``Japan’s Renewable Energy Revolution:

What it Means For Hokkaido Businesses``

Eric JohnstonHokkaido International Business

AssociationMarch 21st, 2013

Japan and Renewable Energy: The Fundamental Facts

Proportion of Japan’s electricity generated by renewable energy, including hydro, in 2011: 9.1 percent

Proportion of electricity generated by renewable energy, excluding hydro, that same year: 1 percent

Official estimate of how much power solar energy could ``feasibly’’ generate: 100-150GW

No. of homes one GW of energy will supply: 243,000 Total amount of solar capacity in Japan in 2011: 5GW Projected value of solar energy market following FIT:

US$ 9.6 billion Japan’s potential offshore wind power capacity:

1,600GW

Japan and Renewable Energy: The Fundamental Facts

Japan’s potential onshore wind power capacity: 30GW

No. of installed wind turbines (Sept. 2011): 1,807

Total wind energy generating capacity: 2.4GW

Est. geothermal generating capacity: 23.5GW

No. of geothermal plants: 19 Total generating capacity: 535MW

July 1st, 2013: The New Feed-In Tariff for

Renewable Energy Goes into Effect

The New Tariff means businesses in five different renewable

energy industries can sell their power at a guaranteed fixed rate

over a fixed period of time

THE NEW FEED-IN TARIFFS

SOLAR POWER

Output Range ABOVE 10 KW BELOW 10KW

Basic Tariff (per

kilowatt/hour)

42 yen 42 yen

PERIOD 20 years 10 years

THE NEW FEED-IN TARIFFS

WIND POWER

Output Range ABOVE 20 KW BELOW 20KW

Basic Tariff (per

kilowatt/hour)

23.10 yen 57.75 yen

PERIOD 20 years

THE NEW FEED-IN TARIFFS

GEOTHERMAL POWER

Output Range ABOVE 15 KW BELOW 15KW

Basic Tariff (per

kilowatt/hour)

27.30 yen 42 yen

PERIOD 15 years

THE NEW FEED-IN TARIFFS

MINI-HYDRO

Output Range

1mW-30mW 200kW-1mW Under 200kW

Basic Tariff(per kilowatt

hour)

25.20 yen 30.45 yen 35.70 yen

PERIOD 20 years

THE NEW FEED-IN TARIFFS

BIOMASSSector Methane Gas Unused

Wood Products

General Wood

Waste-related Biomass

Recycled Wood Product

s

Type Sewer Sludge Gas

Household

Waste

Unused Wood Products

General Wood

Solid General Waste

Solid Sludge

“

BasicTariff(per kwH)

40.95 yen 33.60 yen

25.20 yen

17.85 yen 13.65 yen

Period 20 years

FIT’S RESULTS According to Japan For Sustainability

(

From April to October 2012, the number of renewable energy power facilities approved as targets by electricity purchasing schemes was 146,899, generating 2,557 megawatts (MW)

Electricity output from approved renewable sources:

86% was from solar power

13% was from wind power,

A small amount was biomass and small-to medium-scale hydroelectric power

No geothermal power projects were approved.

Output from solar power facilities that generate 10 kW or more (non-residential), including mega solar power facilities, accounted for 64% of the total renewable energy sources.

Although a large quantity of the total approved power will not be sold by the end of fiscal 2012, the amount of generated power is estimated to increase to 2,500 MW during the same period.

But It’s Not All Good News:

GENERAL PROBLEMS AND CHALLENGES

PROBLEMS AND CHALLENGES:

SOLAR POWERUnlike many other countries, the FIT

for solar power is strict, either under or over 10kW. Different FITs for 10, 20, 50, and 100 kW plants are desired.

More flexibility with FIT period is needed.

FIT critics charge that it is designed to benefit a few large companies, not the industry’s smaller, but possibly more innovative players.

Solar panel size: Large areas needed for massive solar farms

PROBLEMS AND CHALLENGES: WIND POWER

FIT needs to be based on wind conditions of location, not a fixed amount of power generation for all locations.

Noise: Local communities complain about loud windmills

Birds: Bird strikes and migratory patterns mean strict environmental regulations on wind farm development in places like the area in and around the Kushiro Wetlands.

Remoteness: On-shore windmills often located far from urban centers, necessitating expensive grid connections.

PROBLEMS AND CHALLENGES: GEOTHERMAL POWER

Vast majority of Japan’s geothermal resources in National Park areas: Strict Environmental regulations.

Many ideal geothermal locations on, or beside, onsens, whose politically-connected owners oppose geothermal development for business reasons.

Geothermal requires heavy initial investment. High cost to maintain and repair plants.

Public fears that geothermal drilling can cause earthquakes.

PROBLEMS AND CHALLENGES: MINI- HYDRO POWER

Requires rivers and streams with regular flows of water at ideal speeds.

Strict gradation requirements often means construction work is needed, creating further environmental damage.

Remote areas of many ideal mini-hydro spots means increased costs to deliver generated electricity.

PROBLEMS AND CHALLENGES:

BIOMASS POWER For Wood Products, responsibility is divided

between Forestry Agency (under MAFF) and METI. Bureaucratic turf wars means bureaucratic headaches for Biomass producers.

Utilities very cold toward biomass power; grid connections are often extremely expensive.

Biomass seen more as heat, rather than electricity, generating resource. Overcoming official perceptions/biases still tough.

Biomass seen by utilities as a threat, due to possibilities of small-scale use.

SO WHAT ABOUT

HOKKAIDO?

Renewable Energy Projects Are Moving Forward,

Especially in Solar and Wind

Japan’s largest solar power plant to date will be built in Hokkaido: 200MW-20 times the capacity of the country’s currently largest plant in Sakai, Osaka Pref.

Softbank’s Masayoshi Son has targeted Tomakomai and Obihiro for both solar and wind farm development. Projects are generating hundreds of megawatts.

HOKKAIDO’S POTENTIAL(SOURCE: Renewable Energy Organization Hokkaido)

HOKKAIDO’S POTENTIAL

TOTAL ESTIMATED POTENTIAL OF RENEWABLE

ENERGY IN HOKKAIDO:　5.7 billion kilowatts (55,682.8万

kW) THIS IS THE EQUIVALENT OF 556 NUCLEAR POWER PLANTS–

more than 10 times the number Japan currently has.

HOKKAIDO’S MAIN ADVANTAGES FOR EMBRACING RENEWABLES

Nuclear Power Lobby is extremely weak in Hokkaido, compared to Tokyo and especially Kansai.

Environmental conservation and awareness high.

Climate, topography, geography, population spread more favorable toward smaller, independent renewable energy projects than in large cities.

Conditions for offshore wind and geothermal in particular favorable.

CHALLENGES HOKKAIDO MUST OVERCOME FOR RENEWABLES

Tendency of local politicians and bureaucrats, and major corporations, to not take initiative and to leave all major decisions affecting Hokkaido to Tokyo.

Skepticism among many in Hokkaido, especially older generations running the prefecture, about technical feasibility of renewable energy.

Ensuring that weather extremes do not interrupt renewable energy supplies, especially in winter.

Ensuring that Hokkaido’s politically powerful agricultural and construction industries support, or at least don’t oppose, a major shift to renewable energy.

THANK YOU!