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.
Monday, May 27, 2013
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.
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.
Saturday, February 23, 2013
End Global Warming in Two Easy Steps
As stated by Noah Smith in The Atlantic last fall.
U.S. CO2 emissions are declining rapidly with a shift from coal to natural gas. Down over 10% since 2007, and continuing to decline even as the U.S. economy has grown back since the financial crisis. Shift from coal to gas is made possible as a result of the shale gas boom and massive new gas supplies coming on line.
2. Solar (and other renewables)
Solar PV pricing is following its own sort of "Moore's Law" -- 7% annual decline in costs annually for MANY years past, and likely to continue at the same rate for the next 20 years at least. Increasingly available and cheaper electricity from renewables will allow a transition to electric vehicles and gradual shift away from oil and coal entirely.
Short term -- shift from coal to gas.
Longer term -- shift entirely to renewables.
Saturday, February 2, 2013
The Empire Strikes Back
What does the LDP's election victory in December 2012 mean for Japanese energy policy?
The LDP platform made a bow toward phasing out nuclear power (Japan should “strive to build an economy and society that does not rely on nuclear power”), but stated that any decision about future energy mix is only to be made “within the next ten years”. Meanwhile, post-election, Prime Minister Abe made a number of statements that sound like a nuclear power booster, indicating that Japan should build new reactors, and the government should strive to obtain “public understanding” to do so.
The LDP platform made a bow toward phasing out nuclear power (Japan should “strive to build an economy and society that does not rely on nuclear power”), but stated that any decision about future energy mix is only to be made “within the next ten years”. Meanwhile, post-election, Prime Minister Abe made a number of statements that sound like a nuclear power booster, indicating that Japan should build new reactors, and the government should strive to obtain “public understanding” to do so.
How much of a change is this? The official policy change is very
subtle. But Abe’s tone is far less
reluctant. He notes, rightly, that any
new reactors to be built use an advanced design, and should be safer, more
reliable, longer-lived and cheaper than old ones such as Fukushima Daiichi, and
sounds almost eager to push ahead with nuclear power.
Then again, will the Japanese people really trust statements
about nuclear safety … statements remarkably similar to what they were told in
the past, but which were disproved by the Fukushima accident? Prime Minister Abe seems to think that an election victory
gives him a mandate to promote nuclear power.
But a pro- (or at least slightly less anti-) nuclear position was not why he won the election. Indeed, the LDP’s platform on the issue was
almost indistinguishable from the DPJ.
And the LDP’s coalition partner, Komeito, has a clear anti-nuclear stance. Asahi Shimbun exit polls indicate that 78 percent of voters favor either an immediate or gradual move AWAY from nuclear power. Only 15 percent oppose such a move. And cabinet representatives have gotten some rough treatment on television and in other public venues when the discussion turns to nuclear's future.
My prediction is that Mr. Abe will have as much success in promoting nuclear power as George W. Bush did in privatizing social security using the “political capital” he felt he had accrued in defeating John Kerry in 2004.
My prediction is that Mr. Abe will have as much success in promoting nuclear power as George W. Bush did in privatizing social security using the “political capital” he felt he had accrued in defeating John Kerry in 2004.
And the government must work with the new, more independent Nuclear
Regulatory Authority, which has recently discovered likely “active” seismic faults
under two groups of reactors that otherwise would be top of the list for
potential restart.
Fortunately, regardless of how the nuclear discussion plays
out, everyone, including the LDP, supports a continued investment in renewable
energy, and diversification of sources (and reduced cost) for fossil fuels.
As for other reforms of the electricity system -- we shall see. There is some good news in that METI advisory committees are moving ahead with plans to split generation, transmission and distribution. Apparently they are adopting a proposal to operate these functions in separate subsidiaries of the large utilities.
As for other reforms of the electricity system -- we shall see. There is some good news in that METI advisory committees are moving ahead with plans to split generation, transmission and distribution. Apparently they are adopting a proposal to operate these functions in separate subsidiaries of the large utilities.
Nuclear Regulatory Authority (NRA) draft rules make restarts look very expensive
On January 30 the NRA, Japan's new nuclear regulator (not to be confused with the U.S. pro gun lobby, the National Rifle Association), released an initial draft outline safety rules for Japan's existing, largely shut down fleet of nuclear reactors. The detailed rule draft is expected in April, with final rules to be adopted by July 18, 2013.
According to press reports, the new rules will make it extremely time-consuming and expensive to restart reactors. The rules are to consider not only natural disasters, but also potential terrorist attacks.
Some highlights:
1. New cabling requirements. Apparently Japanese reactors approved before 1975 have cabling that would not meet the NRA's proposed requirements for flame-resistant coating. A complete recabling of these reactors is said to be prohibitively expensive, and if this rule becomes final, it might shut the door on any further efforts to restart older reactors.
2. Radiation filters. A new requirement that all have filtering vents that make it possible to discharge steam without releasing radioactive substances, to avoid the hydrogen explosions seen at Fukushima without releasing massive amounts of radiation into the surrounding area. Apparently this is less of an issue for pressurized water reactors (PWRs), which have much more substantial concrete containment domes, than for boiling water reactors (BWRs) such as those at Fukushima Daiichi. The Yomiuri reports that only two BWRs, at the TEPCO Kashiwazaki-Kariwa facility in Niigata, are expected to start work on installing these expensive filters in time for summer. The PWR reactors are said likely to be given a grace period for this requirement.
3. Higher seawalls. Seawalls must be high enough for the largest "hypothetically possible" tsunami. At the Hamaoka plant in Shizuoka -- number one suspect for tsunami damage, a new seawall has been under construction since 2011. Initial reports mentioned an 18 meter height. Now it is being built to 22 meters (72 feet) high, at a total cost of at least 150 billion yen (almost $2 billion).
4. Duplicate control rooms. The new rule outline requires construction of quake-proof crisis response building, including a second control room, that can take over plant operations in the event the main control room cannot be used because of quake damage, radiation release, terrorism, etc.
5. Additional earthquake fault data analysis. Finally, all plants are being required to undergo an additional, detailed survey to verify lack of any earthquake faults. As seen at Tsuruga and Higashidori recently, if the burden of proof shifts onto the utility to prove lack of earthquake faults, it becomes very hard to satisfy the requirement in Japan.
The lead story in Friday morning's Nikkei Shimbun suggested that the cost for satisfying these requirements is likely to be well over a trillion yen ($11 billion), and perhaps much more. A short English language summary of the Nikkei story is here.
Of course, both Hamaoka and Kashiwazaki-Kariwa are huge question marks in terms of seismic risk, so we could see hundreds of billions of yen spent at each location ... but neither ever restart. According to Nikkei, the most likely reactor restarts, in fall of 2013, are Kyushu Electric's Kawauchi reactor in Kagoshima, and Shikoku Electric's Ikata reactor in Ehime.
One English report from the Asahi Shimbun is online here.
According to press reports, the new rules will make it extremely time-consuming and expensive to restart reactors. The rules are to consider not only natural disasters, but also potential terrorist attacks.
Some highlights:
1. New cabling requirements. Apparently Japanese reactors approved before 1975 have cabling that would not meet the NRA's proposed requirements for flame-resistant coating. A complete recabling of these reactors is said to be prohibitively expensive, and if this rule becomes final, it might shut the door on any further efforts to restart older reactors.
2. Radiation filters. A new requirement that all have filtering vents that make it possible to discharge steam without releasing radioactive substances, to avoid the hydrogen explosions seen at Fukushima without releasing massive amounts of radiation into the surrounding area. Apparently this is less of an issue for pressurized water reactors (PWRs), which have much more substantial concrete containment domes, than for boiling water reactors (BWRs) such as those at Fukushima Daiichi. The Yomiuri reports that only two BWRs, at the TEPCO Kashiwazaki-Kariwa facility in Niigata, are expected to start work on installing these expensive filters in time for summer. The PWR reactors are said likely to be given a grace period for this requirement.
3. Higher seawalls. Seawalls must be high enough for the largest "hypothetically possible" tsunami. At the Hamaoka plant in Shizuoka -- number one suspect for tsunami damage, a new seawall has been under construction since 2011. Initial reports mentioned an 18 meter height. Now it is being built to 22 meters (72 feet) high, at a total cost of at least 150 billion yen (almost $2 billion).
4. Duplicate control rooms. The new rule outline requires construction of quake-proof crisis response building, including a second control room, that can take over plant operations in the event the main control room cannot be used because of quake damage, radiation release, terrorism, etc.
5. Additional earthquake fault data analysis. Finally, all plants are being required to undergo an additional, detailed survey to verify lack of any earthquake faults. As seen at Tsuruga and Higashidori recently, if the burden of proof shifts onto the utility to prove lack of earthquake faults, it becomes very hard to satisfy the requirement in Japan.
The lead story in Friday morning's Nikkei Shimbun suggested that the cost for satisfying these requirements is likely to be well over a trillion yen ($11 billion), and perhaps much more. A short English language summary of the Nikkei story is here.
Of course, both Hamaoka and Kashiwazaki-Kariwa are huge question marks in terms of seismic risk, so we could see hundreds of billions of yen spent at each location ... but neither ever restart. According to Nikkei, the most likely reactor restarts, in fall of 2013, are Kyushu Electric's Kawauchi reactor in Kagoshima, and Shikoku Electric's Ikata reactor in Ehime.
One English report from the Asahi Shimbun is online here.
Tuesday, January 22, 2013
1GW Fukushima Offshore Wind Farm being planned
There were press reports over the past week about plans for a huge (world's largest) offshore wind farm along the coast of Fukushima Prefecture -- offshore from the damaged nuclear reactors -- targeting 2020. You can read about it here, and it got repeated here and here.
Japan's offshore wind resources have enormous potential, but siting is very difficult, as with almost everything else in this country. At least offshore Fukushima, the fishing industry is unlikely to oppose the project, given the damage they have already suffered from concerns over radioactivity and a need to keep well away from the damaged reactors when fishing.
Japan's offshore wind resources have enormous potential, but siting is very difficult, as with almost everything else in this country. At least offshore Fukushima, the fishing industry is unlikely to oppose the project, given the damage they have already suffered from concerns over radioactivity and a need to keep well away from the damaged reactors when fishing.
Friday, December 14, 2012
200MW of Geothermal projects
Today's lead energy news in the Nikkei Shinbun is that there are now pending applications for 200MW of new geothermal projects in Japan, following a 12+ year period in which none have been constructed. Apparently the projects are attempting to qualify for development subsidies in addition to the feed-in-tariff.
JX Kinzoku (part of the JX Group) is planning a 40MW project in Hokkaido (southern part of Sapporo City), while Tohoku Electric Power, an incumbent utility, is planning a 50MW project in Akita Prefecture. A government-affiliated oil exploration company is also planning a project in Eastern Hokkaido. While the projects will take up to 10 years to complete (ouch), they apparently already have support from the local governments and, more important, from any potentially affected owners and operators of hot spring hotels (onsen ryokan) in the vicinity.
METI is planning to offer 20 billion yen (almost $250 million) of subsidies for the development phase of these projects, and further applications could be received by December-end.
These projects do not yet show up on METI's list of FIT certifications, which has a "0" first year target for geothermal, given the long lead times involved.
These projects do not yet show up on METI's list of FIT certifications, which has a "0" first year target for geothermal, given the long lead times involved.
Tuesday, December 11, 2012
Trouble on the Nuclear Ginza
The only nuclear plants to reopen in Japan since the March 11, 2011 disasters are Kansai Electric's Oi #3 and #4 plants in Fukui Prefecture, two of the more modern, larger plants in Japan.
Various other plants are now under inspection as one step to reopening. One of the next in line is the Tsuruga #2 plant, only a short distance to the east in Fukui Prefecture from Oi, on a peninsula along the Japan Sea Coast. The Tsuruga #1 and #2 plants are located near the older and smaller, somewhat accident prone, Mihama plants, which I suspect will never reopen. The Tsuruga operator, Japan Atomic Energy, had planned to build Tsuruga #3 and #4 reactors as well over the next 5-7 years. This area also hosts the accident-prone Monju experimental fast breeder reactor, and is known in Japan as the "nuclear Ginza", because of the crowded real estate and the massive subsidies that Fukui Prefecture has gotten over the years.
The new regulatory agency in charge of nuclear safety, the Nuclear Regulation Authority ("NRA") has been examining claims from some seismologists that a "crush zone" of rock under the Tsuruga #2 Plant (the "D-1 Fault" which is said to branch off of the nearby, active "Urasoko Fault") is an active earthquake fault. Under pre-existing Japanese rules, "active" means something like "has moved in the past 120,000-130,000 years". (It would not be surprising to me if any place in Japan is not considered on or near an "active" fault, under that definition, which really gets to the heart of the unique problems with siting reactors in this country). Based on inspections to date, it seems all members of the relevant commission believe the D-1 Fault is likely an "active" fault, and the commission is considering next steps. Most likely, they will conclude that the plant should never have been sited at its location ... and will not be permitted to reopen. This is the lead story in the Japanese press today, and English reports can be found on AP and NHK websites.
Tsuruga Plant #1 was completed in 1970, shut down in March 2011, and was never a likely prospect to reopen, being over 40 years old and relatively small. Tsuruga Plant #2, however, was completed in 1987 and, when operating, provides baseload power of over 1100MW to the Kansai area.
There is also a pending investigation of "crush zones" beneath the Oi #3 and #4 reactors, and a divided opinion over whether or not they represent an "active" fault.
UPDATE May 2013: The NRA has completed its process and formally concluded that the "cursh zone" under the Tsuruga #2 reactor is an active fault ... making it virtually impossible that this reactor will reopen.
Meanwhile, efforts to restart the experimental Monju fast breeder reactor (nearby Tsuruga) have been dealt a severe blow, as the operator has been found to have failed to conduct regular equipment inspections over the lengthy period it has been inoperable.
Various other plants are now under inspection as one step to reopening. One of the next in line is the Tsuruga #2 plant, only a short distance to the east in Fukui Prefecture from Oi, on a peninsula along the Japan Sea Coast. The Tsuruga #1 and #2 plants are located near the older and smaller, somewhat accident prone, Mihama plants, which I suspect will never reopen. The Tsuruga operator, Japan Atomic Energy, had planned to build Tsuruga #3 and #4 reactors as well over the next 5-7 years. This area also hosts the accident-prone Monju experimental fast breeder reactor, and is known in Japan as the "nuclear Ginza", because of the crowded real estate and the massive subsidies that Fukui Prefecture has gotten over the years.
 |
| Sunset over the Tsuruga Peninsula. The nuclear facilities are on the far side, out of sight. |
Tsuruga Plant #1 was completed in 1970, shut down in March 2011, and was never a likely prospect to reopen, being over 40 years old and relatively small. Tsuruga Plant #2, however, was completed in 1987 and, when operating, provides baseload power of over 1100MW to the Kansai area.
There is also a pending investigation of "crush zones" beneath the Oi #3 and #4 reactors, and a divided opinion over whether or not they represent an "active" fault.
UPDATE May 2013: The NRA has completed its process and formally concluded that the "cursh zone" under the Tsuruga #2 reactor is an active fault ... making it virtually impossible that this reactor will reopen.
Meanwhile, efforts to restart the experimental Monju fast breeder reactor (nearby Tsuruga) have been dealt a severe blow, as the operator has been found to have failed to conduct regular equipment inspections over the lengthy period it has been inoperable.
Sunday, December 9, 2012
More LNG Imports On the Way
We have heard that it will take a decade or more for Japan to modify its LNG import pricing structures, diversify supply, and deal with the issues raised by the current shut down of its nuclear plants, which seems likely to drag on, and on. Well, maybe things can happen a bit faster than that.
1. Jiji Press (via Yomiuri) reported this week the first shipment ever of LNG to Japan by Russia's Gazprom, via the Arctic Ocean. The tanker left Norway on November 7 and arrived in KitaKyushu on December 5. With global warning, a new, shorter shipping route is opened. Of course, LNG losses during shipment can be cut significantly by a shorter routes, and by shipping in colder temperatures. Also, if the LNG plant is in a cold location, there is a significant cost saving in the liquefaction process, if memory serves.
2. Osaka Gas announced plans gradually to increase its LNG imports by 25% (to 10 million metric tons annually) over the next 7-8 years, primarily for use in electricity generation. Sources are expected to include new gas supply from west Africa, and also U.S. supply made possible by the shale gas boom.
3. Friday December 7's Nikkei reports various plans by Japanese companies to import LNG from the U.S., based on a new U.S. DOE report that LNG exports would be economically beneficial to the U.S. -- an issue that remains controversial. U.S. natural gas production has increased by approximately 30% from 2005 through 2011, mostly as a result of new shale gas production, and prices are through the floor. The Washington Post had has a series of articles about these developments, caused by the shale gas boom, including one featuring the DOE report and plans to build export facilities at Cove Point, Maryland, based upon demand from Japan.
Specific potential export sites and Japanese companies involved by Nikkei include:
Specific potential export sites and Japanese companies involved by Nikkei include:
1. Freeport LNG (Texas). 4.4 million metric tons per year. Osaka Gas and Chubu Electric.
2. Cameron LNG (Louisiana). 8 million metric tons per year. Mitsubishi Corporation and Mitsui & Co., Ltd.
3. Cove Point LNG Project (Maryland). 2.3 million metric tons per year. Tokyo Gas, Sumitomo Corporation.
Of course, note that these projects are at existing re-gasification import terminals, require construction of major infrastructure to support liquefaction for export, and that they are all on the Atlantic side of the U.S. ...
But as I understand it, this business can involve swapping cargoes, so that, for example, a Japanese trading house that has rights to gas from Louisiana, could enter into a long term swap with a customer who wants to ship it to somewhere on the Atlantic basin, in exchange for a Pacific cargo close to Japan (maybe from Norway via the Arctic, or from Chile, Malaysia, Indonesia, or NW Shelf Australia, and even eventually Alaska).
More on Dynamic Pricing
A short article in the December 7, 2012 Nikkei reports that IBM Japan, Fuji Electric and Yaskawa Electric are teaming up to develop and implement a system for true dynamic pricing at the retail/residential level in Japan, in anticipation of deregulation by 2015.
The system would permit "real time" notification of demand/supply based price shifts, so that users can modify usage in response and promote conservation.
The system would permit "real time" notification of demand/supply based price shifts, so that users can modify usage in response and promote conservation.
METI Proposes Gradual Implementation of Residential Retail Electricity Competition
At the conclusion of Japan's late-1990s effort to deregulate the electricity generation and distribution businesses, when many other countries had recently done so, Japan was left with a system still dominated by regional monopoly utilities, though competitive electricity supply is permitted to larger users. The monopoly is enshrined in law for smaller commercial and residential users (anyone under 50kW). The late-1990s deregulatory effort was first stalled then cut-off completely by the electric utilities and other powers that be, citing the negative examples of the bankruptcy of Enron, manipulation in the California market, etc.
Post-Fukushima, in rebuilding an electricity system that will rely upon diverse supply sources (including renewables), and where massive investment is needed to implement smart-grid metering, dynamic pricing and other innovations, as well as to encourage conservation, there is widespread acknowledgement that market-based competition of some type will be needed.
The debate is about how quickly such competition should be implemented, how much regulation shoul be retained, and how competition can be layered onto the heavily strained current system. All of the existing transmission and distribution infrastructure, and 90%+ of the generation, is within the monopoly utilities. There is no independent grid operator. And the utilities already suffer from huge imported fuel costs, potentially massive asset write-downs if they cannot get their existing nuclear plants back into operation, and, of course, for TEPCO, the actual clean-up and decommissioning costs of Fukushima Dai Ichi.
METI's advisory committee on power system reform (headed by Prof Motoshige Ito of Tokyo University) last week rolled out a proposal for transition to full liberalization and retail competition.
The proposal would:
--first end the legal monopoly on distribution to sub-50kW users, but would maintain regulated rates for some transition period.
--set a period for continued provision of power at regulated rates for users who request it.
--promote competition by a separation of generation and distribution/grid assets to permit eventual removal of regulated rates.
--include a system for widely borne surcharges to support subsidies that achieve reasonable rates on delivery to users in remote areas.
--permit METI to retain authority to police unfairly high rates.
Based on press reports, the proposal does not make a decision about one of the most important steps, of how to go about separation of the generation and distribution businesses of the electric utilities. Current proposals would involve either true "legal" division into separate companies, or mere "functional" separation.
And electricity deregulation is one area where the upcoming election (December 16) could have an impact on future course of debate.
Post-Fukushima, in rebuilding an electricity system that will rely upon diverse supply sources (including renewables), and where massive investment is needed to implement smart-grid metering, dynamic pricing and other innovations, as well as to encourage conservation, there is widespread acknowledgement that market-based competition of some type will be needed.
The debate is about how quickly such competition should be implemented, how much regulation shoul be retained, and how competition can be layered onto the heavily strained current system. All of the existing transmission and distribution infrastructure, and 90%+ of the generation, is within the monopoly utilities. There is no independent grid operator. And the utilities already suffer from huge imported fuel costs, potentially massive asset write-downs if they cannot get their existing nuclear plants back into operation, and, of course, for TEPCO, the actual clean-up and decommissioning costs of Fukushima Dai Ichi.
METI's advisory committee on power system reform (headed by Prof Motoshige Ito of Tokyo University) last week rolled out a proposal for transition to full liberalization and retail competition.
The proposal would:
--first end the legal monopoly on distribution to sub-50kW users, but would maintain regulated rates for some transition period.
--set a period for continued provision of power at regulated rates for users who request it.
--promote competition by a separation of generation and distribution/grid assets to permit eventual removal of regulated rates.
--include a system for widely borne surcharges to support subsidies that achieve reasonable rates on delivery to users in remote areas.
--permit METI to retain authority to police unfairly high rates.
Based on press reports, the proposal does not make a decision about one of the most important steps, of how to go about separation of the generation and distribution businesses of the electric utilities. Current proposals would involve either true "legal" division into separate companies, or mere "functional" separation.
And electricity deregulation is one area where the upcoming election (December 16) could have an impact on future course of debate.
Sharp To Join Toshiba and "Outsource some Module Production" to SunPower; SolarWorld Enters Japan
Sharp Corporation has been suffering from widely reported financial distress this past year or two, as its core LCD screen and TV business has been in difficulty, together with many of its smaller businesses.
And, of course, Sharp is one of the major Japanese manufacturers of solar PV cells/modules and related equipment (together with Kyocera and Panasonic/Sanyo and others).
One of the more interesting arrangements in the Japanese PV market has been SunPower's supply to Toshiba. Toshiba made the (financially wise) decision not to manufacture solar PV modules, and instead has purchased the product from third party suppliers. At last year's PV Japan exhibition (December 2011), the Toshiba booth could advertise Toshiba-branded modules with the "world highest module-level conversion ratio" -- above 19%. At PV Japan this year (December 5-7 2012), they again could promote a residential product with the "world highest" conversion ratio, at just over 20%. According to Bloomberg and other sources, SunPower and Toshiba have now extended their module supply agreement through 2018, at 100MW per year.
So I was interested to read in the Yomiuri a story that Sharp will buy modules from SunPower as well, as it shuts down unprofitable production at several domestic Japanese module factories (but maintains others, and continues its "BlackSolar" residential product). The Yomiuri story suggests that Sharp is taking these steps in an attempt to cost losses AND increase its share of the PV module market in Japan in response to this year's rapid growth under the feed-in tariff. No confirmation from the companies themselves.
Lastly, I should note that SunPower is now in the Japanese market directly, targeting the commercial rooftop market. They had a big booth at PV Japan 2012 last week -- just next to the Toshiba booth, and hosted a marketing seminar on why their product makes economic sense (probably not a difficult case to make in Japan given expensive rooftop space, a high feed-in tariff, high installation costs and premium pricing of Japanese competitors' products).
For anyone not familiar with it, SunPower is a U.S. based and listed company with a long history of innovation and development in the PV business ... but now with majority French ownership (Total) and its modules produced at factories in the Philippines.
If you want an actual "made in the U.S." module, then note that SolarWorld, a large German-based module manufacturer, also now has an exclusive distributor in Japan and had a major exhibit at PV Japan. In contrast to SunPower, its product does not stand out particularly from a performance/specification perspective, but it does have very modern, large scale, highly automated production sites in the developed world, including the U.S. (just outside my hometown of Portland, Oregon). And it has been the only named plaintiff in the U.S. (and EU?) cases pursuing trade remedies against the Chinese manufacturers for unfair government subsidies/dumping, etc.
And, of course, Sharp is one of the major Japanese manufacturers of solar PV cells/modules and related equipment (together with Kyocera and Panasonic/Sanyo and others).
One of the more interesting arrangements in the Japanese PV market has been SunPower's supply to Toshiba. Toshiba made the (financially wise) decision not to manufacture solar PV modules, and instead has purchased the product from third party suppliers. At last year's PV Japan exhibition (December 2011), the Toshiba booth could advertise Toshiba-branded modules with the "world highest module-level conversion ratio" -- above 19%. At PV Japan this year (December 5-7 2012), they again could promote a residential product with the "world highest" conversion ratio, at just over 20%. According to Bloomberg and other sources, SunPower and Toshiba have now extended their module supply agreement through 2018, at 100MW per year.
So I was interested to read in the Yomiuri a story that Sharp will buy modules from SunPower as well, as it shuts down unprofitable production at several domestic Japanese module factories (but maintains others, and continues its "BlackSolar" residential product). The Yomiuri story suggests that Sharp is taking these steps in an attempt to cost losses AND increase its share of the PV module market in Japan in response to this year's rapid growth under the feed-in tariff. No confirmation from the companies themselves.
Lastly, I should note that SunPower is now in the Japanese market directly, targeting the commercial rooftop market. They had a big booth at PV Japan 2012 last week -- just next to the Toshiba booth, and hosted a marketing seminar on why their product makes economic sense (probably not a difficult case to make in Japan given expensive rooftop space, a high feed-in tariff, high installation costs and premium pricing of Japanese competitors' products).
For anyone not familiar with it, SunPower is a U.S. based and listed company with a long history of innovation and development in the PV business ... but now with majority French ownership (Total) and its modules produced at factories in the Philippines.
If you want an actual "made in the U.S." module, then note that SolarWorld, a large German-based module manufacturer, also now has an exclusive distributor in Japan and had a major exhibit at PV Japan. In contrast to SunPower, its product does not stand out particularly from a performance/specification perspective, but it does have very modern, large scale, highly automated production sites in the developed world, including the U.S. (just outside my hometown of Portland, Oregon). And it has been the only named plaintiff in the U.S. (and EU?) cases pursuing trade remedies against the Chinese manufacturers for unfair government subsidies/dumping, etc.
JX Energy Announces Condominium Electricity Supply System with Natural Gas Fuel Cells
The Nikkei Shimbun today (Dec 9, 2012) has a lead story that suggests competitive electricity supply is about to get more interesting in Japan.
JX Energy (the largest oil importer/distributor in Japan -- a combination of Nippon Oil and Japan Energy), has announced a new product line to provide electric power to newly constructed condominiums, reducing the building's need to purchase from the grid by 80-90 percent. The product is being tested on several JX company housing facilities near Tokyo and will be rolled out to the market by 2014.
The product includes a combination of
(1) a new, more efficient and less expensive natural gas-powered fuel cell generator. (These have been part of the mix in Japan for some years now, with outrageously expensive natural gas-fired fuel cells for residential use, snapped up quickly to the extent of massive per-unit subsidies);
(2) rooftop solar PV;
(3) battery storage; and
(4) for the remaining 10-20% of electricity needs, a contract with JX Energy's competitive energy supplier subsidiary, which owns an 847MW gas-fired plant in Kawasaki, and will deliver over the existing grid. (This electricity predicted to be available at 5-10% less than the TEPCO rates).
The article notes that the overall energy cost for the building/residents will be less than buying from TEPCO. Of course, if natural gas prices can be brought down in Japan in coming years, then the difference could be substantial.
Apparently several other large companies (NTT Group, Daikyo) are also starting to offer discount electricity supply for multi-family housing in Japan, at some savings to the existing utilities.
Finally, the article notes that JX Group has completed development of new, more efficient and less expensive natural gas-powered fuel cell for residential use. The initial price is expected to be more than 2 million yen, but they are targeting further development to bring the price down to the range of 500,000 yen ($6500) by the year 2015.
JX Energy (the largest oil importer/distributor in Japan -- a combination of Nippon Oil and Japan Energy), has announced a new product line to provide electric power to newly constructed condominiums, reducing the building's need to purchase from the grid by 80-90 percent. The product is being tested on several JX company housing facilities near Tokyo and will be rolled out to the market by 2014.
The product includes a combination of
(1) a new, more efficient and less expensive natural gas-powered fuel cell generator. (These have been part of the mix in Japan for some years now, with outrageously expensive natural gas-fired fuel cells for residential use, snapped up quickly to the extent of massive per-unit subsidies);
(2) rooftop solar PV;
(3) battery storage; and
(4) for the remaining 10-20% of electricity needs, a contract with JX Energy's competitive energy supplier subsidiary, which owns an 847MW gas-fired plant in Kawasaki, and will deliver over the existing grid. (This electricity predicted to be available at 5-10% less than the TEPCO rates).
The article notes that the overall energy cost for the building/residents will be less than buying from TEPCO. Of course, if natural gas prices can be brought down in Japan in coming years, then the difference could be substantial.
Apparently several other large companies (NTT Group, Daikyo) are also starting to offer discount electricity supply for multi-family housing in Japan, at some savings to the existing utilities.
Finally, the article notes that JX Group has completed development of new, more efficient and less expensive natural gas-powered fuel cell for residential use. The initial price is expected to be more than 2 million yen, but they are targeting further development to bring the price down to the range of 500,000 yen ($6500) by the year 2015.
Tuesday, November 13, 2012
Back Again -- Beyond the Nuclear Debate
After a long break, it is time to return to Japanese energy policy.
September and early/mid October saw the confused conclusion of the government's attempt to formulate a new long-term energy policy based upon the "national conversation" that took place over the summer months.
Public sentiment is very much against nuclear power, with a strong majority supporting a phase-out of nuclear plants as quickly as practicable (and a very large number of people opposing the restart of ANY nuclear plants, regardless of economic consequences). One can regularly see stories in the Japanese media about the ongoing problems in Fukushima, delays in the clean-up process, complaints about compensation, and communities that oppose the location of dumping grounds for radioactive material. (I was in North Tochigi Prefecture last month and was impressed by the long lines of flags along many country roads announcing opposition to a proposed dump location in the hills nearby.)
Not surprisingly, the public prefers a zero nuclear option, and none of the arguments presented during the national conversation, in town halls, position papers, on television discussion programs or elsewhere seem to have swayed anyone. Some would say that they were shouted out by a biased media.
However, the Japanese business community and many others -- including U.S. strategic planners who worry about Japanese demand pushing up fossil fuel prices and exacerbating issues around the Middle East, the status of various US-Japan nuclear cooperation initiatives, and increased CO2 emissions -- continue to think that a quick phase-out of nuclear power in Japan is impractical.
As a result, and after one noticeable flip-flop, the government seems to have announced a policy that nuclear policy is to be phased out, as and when possible, sometime between 2030 and 2040, subject to availability of alternatives and to ongoing review of the policy in a "flexible" manner. These adjectives were seen as a significant victory for the pro-nuclear forces.
Also, the government has bowed to pressure from Aomori Prefecture, which is pretty much a nuclear dependent economy based on the vast plans for the Rokkasho fuel reprocessing facility. Nuclear fuel reprocessing is still officially part of the "fuel cycle" plan for Japan, even if it takes trillions of yen ($28 billion so far, and counting) and many more years to get the facilities in place, and despite the contradiction that there should be eventually no Japanese spent fuel that needs reprocessing. Work on the final reprocessing facility is now only 3% complete, and has been delayed repeatedly.
Also, TEPCO's new management (selected by the government, now its majority shareholder), announced last week that it is doubling its estimate of the cost of the Fukushima clean-up, from $60 billion to $125 billion. Also decommissioning the reactors is likely to exceed the earlier estimated cost of 1.15 trillion yen ($14 billion). No surprise there, but $125 billion is real money.
Next into this mix is an upcoming election, most likely sometime early in 2013. The leadership of the main opposition party, the LDP, is of the same view as the business community and supports restarting nuclear plants and continuing to use nuclear power. They are seen as the favorites to lead the next government. On the other hand, an election might force them to revisit their positions, if the DPJ (and other smaller opposition groups) try to take advantage of the unpopularity of the LDP's view. The DPJ is poorly positioned to push the issue, based upon its "flexible" policy.
As these debates play out in the background, we will focus future discussion on other areas -- plans for reform of Japan's electricity grid and distribution system, renewables under the feed-in-tariff and otherwise, the need for cheaper natural gas imports, conservation initiatives, and the like. These are areas where we can still hope to see real progress made over the next few years.
September and early/mid October saw the confused conclusion of the government's attempt to formulate a new long-term energy policy based upon the "national conversation" that took place over the summer months.
Public sentiment is very much against nuclear power, with a strong majority supporting a phase-out of nuclear plants as quickly as practicable (and a very large number of people opposing the restart of ANY nuclear plants, regardless of economic consequences). One can regularly see stories in the Japanese media about the ongoing problems in Fukushima, delays in the clean-up process, complaints about compensation, and communities that oppose the location of dumping grounds for radioactive material. (I was in North Tochigi Prefecture last month and was impressed by the long lines of flags along many country roads announcing opposition to a proposed dump location in the hills nearby.)
Not surprisingly, the public prefers a zero nuclear option, and none of the arguments presented during the national conversation, in town halls, position papers, on television discussion programs or elsewhere seem to have swayed anyone. Some would say that they were shouted out by a biased media.
However, the Japanese business community and many others -- including U.S. strategic planners who worry about Japanese demand pushing up fossil fuel prices and exacerbating issues around the Middle East, the status of various US-Japan nuclear cooperation initiatives, and increased CO2 emissions -- continue to think that a quick phase-out of nuclear power in Japan is impractical.
As a result, and after one noticeable flip-flop, the government seems to have announced a policy that nuclear policy is to be phased out, as and when possible, sometime between 2030 and 2040, subject to availability of alternatives and to ongoing review of the policy in a "flexible" manner. These adjectives were seen as a significant victory for the pro-nuclear forces.
Also, the government has bowed to pressure from Aomori Prefecture, which is pretty much a nuclear dependent economy based on the vast plans for the Rokkasho fuel reprocessing facility. Nuclear fuel reprocessing is still officially part of the "fuel cycle" plan for Japan, even if it takes trillions of yen ($28 billion so far, and counting) and many more years to get the facilities in place, and despite the contradiction that there should be eventually no Japanese spent fuel that needs reprocessing. Work on the final reprocessing facility is now only 3% complete, and has been delayed repeatedly.
Also, TEPCO's new management (selected by the government, now its majority shareholder), announced last week that it is doubling its estimate of the cost of the Fukushima clean-up, from $60 billion to $125 billion. Also decommissioning the reactors is likely to exceed the earlier estimated cost of 1.15 trillion yen ($14 billion). No surprise there, but $125 billion is real money.
Next into this mix is an upcoming election, most likely sometime early in 2013. The leadership of the main opposition party, the LDP, is of the same view as the business community and supports restarting nuclear plants and continuing to use nuclear power. They are seen as the favorites to lead the next government. On the other hand, an election might force them to revisit their positions, if the DPJ (and other smaller opposition groups) try to take advantage of the unpopularity of the LDP's view. The DPJ is poorly positioned to push the issue, based upon its "flexible" policy.
As these debates play out in the background, we will focus future discussion on other areas -- plans for reform of Japan's electricity grid and distribution system, renewables under the feed-in-tariff and otherwise, the need for cheaper natural gas imports, conservation initiatives, and the like. These are areas where we can still hope to see real progress made over the next few years.
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