BNEF Publishes Predictions for 2017

You can find BNEF Advisory Board Chair Michael Liebreich and Chief Editor Angus McCrone's ten predictions for 2017 this link.

A few highlights (quoting from the report):

• "Super-low-cost renewable power – what we are now calling “base-cost renewables” – is going to force a revolution in the way power grids are designed, and the way they are regulated.

• The old rules were all about locking in cheap base-load power, generally from coal or hydro plants, then supplementing it with more expensive capacity, generally gas, to meet the peaks. The new way of doing things will be about locking in as much locally-available base-cost renewable power as possible, and then supplementing it with more expensive flexible capacity from demand response, storage and gas, and then importing the remaining needs from neighbouring grids.

• New nuclear plants will remain the political bauble they currently are, unless next-generation nuclear can prove it can deliver fail-safe designs at affordable cost. Demand will be suppressed by energy efficiency and self-generation, and augmented by electrified transport and heat.

• Putting super-cheap, “base-cost” renewable power at the heart of the world’s grids in this way will require a revolution in the way the electricity system is regulated.

Nonetheless global markets in renewable energy will slow in 2017, because of (1) cost/price reductions, (2) China slowdown, and (3) Japan:

• The third reason is Japan, where the runaway solar boom of recent years has turned to the predicted bust, and few utility-scale plants are likely to be given grid permits from now on. Instead, rooftop solar will become the main game, but its best years lie some way in the future, not in 2017.

As for cost and price -- BNEF predicts another 25% drop in module prices and 10% overall system cost drop, this year!

Just imagine the headline "nuclear power system cost to fall another 10% in 2017"?  Pretty hard to imagine. All we get is "if you pay $100 billion now to develop it, the next generation should be cheaper and safer ... no guarantees though folks", and not a really good track record of delivering on time and under budget. Meanwhile, the nuclear sector seems to have much bigger, and almost as numerous, corporate financial disasters as the solar PV sector.

Japan's plans are a bit underwhelming, and will likely continue to be so until the electricity sector deregulation is implemented down the road.  But at least as a result of the feed-in tariff, Japan has a base of domestic AND foreign participants in the electricity sector who will play a role in pushing the energy transition going forward. And its manufacturers will see the incredible global business opportunities they will have IF they can incubate successfully in the domestic market.

The U.S. is likely to backslide significantly at the Federal level, but that is a topic for another day.

... solar power takes up too much space?

This nice summary at a global level by Adair Turner notes that there is plenty of room for solar and wind power in most countries AND a low enough cost that "within 20 years many countries could get a majority of their electricity from renewable sources at an easily affordable price."  He notes that in a few countries with high population density (e.g. India, Bangladesh, S. Korea) we may need to add some nuclear and carbon recapture technologies to make a swift transition to a zero carbon economy. And some rich countries (Britain) may prefer to pay a bit more for electricity to place their wind farms offshore, for aesthetic reasons.

Japan (and Germany) are absent from the analysis.  Japan's population density (336 persons per square kilometer) is lower than S. Korea (507), India (407), Taiwan (647), Bangladesh (1119) and similar.  But like Britain Japan has a strong "NIMBY" tradition that allows localities to veto many types of developments.  So site availability will continue to be an issue for renewables in Japan.

Some ways around the issue:

Solar -- as much rooftop and BIPV as possible, on every new house and commercial or industrial structure!  Floating solar on ponds, reservoirs, etc.  Solar greenhouses.

Wind -- offshore with floating projects as they become commercially viable, and massive new capacity additions in Tohoku and Hokkaido with sufficient transmission capacity to get the power to demand centers in Kanto (and Kansai).

Portugal Runs for 4 days straight on 100% renewable energy

This report from the Guardian online.

"As recently as 2013, renewables provided only about 23% of Portugal's electricity.  By 2015 that figure had risen to 48%."  Hydro, wind and solar.  In February 2016 they were at 95% renewables.

And no, they did not build a lot of big new hydro dams in 2014 and 2015, nor did they cut their electricity usage in half!

And even if most of the increase in renewables is wind and solar, they did add 260MW to an existing hydro/pumped storage plant in January 2013 -- and storage allows them to use renewables to get to such a high percentage.

NY Times Editorial Board - "A Renewable Energy Boom"

When I was a regular reader of print newspapers back in the last century, I used to enjoy the pre-Murdock Wall Street Journal's editorial page.  They would propose sometimes audacious, outrageous things.  They would take crazy "conservative" positions.  Sometimes I felt as if my blood would boil.

The New York Times editorials ... not so much.

A typical NY Times editorial would expound that education is good; crime is bad; that we all should volunteer more to help our communities.  The NY Times editorial board would endorse proven, mainstream political candidates.  Yawn.

So when an April 4, 2016 New York Times editorial announces that we are entering a "renewable energy boom", citing a written-by-committee consensus UN report , you know that renewables are no longer a "fringe" source of energy.

Indeed, as the editorial notes, a majority of the generation added last year GLOBALLY was in renewables, more than half of total new renewables investment last year occurred in China, India and Brazil -- the big developing markets that will make or break efforts to control greenhouse gas emissions -- and renewables, including hydro, share of global electricity production has doubled from 2007 to 2015, while costs are dropping like a rock. By 2020, solar PV will be cheaper in India than new coal-fired generation.

(In such an environment what investor in his or her right mind would commit to a new coal-fired plant?)

These facts are now commonplace.  Governments and companies: ignore them at your peril.

P.S. If the UNEP (United Nations Environment Programme) is a bit suspect for the typical somewhat conservative U.S. senator or, say, Wall Street banker, how about Bloomberg?

How to keep everyone on the grid and get to 80% renewables by 2030

It is good to be back after a long absence from this blog.

My last post was about how a combination of solar + storage is likely to lead to massive "grid defection" over the coming 15 years.

Now, a study that suggests another way things MIGHT go.

A study published in the leading scientific journal Nature (and available online at the link) indicates that, for little or no net increase in the levelized cost of electricity, it would be possible to get the U.S.A. to 80% renewables by 2030.  How? A significant investment in the transmission grid, including new very high capacity, low loss, long distance DC (direct current) transmission.  The study looks at renewable generation and potential generation using detailed weather data, and concludes that even though sun and wind resources are intermittent and variable locally, across the U.S. as a whole the amount of electricity that can be generated by renewables at any one time is remarkably steady.

So, the authors suggest, the key is a grid that has sufficient capacity and resiliency to get the electricity from where it is produced at any time to where it would be consumed.  A huge undertaking ... but one that costs no more than building and fueling the traditional generation the nation will need if this is not done.

Incredible.

Cheap Oil ... will not kill Solar

I just read an interesting short Bloomberg article about why solar PV will survive cheap oil prices.  Of course, it is titled "Seven Reasons ... "  I hate these list-like articles ... attempts to attract online readers who are accustomed to to bite-sized content, rather than serious analysis.

And, of course, the article has the obligatory cool chart.  The same readers who want a "seven reasons" headline and a bullet point list also want charts!

But this chart I really do enjoy.  A reprinted Bernstein research comparison of cost of solar and various fossil fuels, per mmbtu equivalent.  Yes, solar is still more than Henry Hub gas.  But look at that declining cost curve!

Electricity Storage Makes Dramatic Advances

This morning (January 18 2015) the Nikkei carries an article highlighting a Sumitomo Denko announcement of their plan to cut the cost of energy storage to "1/10" of current levels.  Sounds impressive.

Well ... not quite THAT impressive.  The article focuses on Sumitomo Denko's "Redox Flux" batteries.  Yes, these are one of several impressive battery technologies now being advanced globally.  Sumitomo Denko's target is to cut cost to 20,000 to 30,000 yen per kWh, and to have a large scale product available commercially by 2020.  The important points -- redox flow batteries do not have a limited number of cycles, so conceivably can last over a decade and be consistent with the life of a solar PV facility.  This compares with Lithium Ion and NAS, which have limited cycle lifes.  Also, Redox Flow is safer.

The article does not mention any of the other recent efforts OUTSIDE Japan involving redox flow (more specifically vanadium redox flow) that have been in the renewables trade press over the past year.  I collected a few of these in recent months.  These products are NOT in the 200,000-300,000 yen per kWh range.  Rather, prices are already sliding toward the $500 per kWh range (around 60,000 yen at current exchange rates), and are likely to go lower fast.

So if Sumitomo Denko does not roll out its product until 2020, the main question is, will the market have already passed it by?  Has the market already, today, passed it by?

CellCube model batteries:  Gildemeister -- already available.

http://energy.gildemeister.com/en (now part of DMG Mori Seiki)

http://www.greentechmedia.com/articles/read/the-german-american-vanadium-flow-battery-connection

Unienergy -- currently $700 to $800 per kWh storage, when scale up will be around $500.

http://www.greentechmedia.com/articles/read/unienergy-brings-next-gen-vanadium-flow-battery-to-commecial-scale

Imergy -- driving costs down from $500 toward $300 per kWh storage.

http://www.greentechmedia.com/articles/read/imergys-slag-to-energy-storage-vanadium-recipe

http://www.theatlantic.com/technology/archive/2014/04/the-forever-battery/361167/

Eos Energy -- $160 per kWh storage product now taking orders for 2016 delivery!

http://cleantechnica.com/2015/01/29/eos-energy-storages-aurora-battery-system-commercially-available-2016-160kwh/

For a note on ViZn's Zinc Iron Redox Flow batteries, see Peter Detwiler's November 2014 Forbes Post:

http://www.forbes.com/sites/peterdetwiler/2014/11/21/vizns-zinc-iron-redox-flow-battery-another-storage-company-in-the-game/

And his 2014 year-end post on storage generally as one of the ten major themes of the past year:

http://www.forbes.com/sites/peterdetwiler/2015/01/07/2014-energy-story-2-storage-entered-the-game/

Stop the Bullying, Please!

Japanese media from time to time turns its focus inward and looks at the phenomenon of "ijime" in Japanese society.   Ijime is usually translated as "bullying" and most commonly thought of as a middle/high school phenomenon.  Sometimes a more granular approach identifies types of "harassment" such as "power harassment" (boss to subordinate) or "pregnancy harassment" (company to female employee) in the workplace, or bullying/hazing type tactics by athletic team coaches.  I guess this type of thing, common in almost any society in some or another form, comes with the territory in a society like Japan that is full of hierarchical/vertical relationships.

Last week, I was talking with a prominent Japanese lawyer who handles many project financings, including solar power projects.  He asked me (in Japanese) "why is the Nikkei Shimbun bullying solar power developers"?

Indeed, the past year there has been a massive campaign in the Nikkei and some other outlets (Yomiuri, and presumably also Sankei commentators and other more conservative outlets I do not usually read), to demonize solar power.  It is clearly driven by the utilities, their supporters in the LDP and the government and industry, and it is transparent.  I have not commented before, but it struck me that this lawyer had it right.  What is going on a type of "ijime" or bullying.

Upon passage of the FIT legislation in August 2011 - happy faces on Kan and Son.

Solar PV is never mentioned in the Nikkei or Yomiuri without the adjectives "expensive, unreliable".  Okay, to be completely fair, maybe they substitute "unstable" or "intermittent" for "unreliable" but always include "expensive." And the media continues to repeat, ad nauseum, the allegation by someone (never named) that developers are "sitting on" approvals waiting for module prices to go down before building projects -- in fact, as the yen has plunged (again down more than 5% the past few weeks), module prices have increased in local currency terms and as a percentage of project income.

Recently there was an article in Nikkei about the relevant METI study committee wanting to reform the system to prevent 不当利益 -- illicit profits.  There was another one about how METI wants to block sellers of retail power from marketing to consumers as "100% green" or "all renewable" when their generation is sold (with subsidies) under the FIT.  Of course, if it turned out consumers all want, and are willing to pay more for, "all renewable" power, then that would not be a good result for the existing utility industry or other suppliers.

This whole campaign reached its low point, for me, in a large article on page 2 of the Nov 4, 2014 Nikkei entitled 「蹉跌再生エネルギー」("Failure of Renewable Energy, Part 1") -- apparently the first in a series.

The large headline, in the middle of the page, was 「国民に6.5兆円の請求書」, which translates roughtly as a "6.5 trillion yen bill for the Japanese people!"  That is over $50 billion a year.  Except the headline was more like this:
 「国民に6.5兆円の請求書」
A business newspaper, Nikkei is not known for inflammatory headlines.  I do not see in Nikkei a similar headline about the "20, 30 or 40 trillion yen bill for the Japanese people!" from the Fukushima accident and related cleanup, decommissioning and retrofitting of nuclear reactors.  How much is Japan's total cost of electricity in a year?

Nor does Nikkei "call a spade a spade" when one of the utilities refuses to decommission a reactor that has a less than 1% chance it will ever reopen ... just to keep the asset on a balance sheet and avoid, or at least delay, potential insolvency.  And when METI and other regulators get together to change the electricity ratebase accounting calculations so that operators can recover costs from their ratepayers and amortize even non-functioning or prematurely decommissioned reactors, I see only a polite article discussing the idea, not really anything to indicate the painful numbers involved -- a trillion yen?  10 trillion yen?, and certainly not in 30 point typeface.

How did the Nikkei writer arrive at the 6.5 trillion yen figure?   What is the basis?  The Nikkei article does not say.

It is actually very difficult to know the cost of the FIT, as compared to an alternate world where the FIT had not been adopted.  This is even more so in a country where there are not transparent, liquid markets in electric power.  In Germany, solar looks expensive, but it actually pushes WAY down the cost of wholesale power during peak periods (daytime).  If a user gets cheaper power, but pays a bit renewable surcharge, the user is no better or worse off economically than before, but solar looks "expensive", and the competing coal generator is extremely unhappy at the low prices it gets for its output.

But in Japan, one key assumption is how much of the approximately 70GW of "METI certified" solar projects will actually be built.

METI produced some materials for the committee now considering the future of the FIT on this very subject, dated September 30, 2014.  You can find them here.  (Materials #8).

What the METI submission to the committee says is that the annual "surcharge" amount for the projects operating under the FIT as of June 30 2014 is around 650 billion yen, or just under US$600 million.  The anticipated figure if ALL METI-certified projects were to start operations?  Around 4 times that amount, or 2.7 trillion yen per year.  But of course, the very same METI chart warns that THIS WILL NOT HAPPEN.  METI realizes that no one expects this, as projects will NOT go forward for any number of reasons, some of which are listed in the chart.

In fact, Japan implemented 7GW of solar in 2013, will implement around 10GW in 2014.  My guess is that there will be similar numbers next year and perhaps a bit less in 2016 (to the extent we can know).  These will be a mix of 40-yen, 36-yen and 32-yen approved projects.   The total that will be built from the 69GW that has been certified?  Probably around half, or less.  The short term economic burden on consumers will be real (as compared with coal or even gas-fired generation), but very manageable.  A few hundred yen per month for the average consumer ... much of whose bill is going to pay the cost of other, opaque mistakes and errors by the suppliers over past decades.  And many of these facilities will continue to produce electricity, selling at and pushing down market rates, for 5, 10 or even 15 years after the FIT purchase obligation ends.

But this is a very scary world for the utilities.  Each GW of solar means a loss of peak electric sales for them, and more trouble justifying their existing generation expansion plans.  Each household that implements solar with storage in the future ... means a permanent lost customer.  They will either embrace these changes and preserve an interesting, if very different, business, or will go the way of the dinosaurs.

When I first started to work on solar PV projects in Japan, I can remember several meetings with a major Japanese institution when I would explain what we were trying to do -- bring the best of the world's experience to Japan and accelerate implementation of solar PV here, including the Moore's Law-like cost reductions seen elsewhere in the world.  The counterparties would warmly thank us for our efforts to develop such a business to help expand renewables in Japan.

That was before the change in government, and the utilities realizing that solar PV and other renewables under the feed-in tariff is an existential threat to their business models.  That was before the nuclear restart fell 12-18 months behind its initial schedule.   Indeed, now as Japan heads into its winter peak electricity use period having survived a second consecutive zero nuclear power summer, and with no specific government conservation targets for large users, AND as oil and gas prices plunge to their lowest levels in many years, the utilities and government might be worried about people starting to ask questions such as "is there really a crisis that requires the nuclear restart?"

Do we really need new large coal-fired plants ... or won't we have access in the future to cheaper LNG?   Shouldn't we plan future electric capacity based upon the "Moore's Law" characteristics of technology-driven renewables like solar and storage?

The Future of Solar Pt 2

The Future of Solar (Part 2) -- Leapfrog

As the Japanese government struggles with trying to figure out just how much solar PV will actually be built under the feed-in-tariff (FIT), it becomes clearer and clearer that solar PV will be a huge part of Japan's energy future, whatever METI and the current government decide to do with the FIT.

Why?  Solar PV modules are now 80% cheaper than in 2008.  And the trend will continue, with some dramatic improvements just a few years from commercialization.  Two announcements in PV Magazine's daily newsletter this week drew my eye.

First, PV Magazine reported that Oxford PV (formed by Oxford University-affiliated scientists) appears to be making swift progress with its plans for PV based upon a cheap "thin film perovskite" technology.  In two years they have moved from cell-level conversion efficiencies of 5% to 17%.  If this is dramatically cheaper than traditional crystalline technology, that will be a huge improvement.  

But more importantly, Oxford PV announced that it plans much more quickly to commercialize another use of the technology -- adding a cheap perovskite "tandem layer" to traditional crystalline modules.  By doing so, they plan to increase the conversion efficiency of traditional modules by 20%.  They plan to have "prototype modules" by 2015.  If this is in the market by 2018 or 2019, wow.  A cheap add-on technology that could boost basic PV module effiency by 20%.  So a 16% conversion efficiency module becomes a 20% conversion efficiency module.

Separately, an Australian research organization, CSIRO, announces it is near commercializing a cheap "printable" solar PV technology.  The technology for "spray on" solar ink, using a modified commercial printer, would allow just about any plastic surface to be converted into a solar cell.  Current conversion efficiencies are in the 10% range, but are improving.   The cost of the ink is "negligible".  Several Australian printing companies are reportedly studying the possibility of working with CSIRO to commercialize products.  With this, it is possible to imagine a cheap solar "tent", solar "mats", cheap BIPV windows with a solar layer, and on and on.  (Australian researchers have held a number of records for highest conversion efficiencies in various solar PV technologies over the past 20-30 years and the country continues to "punch above its weight" in this technology).

Of course, these are just two of many different efforts.  Any one of these could offer quantum leap in cost-performance of solar PV.  Japan will be waiting.

-----------------------------------

So even if the legacy participants in Japan's electric power industry face a relatively bleak future -- with trillions of yen of stranded assets, decades of decommissioning costs and a clean up at Fukushima that will take the rest of my lifetime and beyond, it is difficult not to be optimistic about the energy transformation that can and should occur over the next decade or two.

Japan Mega Solar -- Tochigi Examples

As some of the first projects we started developing back in late 2012/early 2013 are now finished, here are some visuals.

First, an aerial video of the project Deneb Renewable Energy developed together with partners at Sakura City, Tochigi Prefecture.  The main investor, and project final design, procurement and supervision was done by IBC Solar AG, together with Japanese construction partner Yokohama Kankyo Design.  The project is now ready to start operation and should be selling electricity in October, 2014.



And a screen shot of the same project:

Below are a few photos of a second project developed by Deneb Renewable Energy, at Kami-Ishigami, Otawara City, Tochigi, which started operation on September 24, 2014.  The project's main investor is Square, a Tokyo-based real estate investment company.  The design, procurement and supervision was also handled by IBC Solar AG.  TTK, a local Tochigi-based construction company, was the main construction contractor.

Both projects used racking provided by Schletter Japan, which was installed by Kyoto-based Asia Machinery Solutions Co., Ltd.  Both projects also use inverters, transformers and grid connection-related equipment provided by ABB KK.  And both projects will sell power to Tokyo Electric Power Co., Ltd. (TEPCO).

Midday view toward East

Sunset in the west.

Members of the core team gather to celebrate the project commissioning.

The grid connection point on the plant's NE edge.

The project is barely visible behind blooming Cosmos flowers from the nearby temple.

How Much Renewables can the Grid Support?

This interesting article from MIT Technology Review series "Ten Breakthrough Technologies 2014" suggests that, using information technology to generate sophisticated predictive models of how much wind and solar will be generated in 15-minute increments, electricity grids will be able to support MUCH MORE "intermittent" renewable energy than previously thought.

The (US) National Center for Atmospheric Research (NCAR) in Boulder, Colorado has a pilot project, whereby Xcel, one of the US' largest utilities and the main power distributor in Colorado, is able to avoid the need for back-up fossil fuel generation, taking data from every wind turbine feeding into its system and using the NCAR models.  Based on the new models, Xcel supports a mandate for utilities to get 30% of their electricity from intermittent, renewable sources.

And NCAR is now working on a similar model for solar, to match the wind models.  The main challenge is the lack of data from residential rooftop systems.

And the MIT article mentions one of my favorite ideas -- the use of electric car battery storage to offset dips in the grid from use of renewables.

These types of developments are among the reasons why U.S. technology thinkers now see renewables as no longer expensive or impractical, and why the largest share of U.S. new generation added last year was renewable wind/solar.

Sekisui Chemical Battery and Solar Announcements Grab the Eye

There was a press release last week that really caught my attention.  The Nikkei carried a story about a new process for making lithium ion batteries that promised to dramatically reduce cost and increase energy storage capacity.  The story indicated a 3x increase in storage capacity and much lower production costs.  Wow, I thought, if this is actually commercializable then it will accelerate the shift toward PHEV and EVs.  And also storage systems for renewable energy.  And unlike other battery technologies I have been reading about, the story indicated it should be on the market in a little more than a year.

The press release issued by Sekisui Chemical (click link) adds detail, and more important, photos of the new battery -- a flexible, film-type, sprayed on product.  Wow.

 

Then a few days later, I see on the Sekisui Chemical website yet another remarkable press release: for a cheap, flexible organic dye-sensitized solar cell produced at room temperature with an 8% conversion efficiency, a world record for this type of cell.  This was based upon work done with Japan's National Institute for Advanced Industrial Science and Technology (AIST).  Again, the company hopes to have a product on the market -- for use in building integrated applications (BIPV) such as office windows -- by 2015.

These are the kind of advances -- that could be on the market in the next few years and represent a significant jump from today -- they are a reason to be very optimistic about Japan's (and the global) energy future, and to wonder whether it is really good value to be spending trillions of yen on trying to restart a portion of the existing nuclear power fleet.

Higher FIT Considered for Offshore Wind Projects; Lower FIT Possible for Solar PV from April 2014

Japan does not have the kind of shallow offshore waters that form the ideal environment for offshore wind.  Instead, the ocean surrounding Japan drops off deeply, and conditions can be harsh.  The offshore wind projects now being tested is for massive floating platforms, anchored with huge chains. The project participants are major companies, with big company overhead and long planning horizons.

That is expensive, to say the least.

In addition to the 1GW Fukushima project mentioned earlier this year, Marubeni is reported to be leading a 125MW project offshore of Kashima, Ibaraki.  Other smaller demonstration projects are planned elsewhere, from Kyushu to Hokkaido.

So it was not such a big surprise to see reports in the press last week that a higher feed-in tariff rate is being considered for offshore wind.  The current year's FIT for wind generated power is 22 yen per kWh.  From next year, according to Nikkei, a tariff for offshore projects is being considered of 30-40 yen per kWh, likely around 1.5 times the rate for land-based wind.  Such a differential is not uncommon in European feed-in tariff regimes.

Meanwhile, according to the same source, it is likely that the solar PV tariff (now 36 yen) will be reduced to a level somewhere between 30 and 35 yen (plus tax).  It was recently announced that residential solar installations are down 15% from last year.  Perhaps the FIT pricing committee should consider retaining 36 yen pricing for residential rooftop and "mini" solar projects, even if the tariff is cut to somewhere in the 30-35 yen range next year for larger open field installations?

Unfortunately, a high FIT rate does not seem to be enough to jumpstart some of the other renewables areas.  Geothermal, in particular, needs some kind of boost to get around NIMBY complaints and unproven worries about projects' impact upon hotspring water resources.  Onshore wind requires accelerated environmental assessment procedures if it is to make an impact.

The Future of Solar - Part 1

Given the Japanese feed-in tariff and current prices for solar PV modules, the economics of open field mega-solar projects favor a simple fixed tilt installation using cheap, reliable, 60-cell 250 watt polycrystalline modules, typically with a conversion efficiency of slightly better than 15%.  

One or two axis trackers?  Thin film modules?  Concentrating lenses with high efficiency PV cells? Expensive storage solutions?  None of these make economic sense under normal circumstances, at least in the Japanese market.  Here are some ideas that may make sense, either today or in the very near future.

1.  East West Installations

An "East West" installation achieves a much flatter power curve -- more even production during daylight, and thus can be preferable where the aim is self-consumption, or where power is sold onto the grid at market-based prices in a region where other solar output depresses mid-day pricing.  As you can see from the photos below, East-West installations can also pack a large number of modules onto a limited size site and so are ideal for an environment where modules are cheap and land is expensive.

IBC Solar recently completed a 6.36MW open field East-West installation in Kaiserlautern, Germany -- the largest so far in that country.  The plant will supply 2 nearby industrial users.

2.  Water-based Installations

Another recent innovation is to install a large solar installation on a pond, lake or reservoir.  The site can continue to be used for irrigation, flood control or other purposes, so any revenue from a solar lease is purely additive -- pennies from heaven for the owner of the pond.  Also, if the modules are installed on floats relatively close above the surface of the water, the water exerts a cooling effect on hot days, and can significantly improve output.  

Ciel et Terre, a France-based company, has the leading current system of floats for this type of installation.  Their first Japanese system was installed in Okegawa, Saitama in a West Holdings project.  A number of others are now in the planning stage.

Renewables Inbound Investment into Japan

Japan has the lowest level of inbound foreign direct investment of any major economy.  It is a very attractive market, but also a difficult one, given language and cultural barriers, high costs and long lead times to get established.  And in many industries, Japan's slow economic growth, aging (and, as of now, shrinking) population, have made domestic markets challenging even for Japanese companies, let alone foreign new entrants.

So it was heartening to read the lead story in Saturday's Nikkei Shimbun touting 700 billion yen ($7 billion) in planned foreign investment in renewable energy, triggered by the Japanese feed-in-tariff that has been in place from July of 2012.  The story highlighted a number of different plans from different origins:

1. Australia - Macquarie plan to invest 100 billion yen in solar and wind projects (primarily lease-type financing, I believe).
2. China - GCL Poly Energy targeting 100 billion yen in solar -- both equipment supply and ownership.
3. USA - Goldman Sachs plan to invest 300 billion yen in solar and wind renewables projects over 5 years (primarily third party debt, I believe, with the equity investment much lower).
4. Germany - Photovolt Development Partners (PVDP) of Berlin plan for 90 billion yen of solar projects.  (PVDP is a little known developer in Germany that has announced a number of huge projects in Japan, none of which has yet to enter construction).
5. Spain - Gestamp Solar plan for 90 billion yen of solar projects over 3 years.
6. Korea - Hanwha Q-Cells plan to invest 30 billion yen in 2013.

The articles notes that as growth slows for renewables in Europe, Japan has become seen as a very attractive market.  Indeed, the feed-in-tariff presents a rare opportunity for foreign investment into Japan, and is one of those rare opportunities for a business to establish a position in the Japanese market in an industry that should be very interesting over the coming decade or more.

The article ends on a mixed note, however, suggesting worries about a solar PV "bubble" in Japan, with comments on the high purchase price under the feed-in-tariff (FIT) for solar PV, even though it was reduced by 10% from the first to second year of the FIT; the fact that consumers will pay a surcharge on their electric bill for renewables; and noting the perceived problems with excess renewable supplies in Germany (after 10 years of a FIT that has resulted in many, many times the installation of solar PV and wind that is likely in Japan over the next few years).

Of course, without the initial generous FIT, Japan would never have "jump started" its renewables businesses in 2012, and never would have attracted such ambitious foreign investment plans.  Foreign investment in renewables is essential to modernize the Japanese project development business.

Japanese construction companies look at the FIT as a way to make a killing -- taking a fat margin when their other businesses are suffering.  Foreign developers, on the other hand, want to implement projects at as low a cost as possible.  This is a matter of self interest, of course, to maximize profit.  But it is also a process of transferring know-how, and of generating the cost data that will show, indeed, it is possible to do renewables projects in Japan at a price somewhere in between the "domestic" price level and the "international" price level.  Without foreign entrants, Japan's renewables business would have remained stranded in a world full of uncompetitive and anticompetitive practices, dominated by the incumbent utilities and the major construction companies and domestic equipment suppliers.

Renewable Energy Capacity in Japan -- up 15% in Year 1 of the Feed in Tariff

According to METI statistics released last week, the total newly installed capacity of renewable electricity generation in Japan during the first year of the feed-in-tariff (July 1 2012 to June 30 2013) amounts to 3.666 Gigawatts of capacity, a 15% increase in Japan's renewable energy generation capacity.

More than 95% of the newly installed capacity is solar PV -- no surprise given the comparative difficulty of siting, permitting and building other types of renewables in Japan.  Of the new capacity, 1.379GW is residential solar PV, and 2.12GW is commercial/utility scale, so-called "mega" solar installations.

The 3.5GW of new solar far exceeded METI's plan for 2.0GW installations.  Wind power,  on the other hand, barely shows up as a blip on the radar.  Siting of major wind farms takes a very long time in Japan, and NIMBY opposition makes it nearly impossible.

The 3.5GW of installed solar is only a small fraction of the 22GW that has been METI "certified" solar PV.  The bulk of the to-be-built projects are mega solar.  Even if many of those projects are never built due to issues with land rights, land use approvals, utility interconnection and/or financing, a portion of the 22GW will be build, and yet further project will be certified.  It should be easy to exceed 3.5GW of newly installed solar PV in Japan during July 1, 2013-June 30, 2014.

Many sources indicate that the new renewables capacity is equivalent to "3 nuclear power plants".  That is not quite accurate.  There is no technical reason that a nuclear plant with 1GW generating capacity should not operate 80% or more of the time.  The U.S. nuclear reactor "fleet" operates at higher than 85% load factor (capacity utilization).  In fact, prior to March 11, 2011, Japanese nuclear plants had a very low average load factor -- more like 60%.  Solar facilities, on the other hand, operate at or near their rating peak capacity for only a few hours a day, so have only 10-12% of the annual kWh generation of a 24x7 plant operating at full capacity.   When this discount is applied, 3.5GW of solar PV installation is closer to one half of a Japanese nuclear reactor.)

Offshore wind turbines ready for test

The press this week was full of this photo

showing the massive floating turbines being readied for a test off of Fukushima.

A few weeks ago we saw this picture of the massive chains that will be used for moorings.

The project sponsors and government certainly like the symbolism of a big offshore project near the Fukushima reactors.  They have named it "Fukushima Mirai" -- the future of Fukushima.

Let us hope that the project works out from both a technical and a cost/performance standpoint, and maybe even manages to utilize the 500kV transmission lines running between the Fukushima Daiichi reactors and the Tokyo region.

The Fukushima offshore wind project website is now accessible here.

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.