Monday, May 27, 2013

Huge Storage Battery Planned for Hokkaido to support renewables

Hokkaido has the best wind resources in Japan.  It also has the most readily available land for solar PV projects.  Unfortunately, it has a population of only 5.4 million persons, less than 5% of Japan's total.  Like much of Japan, population is not growing.

There is a huge bottleneck now of potential solar PV projects in Hokkaido, far more than the demand at the local electric utility, Hokkaido Electric.  As of March end, 2013, Hokkaido Electric had authorized interconnection for 400MWp of large scale solar PV projects, against applications of 1.56GW peak.  

Thus, in late April, 2013, METI issued a request for public comments on a suggested modification to the curtailment rules that would, initially at least, affect only Hokkaido and would permit greater flexibility in curtailment, in order to make it possible for the utility to accommodate additional projects.  We hope that the resulting rules will encourage diversity in project design, rather than making Hokkaido projects uneconomic and unfinanceable.

As an additional step, METI announced a 20 billion yen ($200 million) subsidy for Hokkaido Electric to implement a massive storage battery.  The battery project will include 60MWh of electricity storage.

The kind of investments needed to transform the electric system in Japan will not be feasible using such one-off subsidies.  Nor will they be feasible if just added as a burden on the existing utilities without a real unbundling of generation, transmission and distribution.

Higher tariffs for offshore wind?

On May 6, 2013 it was reported that METI has indicated it will set a new tariff for offshore wind projects.  The government plans to collect data and set the tariff by early 2014, in order to promote the wide adoption of offshore wind projects.

The stated explanation is that offshore wind projects have a high cost and so will need to be higher than the 23.1 yen per kWh tariff generally available for larger wind generation.

Of course, in Europe offshore wind projects can offset their high cost with excellent revenue prospects, since the wind resources offshore are far better than on land, the wind both stronger and steadier.  The same is true offshore Japan.

Of course, a bigger concern with promoting wind as a renewable energy source in Japan is that NIMBY (not-in-my-back-yard) concerns make it extremely difficult to site sizeable wind projects onshore.  Whatever the truth of the matter, it is widely feared in Japan that vibrations from wind turbines result in headaches and generally create disturbance.

Much European offshore wind is in relatively shallow offshore waters.  On the other hand, Japanese projects may need to use floating installations, and the high cost could be justified for deep water, floating installations.

Goldman Sachs plans $2.9 billion in Japan renewables investments

It looks as if there is a lot of money available for renewable energy investments in Japan, thanks in large part to the Feed-in-Tariff.   Last week, the Japanese press carried reports that Goldman Sachs plans $2.9 billion in Japan renewables investments over the next five years.  GS has set up a subsidiary, Japan Renewable Energy, which has already lined up 40 megawatts of projects primarily in Ibaraki Prefecture.

Bloomberg noted that in fact GS only plans to invest around $500 million of equity, with the rest of the funding to come via bank loans and project financing.

Lots of other financial investors now have allocations available for renewables in Japan.  As long as the feed-in-tariff system continues to be implemented faithfully, as long as projects become available, the money will be there.

Enefarm -- fuel cell generator

I read an article last week in the Nikkei newspaper announcing a new Tokyo subsidy for the Enefarm residential fuel cell generators distributed by Tokyo Gas.  The products are manufactured by, among others, Panasonic.  A new model was released this winter -- both lower in price and smaller in size than before.  Could it be that a natural gas-powered fuel cell generator and hot water heater would finally be at a price that makes economic sense?

In previous years, the subsidies for Enefarm devices have been used up quickly, and we had been looking for ways, ANY ways, to reduce our electricity consumption, so we arranged for a consultation.

The system would cost 1.7 million yen, plus 50,000 for gas-related construction.  Then we would get a 400,000 yen subsidy back, for a total cost of 1.35 million yen.  How much would we save?  The advertisements said approximately 50,000 yen per year, but surely we would do better than that, given our large house and its electricity bills.

No.  Apparently the way the system works you do not generate electricity unless you are otherwise consuming gas to heat water.  We do not use much gas, ... and even worse, our gas consumption is split between two separate flash heaters, one on the roof (for 2nd and 3rd Floor) and another at ground level (for bath and 1st floor plumbing).  So the simulation shows we would save ....  20,000 yen a year.  Even with the subsidy, a 67.5 year payback schedule.  Apparently the system is designed to do best with a typical Japanese family of 4 or more, gas cooking, gas hot water (and daily bath -- instead of alternating bath and shower, as we do).

The gentleman who visited our house suggested that maybe we would want to do it even WITH the limited savings, to do our part to cut electricity consumption.  No thank you.

We will keep looking for other, higher cost-performance alternatives.   And, frankly, as a Tokyo taxpayer, I wish the government would spend it subsidy money on something a bit more low tech and higher bang for the buck -- incentives for insulation, double or triple glazed windows, replacing any remaining incandescent lighting, etc., etc.