Japan’s new feed-in-tariff energy law, aimed at promoting renewable energy, will need attractive pricing and revisions to flesh out of vague provisions if it is to help wean the country from nuclear power, a panel of experts said.
Attendees at a three-day international forum also said the law, which requires utilities to purchase solar, wind and other forms of renewable energy and allows them to pass excess costs on to consumers, would be more effective if Japan adopted clear, ambitious renewable energy targets that encourage investment.
“We want the government to form a clear plan, introducing a long-term development scheme soon and an ambitious national target,” said Tetsuo Saito, director of strategy planning at the Japan Wind Power Association.
The new law passed in August, five months after the Fukushima nuclear disaster shook the public’s confidence in atomic power, and aims to encourage renewable sources such as solar, wind and geothermal, which currently generate only 1 percent of Japan’s electricity.
Including big hydroelectric plants, renewable sources account for 10 percent of Japan’s energy portfolio.
In May, former Prime Minister Naoto Kan said he wanted to boost renewable energy, including big hydro plants, to at least 20 percent of Japan’s power supply by the 2020s, although renewable energy advocates have called for more aggressive targets.
Japan’s trade and energy ministry is mulling setting the purchase price for renewable energy between 15 and 20 yen per kilowatt of electricity and the duration of purchases at 15 to 20 years.
“We don’t expect any new entrants into geothermal, meaning no growth in this area, if the purchase price is set at 15 yen and if the duration is only 15 years,” said Masaho Adachi, chairman of Okuaizu Geothermal, a company that generates power from geothermal steam.
“If the government sets the price at 20 yen for a 20 year period, then the law will have a better chance of success.”
Japan has substantial geothermal resources, although many of its geothermal hot spots are within protected national parks.
“The country is obsessed with energy but it also needs to continue respecting laws dictating land use for the environment,” said an official from Japan’s environmental ministry.
Vague elements of the law were also seen potentially hindering access to the power grid by renewable energy producers wanting to enter the market.
The law exempts utilities from renewable energy purchases if there is a valid reason for rejecting them or if purchases would pose a potential threat to the stable supply of electricity.
Analysts have said both clauses in the law are open to differing interpretations, allowing utilities to reduce the amount of electricity they must buy from renewable sources.
“The impression is that too many loop holes may be left in the law, which will lead to barriers and misunderstandings towards the law being realised,” said Doerte Fouquet, a lawyer specialising in Europe’s energy legislation and a director of the European Renewables Energies Federation.
She and other experts had gathered for a three-day forum to mark the launch of the Japan Renewable Energy Foundation, a brainchild of Masayoshi Son, the billionaire founder of Japanese telecom firm Softbank Corp .
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