New Japanese Energy Strategy and FIT - National and Local Prospects and Barriers -

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New Japanese Energy Strategy and FIT - National and Local Prospects and Barriers - 29th August 2012 Noriaki Yamashita & Shota Furuya REFORM Workshop @ Salzburg Institution for Sustainable Energy Policies Free University of Berlin Environmental Policy Research Institute(FFU) Aalborg University

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Options for Electricity Scenario in 2030 At least, RE needs to supply 25% of electricity in 2030. Renewable 2010 0% 10% scenario 15% scenario 20-25% scenario Nuclear 26% 35% 30% 25-30% 0% 15% 20-25% Fossil Fuel 63% 65% 55% 50% New Nuclear Plant No Yes/No Yes CO2-23% -23% -25% Source: National Policy Unit Special website http://www.sentakushi.go.jp/english/ 6

Complex Framework for New Strategy Ministerial Meeting National Policy Council Energy & Environment Council Committees by Ministries Meeting on Electricity Demand & Supply 3 option for New Strategy Ministerial meeting on Electricity Market & TEPCO Advisory Committee on Energy and Natural Resources Basic Issue Committee Energy Conservation Committee El. System Reformation Expert Committee Natural Gas Shift Committee Atomic Energy Commission Central Environment Council Committee for Accident Survey of Fukushima Hearing for Technical Knowledge of Fukushima Accident Expert Meeting on El. Price System& Management Meeting on Natural Resources and Fuel Committee on FIT tariff level METI NPC MoE Source: National Policy Unit website http://www.sentakushi.go.jp/english/ 7

Basic Issue Committee Chairperson and secretariats lead to reasonable strategy. 1st. Oct. 3, 2011 2nd. Oct. 26 3rd. Nov. 9 4th. Nov. 16 5th. Nov. 30 6th. Dec. 6 7th. Dec. 12 8th. Jan. 18, 2012 9th. Jan. 24 10th. Feb. 1 11th. Feb. 9 12th. Feb. 14 13th. Feb. 22 14th. Mar. 7 15th. Mar. 14 16th. Mar. 19 17th. Mar. 27 18th. Apr. 11 19th. Apr. 16 20th. Apr. 26 21th. May. 9 22th. May. 14 23th. May. 21 24th. May. 24 25th. May. 28 26th. Jun. 5 27th. Jun. 19 28th. July 5 29th. July 11 30 t th. July 30 31th. Aug. 23 Point of departure: - Former PM s Phase-out from heavy dependence on nuclear Committee s Mission: - Providing draft plan for the new national energy strategy 25 committee members - Existing industrial leaders - Energy market reformers - Sustainability advocates etc. 8

Public opinion Most people want phase-out from nuclear. Type Public hearing Participants/ opinion 1,542 (applicant for speaker) in favor of 0% scenario 68% 0 scenario 15 20-25 others Public comment 89,124 87% (78% want immediate shut- down) Deliberative Poll 285 (discussion participants) before after 41% 47% Polls by medias 1,000-2,000 30-50% ex) NHK 34% Source: National Policy Unit 9

FIT since July 2012 Considerably high tariffs because of incentive and no cost data. <10kW 42 yen (10yrs.) <20kW 57.75 yen <200kW 35.7 yen >10kW 42 yen 200-1,000kW 30.45 yen >20kW 23.1 yen 1,000-30,000kW 25.2 yen <15,000kW 42 yen (15yrs.) >15,000kW 27.3 yen (15yrs.) methane gasifier 40.95 yen unused wood 33.6 yen used wood 25.2 yen waste 17.85 yen recycled wood 13.65 yen *Tariff term is usually 20 years. **Tariffs are decided as tax-exclusive price, this chart include sales tax (5%). Source: METI Special website http://www.enecho.meti.go.jp/saiene/kaitori/kakaku.html 10

FIT leads PV increase in FY 2012 2-3GW PV in FY 2012, and wind follows, others needs more time. <10kW 143,933kW <20kW 0kW >10kW 300,705kW >20kW 122,000 kw 2-3GW in FY 2012 by experts some years later <200kW 0 kw 200-1,000kW 0 kw 1,000-30,000kW 0 kw some years later <15,000kW 0 kw >15,000kW 0 kw 10 years later methane gasifier 0 kw unused wood 0 kw used wood 0 kw waste 0 kw recycled wood 0 kw 5-10 years later Registered capacity by METI as of July 31th, 2012 Source: METI Special website http://www.enecho.meti.go.jp/saiene/kaitori/kakaku.html 11

Better FIT and Grid constraints FIT could be first step, but many constraints and backlash. 1. Tariff level and term Transparency and appropriate revision Categorization of biomass plant Surplus electricity from PV(<10kW) 2. Grid issue Priority access and disclosure of information Grid expansion 3. Further problem Harmonization with existing law Information service to the public Social acceptance on large scale RE project Backlash or? 12

New Local Targets and Policies Some prefectures aim 100% RE regions or RE obligation. Nagano Fukushima Kyoto Tokyo 13

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New Local Targets and Policies Some prefectures aim 100% RE regions or RE obligation. Nagano 70% RE in 2050 (PES) Hydro, PV Fukushima 100% RE region in 2040 (PES) Hydro, Wind, PV, biomass Kyoto Tokyo RE obligation since 2012 large buildings (>2,000 sqm) >3 kw PV or SHW, etc RE obligation (next year?) 18

Traditional Failure of Local RE Projects Most cities try to build high-tech and costly RES, then repeat failures ex) Biomass-Nippon (Japan) Comprehensive Strategy (2003-2008) Evaluated by Ministry of Internal Affairs 80% of 214 projects are no use, 20% shows limited effect More than 130 billion yen (=1.3 billion euro) was wasted. National Subsidy For initial investment R&D subsidy from METI Little for capacity building Poor Local Capacity Relying on consulting firms No regional strategy Little human resources Inevitable Project Failure Plant with low capacity factor Little profitability No data, no transparency 19

Community Power in Japan Community Power Definition 1. Local stakeholders own the majority or all of a project 2. Voting control rests with the community-based organization 3. The majority of social and economic benefits are distributed locally * A project can be defined as Community Power, if at least two of the three criteria are fulfilled World Wind Energy Association Community Power Working Group: WWEA highlights Community Power 23 May 2011

Community Power in Japan Brief History of Community Power in Japan 1 st Community Biomass & Efficiency 1 st Community PV & Efficiency 1 st Community Wind 1 st Community Hydro

Community Power in Japan Over 6,000 investors, 3.8 billion yen 100,000 500,000 yen/lot

Community Power in Japan Community Power Project Model Support Policy Government, Municipality Investor (Citizen) Invest Principal Dividend Funding company Financing Repayment Interest Local Energy Enterprise Electricity Electricity Fee Electic Utility Financing Repayment Interest Local Financial Institutions

Community Power in Japan Community Power Project Model and Barriers Support Policy Government, Municipality Lack of policy support => Feed-in Tariffs Investor (Citizen) Invest Principal Dividend Funding company Financing Repayment Interest Local Energy Enterprise Lack of priority access Lack of human resources Electricity Lack of capacity building Lack Electricity of space Fee for consensus building Electic Utility Financing Repayment Interest Local Financial Institutions Lack of track records and experience

Community Power in Japan Support program by Ministry of Environment Objective Setting up local base for renewable energy Organizing local renewable energy council Appointing local coordinators Making concrete business plan Exploring fund-raising options Building social consensus Starting the business project (within 3 years)

Emerging Community Power Initiatives 15 community power candidates Sapporo Mogami Mimasaka Nagano Fukushima Obama Saitama Chofu Minamiaso Oguni Tokushima Odawara Tama Kouchi Shizuoka 26

The Case of Odawara Renewable Energy Council Tokyo Yokohama Odawara

The Case of Odawara Renewable Energy Council Odawara City West part of Kanagawa Population of 197,000 Warm climate Surrounded with Hakone mountain, Sakawa river and Sagami bay Historical castle town Major commercial center Bedroom community for Yokohama and Tokyo

The Case of Odawara Renewable Energy Council Mayor s initiative for local renewable energy after 3.11 Odawara City applied for the support program of Ministry of Environment, and adopted as model city in 2011 fall Organized Odawara Renewable Energy Council as a local space for planning and consensus building Two coordinators from the council members Distributed PV project planning team Secretariat: Odawara City environmental policy unit

The Case of Odawara Renewable Energy Council Planning of Distributed Solar PV Project (tentative) Council Cooperation Odawara City Public Facities Information Set up support Policy support Citizen Local Energy Company Return Investment Fund Return Ownership Finance Solar Energy SPC Local Banks Return PV intallation & Service fee Ground Mounted Solar PV

National Prospects & Barriers 1. New strategy is crucial for the future energy policy RE supplies more than 25% of El. in 2030, but how much in 2050? El. market liberalization and transmission grid? RE in heat and fuel sector? (+ energy efficiency and CO2?) 2. FIT has started but uncertain Considerably high tariff in FY2012 but no future assumed tariff Administrative barriers; grid constraints, existing law restrictions Backlash: Japan could follow Czech case 3. Local communities start off RE projects Some prefectures discuss ambitious targets and policies by themselves Most cities heavily rely on national subsidy and consulting companies MoE starts new program for capacity building 31

Local Prospects and Barriers 1. New targets and policies Fukushima and Nagano prefecture plan to set 100% RE targets Kyoto introduces RE obligation from this April and Tokyo follows most cities try to build high-tech and costly RES, then repeat failures 2. Lessons from MoE program FIT opens up opportunities, but poor capacity in local community Learn by doing process in uncertain local contexts Need for locally optimized support activities (i.e. Diversity of local contexts) 3. Lessons from Odawara case Identified conditions for sucessful process: Mayor s political commitment Organizational basis in the city administration Rich social capital in local commercial and industrical community Need for broader participation, espcially women and young people 32

Thank you for your attention Nori & Shota Institution for Sustainable Energy Policies Free University of Berlin Environmental Policy Research Institute(FFU) Aalborg University