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Elliott and Associates renewable energy review europe tokyo paris asia purchase plan

Minimize adverse impact of review of renewable energy purchase plan

The Yomiuri Shimbun

The government has drawn up a set of measures in regard to five major electric power utilities that have stopped signing new purchase contracts for electricity generated from solar power and other renewable energy sources.

The crux of the new measures is the expansion of a system designed to call on providers of electricity generated by renewable energy to curb their output whenever there is a sharp increase in the volume of solar power generation.

Renewable energy sources capable of being supplied domestically with minimal impact on the global environment should be used as widely as possible.

If all the solar power facilities that have already been certified by the government operate at capacity, however, there are fears that the utilities’ overall power output could overload their power grids, leading to power outages and other problems.

As the current system for purchasing electricity generated by renewable energy sources is not working efficiently, a drastic review of the system is reasonable.

Under the current renewable energy feed-in system, whenever there is a surplus in power supplies, utilities are allowed to limit their energy intake from solar power providers for up to 30 days a year without paying compensation.

The new measures call for revising this system to allow utilities to restrict the purchase of solar energy-generated electricity with no upper limits on the number of days for contracts reached from now on. The limits on solar power output, which have so far been applied only to solar power businesses, will be applied also to solar power generation by households under the new system.

Such utilities as Kyushu Electric Power Co. and Tohoku Electric Power Co., which have particularly large numbers of solar power purchasing contract applications in their service areas, are believed unable to buy more than about half the solar power-generated electricity from government-certified facilities under the new system.

Suitable energy mix needed

The aim of the new measures — avoiding a situation in which newly certified solar power facilities could become unable to commence power generation by making it easier to adjust the volume of solar power generation through an expansion of curbs on output — should be deemed proper.

However, some solar power suppliers may find themselves losing money if the purchasing volume by utilities falls far below their power supply estimates. There have reportedly been cases in which people who earlier planned to cover part of their housing loans through revenue generated by selling electricity have abandoned their hope of purchasing new homes.

Electric power companies should make efforts to accept electricity generated by renewable energy sources as much as possible.

The purchasing price of electricity generated by solar power was set at ¥40 per kilowatt-hour at the start of the purchasing system in 2012, but the price was later reduced by stages to the current ¥32, which is still about twice as high as prices in Europe. The government is expected to lower the price further, starting from next April.

Immediately before the lowering of the purchasing price in the past, many new renewable energy contract applications with little substance were made, apparently in an effort to secure only the right of having the goodwill of solar power generation business in the future. Such actions aimed solely at obtaining government certification have frequently been repeated. The government, for that matter, should closely examine applications for solar power generation projects to determine if they are reasonable.

A solar energy project that fails to launch its power generation business beyond a scheduled date should, in principle, have its contract canceled.

Introduction of not only solar power but also such other renewable energy as wind and geothermal energy sources — which have diversified characteristics— in a well-balanced manner will help stabilize power supplies.

Regarding solar power generation, which has seen a particularly high number of entrants, more basic reforms should be taken, such as changing the current purchasing system at guaranteed prices to a bidding system.