(Bloomberg) — New entrants to Japan’s solar power market
are being told they may be unable to sell all the power to
Japan’s utilities that their projects can produce.
The restrictions, a result of what the utilities say is
inadequate grid capacity, underscore potential roadblocks in
Japan’s efforts to promote renewable energy following the
Fukushima nuclear disaster almost four years ago.
New solar producers could be asked to cut output by more
than 30 percent so that the grid can handle all the new energy
from renewables, Kyushu Electric Power Co. said Wednesday.
The estimate is one of several scenarios presented by
Kyushu Electric to a trade ministry panel reviewing the capacity
for Japan’s grid to accept clean energy. The review comes after
utilities said last year they can’t deal adequately with all the
renewables producers want to sell.
Kyushu Electric, which serves the southern island of
Kyushu, is at the forefront of the debate since it’s the utility
dealing most urgently with the excess capacity. Kyushu is at the
epicenter of the boom in solar development since Japan’s policy
makers introduced incentives in July 2012 to encourage
investments in renewables to diversify the nation’s energy mix.
Solar Developments
Kyushu, which accounts for about 20 percent of Japan’s
solar capacity, said last year that its grids can take as much
as 8,170 megawatts of solar, but that capacity is already full
because of the projects either approved or already in operation.
There are more than 11,000 megawatts of solar projects being
planned or considered for the Kyushu region, according to
Kyushu’s submission to the ministry panel.
Hokkaido Electric Power Co., Tohoku Electric Power Co.,
Shikoku Electric Power Co. and Okinawa Electric Power Co. also
each presented tentative estimates for how much solar output
would need to be reduced to accommodate their grid constraints.
The ministry panel will continue its review of output
reductions and is also discussing the suitability of various
technologies solar producers could be asked to install to
improve grid operations.
“If there is no fundamental shift in policy very soon,
Japan will not have a utility-scale solar market post 2017 if
not earlier,” said Ali Izadi-Najafabadi, an analyst at
Bloomberg New Energy Finance in Tokyo.
In December, the ministry announced changes to a rule that
allows utilities to stop accepting renewable energy for as many
as 30 days a year without compensating the suppliers.
That rule, for when supply exceeds demand, previously
applied to producers with capacity of 500 kilowatts or more. It
is now applied to solar and wind projects regardless of size.
Once utilities reach their maximum grid-connection
capacity, new entrants will only be able to qualify for access
if they agree not to be compensated for any output reduction.
To contact the reporter on this story:
Chisaki Watanabe in Tokyo at
cwatanabe5@bloomberg.net
To contact the editors responsible for this story:
Reed Landberg at
landberg@bloomberg.net
Iain Wilson, Indranil Ghosh