Natural energy sources a growth sector everywhere but Japan

August 02, 2011

Japan is lagging behind the world in the development of electricity from natural sources and Softbank Corp. President Masayoshi Son wants to do something big to change that.

Son's pet project involves installing solar panels in fallow rice paddies. With about 540,000 hectares of rice paddies currently not in production, if just 20 percent of those paddies were covered with solar panels enough electricity would be generated to equal the 50 million kilowatts now generated by Tokyo Electric Power Co.

Because the idea kills two birds with one stone by helping to spread the use of natural energy sources and dealing with concerns in local communities over the decline of agriculture, 35 prefectural governments have already expressed interest.

Son, 53, developed an interest in electricity after the accident at the Fukushima No. 1 nuclear power plant operated by TEPCO.

At Softbank's annual shareholders' meeting in June, the articles of incorporation were amended to add renewable energy power generation and electricity sales to its business portfolio.

At the meeting, Son said, "If the central government and electric power companies cannot resolve the nuclear power plant issue, I've decided we will have to do the job instead."

To the electric power companies that enjoy a regional monopoly, the declaration by Son, who took on major telecommunications companies to build up a corporate group with consolidated annual sales of 3 trillion yen ($36.4 billion), to enter the electric power sector must have seemed like the second coming of Commodore Matthew Perry's black ships.

However, the model project that has been announced would involve constructing several different solar power generators, each with a capacity of 20,000 kilowatts. Generation at such scale would not allow for a complete move away from nuclear energy.

Moreover, a major precondition for that project is the passage of legislation through the Diet to promote renewable energy sources by requiring electric power companies to purchase all the electricity generated under a feed-in tariff system.

Son was invited to attend a meeting June 15 of a multipartisan group of lawmakers that is seeking to pass the special measures law on renewable energy sources in the current Diet session.

He spoke enthusiastically about renewable energy for about 40 minutes.

"If passage of the legislation is delayed, Japan will become the laughingstock of the world," Son said. "You should establish the right to generate electricity and the right to sell electricity. This will be for the sake of Japan and the children. Pass the bill."

Some have criticized Son for trying to exploit the current interest in natural energy sources.

Son replied on Twitter, "We will not move forward unless someone assumes the risk to commercialize the use of natural energy sources."

During the debate over liberalizing the electric power industry from the mid-1990s, trading companies and gas companies tried to enter the sector mainly through thermal power plants.

However, the trend never took off, partly due to the increase in fuel costs. While entering the electric power sector through natural energy sources will be even more difficult, Son is determined to open up a hole in the old established structure by involving local governments and politicians.

While Son is taking on the electric power industry head-on, others in the business sector are trying to seek out opportunities in creating communities and homes that do not depend on electric power companies to begin with.

In May, Panasonic Corp. announced a project to construct a "sustainable smart town" in Fujisawa, Kanagawa Prefecture. Using the site of a former Panasonic plant, a community of 1,000 households will be created, with each home coming with built-in solar panels and storage batteries.

Panasonic President Fumio Ohtsubo said, "We will seek a lifestyle that is highly independent in terms of energy. What will be important is that the entire community is capable of conducting appropriate energy control."

In addition to the Fujisawa city government, seven other companies will take part in the project, including a bank, real estate company and trading company.

There are estimates that the global demand for new urban development in the form of smart cities or eco-cities will reach 3,100 trillion yen by 2030.

In Rokkasho, Aomori Prefecture, which already hosts a reprocessing facility for spent nuclear fuel, research is progressing on creating a community that does not depend on electric power companies.

Since autumn 2010, Toyota Motor Corp., Panasonic Electric Works Co., Hitachi Ltd. and Japan Wind Development Co. have been conducting experiments to test a smart grid system that is expected to play a key role in the stable supply of electricity generated through wind and solar power.

Employees of the companies involved in the project live in six experimental buildings. The main source of electricity is a solar power generator developed by Hitachi. The project also receives electricity generated by wind farms in Rokkasho. Toyota officials hope that storage batteries developed through the project can be used in the future in plug-in hybrid vehicles.

About 80 percent of the new homes constructed by Sekisui Chemical Co. come with solar panels already installed. The company has also installed a system that allows homeowners to check on their electricity bills by the minute through their computer.

Those measures help to limit the use of electricity and the surplus electricity generated can be sold to the local electric power company. Under such a scheme, households would become sellers of electricity.

All the various moves are expected to lead to a greater abundance of electricity both in homes and communities. Currently, the Electric Utilities Industry Law is fundamentally a one-way street with electric power companies supplying all the electricity.

However, Hitoshi Ikuma, who heads the Center for the Strategy of Emergence at Japan Research Institute Ltd., believes there is a need to change that status quo.

"The time will come when one can sell electricity to one's neighbor and with households generating and supplying electricity among themselves," Ikuma said. "Placing legal restrictions on such a trend will stop industrial development."

In the smart cities and smart homes of the future, the electricity from electric power companies will only play a supplementary role.

While worldwide energy sources are a growth sector, Japan has not kept up with the trend.

According to the Japan Wind Power Association, in 2009, the total global production figure for windmills for power generation reached about 5.8 trillion yen. While the sector is a thriving market with annual growth rates of 30 percent, Japanese companies have only a three-percent share of global sales.

The top company in terms of sales is Vestas of Denmark. Among the other top-ranked companies are those from Europe, the United States, India and China.

The leading Japanese company is Mitsubishi Heavy Industries Ltd. which ranks 13th in the world.

The top-ranking companies grew through the huge markets in their home nations and then proceeded to move into other nations.

However, in Japan, electric generation was centered on nuclear and thermal plants, and there was a tendency to reject wind power because it was unstable due to the fickleness of the wind.

Meanwhile, Australia has set an objective of using renewable energy sources to generate 20 percent of its electricity by 2020. Large wind farms have been constructed in various parts of Australia. Most were built by Suzlon of India. It ranks sixth in terms of global market share.

The president of the Australian subsidiary said, "We have established a style for moving into the global market. Our 2,100-kilowatt windmill is very popular not only here in Australia, but in many regions of the world."

It is said that about half a million people now work around the world in the windmill business.

Britain is emphasizing offshore wind farms, and one reason is to take advantage of the engineers who worked on the North Sea oil fields, which are gradually becoming depleted.

China has already become a major producer of both wind and solar power.

Unless Japan frees itself from the domination of electric power companies and fosters a new industry centered on natural energy sources, it will be left behind.

(This article was written by Atsushi Komori and Harufumi Mori.)

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Softbank Corp. President Masayoshi Son makes the case for a renewable energy bill in front of lawmakers. (Shiro Nishihata)

Softbank Corp. President Masayoshi Son makes the case for a renewable energy bill in front of lawmakers. (Shiro Nishihata)

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  • Softbank Corp. President Masayoshi Son makes the case for a renewable energy bill in front of lawmakers. (Shiro Nishihata)

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