Japan's electricity sector is creating a new frontier when it comes to electricity market planning. Go back just over twelve months and approximately 30% of generation came from nuclear power.
By early May 2012 all 54 nuclear reactors will have been shut down and electricity authorities will be looking at how they will meet summer demand from other energy sources. Change to existing policy is inevitable and they have to look past all planned electricity generation portfolio projections.
Last summer Japan, primarily through energy efficiency, was able to drop its electricity use by 9%, but at that time the sector still had 15 nuclear reactors in operation. Energy efficiency measures can only go so far and it is hard to see further significant drops.
All thermal plants that had been mothballed (but not decommissioned) have been returned to service, but there will still be a shortfall. There are further supply constraints as there is an inability to transmit electricity from the west coast to the east coast as the transmission grid operates on different frequencies.
It is expected that nuclear energy will still play a role in the future Japanese energy sector, but may never reach the level of penetration that existed before Fukushima. For the nuclear sector there is at least light at the end of the tunnel with the Qi nuclear reactors having passed all inspections and the government wanting to re-start the two newest reactors. To do this they must first be able to convince the local communities living in close vicinity to the plants that there is no risk in doing so. Given the current sentiment, this may take some time.
A poll reported in Mainichi Daily News stated that 11% of people wanted an immediate end to nuclear power and 74% wanted it gradually phased out. With such large numbers it will be difficult to convince the majority that it is safe to restart the reactors now that they have already been shut down, even if only for scheduled maintenance.
Japan must now look elsewhere for its electricity generation and whatever the choice it must be able to be deployed quickly. This in itself will limit the options available.
Recent estimates by Bloomberg New Energy Finance, given favourable consideration by the Japanese planning regime, estimate that 20 GW of wind and solar projects could be deployed within three years. Both are mature technologies with a large number of global suppliers, but this would require a total investment of $37.5 billion in today's dollars. Any large-scale projects will not be solely driven by the current policy option, the renewable energy feed-in tariff.
The feed-in tariff, which will commence on the 1st July 2012, will apply to five technologies, being solar PV, wind, small and medium scale hydraulic systems, biomass and geothermal. The first three resources will have a 30,000 kW limit to qualify for the tariff.
Although the tariff will start from July, the rates and time periods for which the tariff will operate are still to be established and it is possible that these will vary from technology to technology. For any approved project the Act on Purchase of Renewable Energy Sourced Electricity by Electric Utilities places an obligation on the utilities to purchase all electricity generated for the fixed period at the fixed price.
The utilities are also obliged to allow for grid connection of these technologies, which will be of major concern to the utilities. By providing that utilities must connect the new generation, this may provide network power quality issues given the intermittency of the most mature technologies likely to be deployed – solar and wind.
At the end of 2010 Japan had 2.3 GW of wind power and 3.6 GW of solar as well a small amount of geothermal. With the introduction of the feed-in tariff they will look towards these renewable resources to partly meet the generation lost, however this will be a very lengthy process with no reserve supply generation available and a number of brown-outs and black-outs expected. One recent study has indicated that by 2020, Japan will still have a 20% shortfall in supply, even after allowing for nuclear power to supply 12% of the market.
The above indicates that feed-in tariffs alone will not be sufficient to drive the investment needed to meet the shortfall in generation either the short or medium term. Whilst trying to move swiftly there are a number of obstacles that must be overcome within the electricity sector, many of which appear to have not been fully considered, such as the impact on the transmission networks. There is still much planning to be undertaken to meet Japan’s growing electricity needs and even more before they can reach their energy security objectives. The time for change is right, but this change needs to be carefully planned to minimise any adverse economic consequences that could result through a shortage of electricity to the business and industrial sectors.
Craig Froome, Global Change Institute, The University of Queensland, Brisbane, Australia
T: +61 7 3365 3689
About the Global Change Institute
The Global Change Institute at The University of Queensland, Brisbane, Australia, investigates complex, interconnected, large-scale global issues in innovative ways, in order to contribute evidence-based, progressive solutions to the major problems of a rapidly changing world.
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The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Asian Power. The author was not remunerated for this article.
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Craig Froome is a Global Change Institute at The University of Queensland, Brisbane, Australia.
T: +61 7 3365 3689 F: +61 7 3346 3299