficulty determining the return on investment to be expected from solar projects.

Some developers say the market impacts will take a while to filter down. A source from Hamburg-based Conergy told solar industry business magazine PV Tech last week that the firm remains confident that previously-approved projects will keep the company busy for the next two years. However, the Conergy executive acknowledged that METI’s new provisions could complicate those projects.

Renewable energy advocates argue that METI has overreacted. METI’s revised rules go well beyond what is required to maintain grid stability according to the Tokyo-based Japan Renewable Energy Foundation, founded in 2011 by Japanese telecoms maverick Masayoshi Son (whose Softbank Corp. is itself a solar power investor). In an e-mail to IEEE Spectrum, JREF director Mika Ohbayashi called METI's calculation of renewable energy limits “very conservative (and not realistic).”

Ohbayashi says that METI’s calculations begin by setting aside transmission capacity and power demand for Japan's idled reactors. She says METI’s limits also fail to take account of each utility’s ability to export excess power generation to neighboring utilities.

Japan’s grid does have one notorious power-transfer limitation: the frequency divide that obstructs the free-flow of AC power between eastern and western Japan. However, Ohbayashi says, transmission lines amongst the utilities on either side of that divide offer considerable and vastly underused exchange capacity that can facilitate the integration of renewable energy.

Ohbayashi cites the example of Hokkaido, whose utility had 520 MW of solar power on its system as of last month. Under METI’s proposal, the utility can now limit additional solar installations to 650 MW. The total would equal just 40 percent of Hokkaido's minimum demand and, according to Ohbayashi, ignores the island's ability to export 600 megawatts of power via its cable interconnection with the main island of Honshu. In 2013, that cable carried 16,940 MWh of power from Hokkaido—equivalent to a little more than one day at full-power operation—leaving plenty of spare capacity to carry surplus renewable energy.

Eric Johnston, who frequently covers energy for the English-language daily The Japan Times, sees METI's revisions as evidence that solar, wind, and other renewables face a “bumpy road” in Japan, where they must confront more than just the technical and financial challenges renewable developers confront globally. In Japan, writes Johnston, renewable energy also confronts “political and bureaucratic hostility that makes overcoming the other issues all the more difficult.”

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