Japan: Wind sluggish as Fukushima fears fade

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Richard Heap
February 22, 2016
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Japan: Wind sluggish as Fukushima fears fade

The world’s economists are looking at Japan, where the central bank this month brought in negative interest rates of -0.1% for banks parking additional funds in it. The Bank of Japan introduced the measure to encourage lending and stimulate the economy, which shrunk by 0.4% in the last three months of 2015.

This is one tool the bank is using to address stagnation in the wider economy. If only the government were similarly keen to address a looming threat of stagnation in renewables, particularly wind.

It all looked good for wind a few years ago when, after 2011’s Fukushima Daiichi nuclear disaster, the government made major commitments to renewables. It shut down Japan’s 48 nuclear reactors, and pledged to phase out coal.

And then, in 2012, its government set out its plans to support sectors including wind and solar by launching feed-in tariffs.

This is where the fortunes of solar and wind started to diverge. Back in 2011, Japan had installed wind capacity of 2.6GW and solar capacity of 4.9GW. The introduction of feed-in tariffs led to a boom in the solar market, with capacity growing by more than sevenfold in the last four years to around 35.6GW now. An extra 14GW is due to be installed this year.

This is in stark contrast with wind. That total installed capacity of 2.6GW in 2011 only grew to over 3GW last year, which means the market has grown by less than one-fifth over four years. Wind has actually been growing at a far slower rate in the last four years (96MW of new capacity on average) than the four years before feed-in tariffs (249MW on average). Clearly, that was not the plan!

The Japan Wind Power Association says that 244MW came online last year, and predicts just 246MW for the whole of this year. The sector has been held back by feed-in tariffs that are not generous enough to facilitate development — ¥22/kWh onshore and ¥36/kWh offshore — and the complex regulatory environment for developers. Getting an approval for a wind farm takes between four or five years in Japan, including a mandatory environmental assessment. That is off-putting for all but the most committed.

And we expect to see this slip further under Japan’s new environment minister, Tamayo Marukawa, who was appointed in October. She has already been mired in controversy for questioning the basis of the government’s target for reducing radiation around Fukushima, and is presiding over a series of changes that will cause problems for those in wind.

In the last 18 months, the Ministry of Economy, Trade & Industry has been looking to make big cuts to feed-in tariffs. Meanwhile, we have seen three of the country’s nuclear reactors re-started over the last five months, which has raised the prospect of a nuclear revival that was unthought of four years ago; and the government is looking to grow the coal sector.

None of this bodes well for Japanese wind, which is installing wind farms at a rate that could generously be called sluggish. And yet the JPWA forecasts that wind capacity could hit 10GW by 2020. We know it is the job of bodies like JPWA to be positive but that prediction is not credible given the recent history of Japanese wind.

There are small rays of hope. Energy companies Eurus Energy and J-Power are planning to each invest more than $500m in wind by 2020, to take them to total capacity of 850MW and 600MW respectively. They are now looking to develop schemes that have cleared the drawn-out approvals process. Meanwhile, Pattern Energy is planning to install 1GW.

But our feeling is that the time for wind to make its big impact was in the immediate aftermath of Fukushima. This did not happen, for reasons outside the industry’s control, and the impetus is slipping away. It will take some strong investors to prove us wrong.

The world’s economists are looking at Japan, where the central bank this month brought in negative interest rates of -0.1% for banks parking additional funds in it. The Bank of Japan introduced the measure to encourage lending and stimulate the economy, which shrunk by 0.4% in the last three months of 2015.

This is one tool the bank is using to address stagnation in the wider economy. If only the government were similarly keen to address a looming threat of stagnation in renewables, particularly wind.

It all looked good for wind a few years ago when, after 2011’s Fukushima Daiichi nuclear disaster, the government made major commitments to renewables. It shut down Japan’s 48 nuclear reactors, and pledged to phase out coal.

And then, in 2012, its government set out its plans to support sectors including wind and solar by launching feed-in tariffs.

This is where the fortunes of solar and wind started to diverge. Back in 2011, Japan had installed wind capacity of 2.6GW and solar capacity of 4.9GW. The introduction of feed-in tariffs led to a boom in the solar market, with capacity growing by more than sevenfold in the last four years to around 35.6GW now. An extra 14GW is due to be installed this year.

This is in stark contrast with wind. That total installed capacity of 2.6GW in 2011 only grew to over 3GW last year, which means the market has grown by less than one-fifth over four years. Wind has actually been growing at a far slower rate in the last four years (96MW of new capacity on average) than the four years before feed-in tariffs (249MW on average). Clearly, that was not the plan!

The Japan Wind Power Association says that 244MW came online last year, and predicts just 246MW for the whole of this year. The sector has been held back by feed-in tariffs that are not generous enough to facilitate development — ¥22/kWh onshore and ¥36/kWh offshore — and the complex regulatory environment for developers. Getting an approval for a wind farm takes between four or five years in Japan, including a mandatory environmental assessment. That is off-putting for all but the most committed.

And we expect to see this slip further under Japan’s new environment minister, Tamayo Marukawa, who was appointed in October. She has already been mired in controversy for questioning the basis of the government’s target for reducing radiation around Fukushima, and is presiding over a series of changes that will cause problems for those in wind.

In the last 18 months, the Ministry of Economy, Trade & Industry has been looking to make big cuts to feed-in tariffs. Meanwhile, we have seen three of the country’s nuclear reactors re-started over the last five months, which has raised the prospect of a nuclear revival that was unthought of four years ago; and the government is looking to grow the coal sector.

None of this bodes well for Japanese wind, which is installing wind farms at a rate that could generously be called sluggish. And yet the JPWA forecasts that wind capacity could hit 10GW by 2020. We know it is the job of bodies like JPWA to be positive but that prediction is not credible given the recent history of Japanese wind.

There are small rays of hope. Energy companies Eurus Energy and J-Power are planning to each invest more than $500m in wind by 2020, to take them to total capacity of 850MW and 600MW respectively. They are now looking to develop schemes that have cleared the drawn-out approvals process. Meanwhile, Pattern Energy is planning to install 1GW.

But our feeling is that the time for wind to make its big impact was in the immediate aftermath of Fukushima. This did not happen, for reasons outside the industry’s control, and the impetus is slipping away. It will take some strong investors to prove us wrong.

The world’s economists are looking at Japan, where the central bank this month brought in negative interest rates of -0.1% for banks parking additional funds in it. The Bank of Japan introduced the measure to encourage lending and stimulate the economy, which shrunk by 0.4% in the last three months of 2015.

This is one tool the bank is using to address stagnation in the wider economy. If only the government were similarly keen to address a looming threat of stagnation in renewables, particularly wind.

It all looked good for wind a few years ago when, after 2011’s Fukushima Daiichi nuclear disaster, the government made major commitments to renewables. It shut down Japan’s 48 nuclear reactors, and pledged to phase out coal.

And then, in 2012, its government set out its plans to support sectors including wind and solar by launching feed-in tariffs.

This is where the fortunes of solar and wind started to diverge. Back in 2011, Japan had installed wind capacity of 2.6GW and solar capacity of 4.9GW. The introduction of feed-in tariffs led to a boom in the solar market, with capacity growing by more than sevenfold in the last four years to around 35.6GW now. An extra 14GW is due to be installed this year.

This is in stark contrast with wind. That total installed capacity of 2.6GW in 2011 only grew to over 3GW last year, which means the market has grown by less than one-fifth over four years. Wind has actually been growing at a far slower rate in the last four years (96MW of new capacity on average) than the four years before feed-in tariffs (249MW on average). Clearly, that was not the plan!

The Japan Wind Power Association says that 244MW came online last year, and predicts just 246MW for the whole of this year. The sector has been held back by feed-in tariffs that are not generous enough to facilitate development — ¥22/kWh onshore and ¥36/kWh offshore — and the complex regulatory environment for developers. Getting an approval for a wind farm takes between four or five years in Japan, including a mandatory environmental assessment. That is off-putting for all but the most committed.

And we expect to see this slip further under Japan’s new environment minister, Tamayo Marukawa, who was appointed in October. She has already been mired in controversy for questioning the basis of the government’s target for reducing radiation around Fukushima, and is presiding over a series of changes that will cause problems for those in wind.

In the last 18 months, the Ministry of Economy, Trade & Industry has been looking to make big cuts to feed-in tariffs. Meanwhile, we have seen three of the country’s nuclear reactors re-started over the last five months, which has raised the prospect of a nuclear revival that was unthought of four years ago; and the government is looking to grow the coal sector.

None of this bodes well for Japanese wind, which is installing wind farms at a rate that could generously be called sluggish. And yet the JPWA forecasts that wind capacity could hit 10GW by 2020. We know it is the job of bodies like JPWA to be positive but that prediction is not credible given the recent history of Japanese wind.

There are small rays of hope. Energy companies Eurus Energy and J-Power are planning to each invest more than $500m in wind by 2020, to take them to total capacity of 850MW and 600MW respectively. They are now looking to develop schemes that have cleared the drawn-out approvals process. Meanwhile, Pattern Energy is planning to install 1GW.

But our feeling is that the time for wind to make its big impact was in the immediate aftermath of Fukushima. This did not happen, for reasons outside the industry’s control, and the impetus is slipping away. It will take some strong investors to prove us wrong.

The world’s economists are looking at Japan, where the central bank this month brought in negative interest rates of -0.1% for banks parking additional funds in it. The Bank of Japan introduced the measure to encourage lending and stimulate the economy, which shrunk by 0.4% in the last three months of 2015.

This is one tool the bank is using to address stagnation in the wider economy. If only the government were similarly keen to address a looming threat of stagnation in renewables, particularly wind.

It all looked good for wind a few years ago when, after 2011’s Fukushima Daiichi nuclear disaster, the government made major commitments to renewables. It shut down Japan’s 48 nuclear reactors, and pledged to phase out coal.

And then, in 2012, its government set out its plans to support sectors including wind and solar by launching feed-in tariffs.

This is where the fortunes of solar and wind started to diverge. Back in 2011, Japan had installed wind capacity of 2.6GW and solar capacity of 4.9GW. The introduction of feed-in tariffs led to a boom in the solar market, with capacity growing by more than sevenfold in the last four years to around 35.6GW now. An extra 14GW is due to be installed this year.

This is in stark contrast with wind. That total installed capacity of 2.6GW in 2011 only grew to over 3GW last year, which means the market has grown by less than one-fifth over four years. Wind has actually been growing at a far slower rate in the last four years (96MW of new capacity on average) than the four years before feed-in tariffs (249MW on average). Clearly, that was not the plan!

The Japan Wind Power Association says that 244MW came online last year, and predicts just 246MW for the whole of this year. The sector has been held back by feed-in tariffs that are not generous enough to facilitate development — ¥22/kWh onshore and ¥36/kWh offshore — and the complex regulatory environment for developers. Getting an approval for a wind farm takes between four or five years in Japan, including a mandatory environmental assessment. That is off-putting for all but the most committed.

And we expect to see this slip further under Japan’s new environment minister, Tamayo Marukawa, who was appointed in October. She has already been mired in controversy for questioning the basis of the government’s target for reducing radiation around Fukushima, and is presiding over a series of changes that will cause problems for those in wind.

In the last 18 months, the Ministry of Economy, Trade & Industry has been looking to make big cuts to feed-in tariffs. Meanwhile, we have seen three of the country’s nuclear reactors re-started over the last five months, which has raised the prospect of a nuclear revival that was unthought of four years ago; and the government is looking to grow the coal sector.

None of this bodes well for Japanese wind, which is installing wind farms at a rate that could generously be called sluggish. And yet the JPWA forecasts that wind capacity could hit 10GW by 2020. We know it is the job of bodies like JPWA to be positive but that prediction is not credible given the recent history of Japanese wind.

There are small rays of hope. Energy companies Eurus Energy and J-Power are planning to each invest more than $500m in wind by 2020, to take them to total capacity of 850MW and 600MW respectively. They are now looking to develop schemes that have cleared the drawn-out approvals process. Meanwhile, Pattern Energy is planning to install 1GW.

But our feeling is that the time for wind to make its big impact was in the immediate aftermath of Fukushima. This did not happen, for reasons outside the industry’s control, and the impetus is slipping away. It will take some strong investors to prove us wrong.

The world’s economists are looking at Japan, where the central bank this month brought in negative interest rates of -0.1% for banks parking additional funds in it. The Bank of Japan introduced the measure to encourage lending and stimulate the economy, which shrunk by 0.4% in the last three months of 2015.

This is one tool the bank is using to address stagnation in the wider economy. If only the government were similarly keen to address a looming threat of stagnation in renewables, particularly wind.

It all looked good for wind a few years ago when, after 2011’s Fukushima Daiichi nuclear disaster, the government made major commitments to renewables. It shut down Japan’s 48 nuclear reactors, and pledged to phase out coal.

And then, in 2012, its government set out its plans to support sectors including wind and solar by launching feed-in tariffs.

This is where the fortunes of solar and wind started to diverge. Back in 2011, Japan had installed wind capacity of 2.6GW and solar capacity of 4.9GW. The introduction of feed-in tariffs led to a boom in the solar market, with capacity growing by more than sevenfold in the last four years to around 35.6GW now. An extra 14GW is due to be installed this year.

This is in stark contrast with wind. That total installed capacity of 2.6GW in 2011 only grew to over 3GW last year, which means the market has grown by less than one-fifth over four years. Wind has actually been growing at a far slower rate in the last four years (96MW of new capacity on average) than the four years before feed-in tariffs (249MW on average). Clearly, that was not the plan!

The Japan Wind Power Association says that 244MW came online last year, and predicts just 246MW for the whole of this year. The sector has been held back by feed-in tariffs that are not generous enough to facilitate development — ¥22/kWh onshore and ¥36/kWh offshore — and the complex regulatory environment for developers. Getting an approval for a wind farm takes between four or five years in Japan, including a mandatory environmental assessment. That is off-putting for all but the most committed.

And we expect to see this slip further under Japan’s new environment minister, Tamayo Marukawa, who was appointed in October. She has already been mired in controversy for questioning the basis of the government’s target for reducing radiation around Fukushima, and is presiding over a series of changes that will cause problems for those in wind.

In the last 18 months, the Ministry of Economy, Trade & Industry has been looking to make big cuts to feed-in tariffs. Meanwhile, we have seen three of the country’s nuclear reactors re-started over the last five months, which has raised the prospect of a nuclear revival that was unthought of four years ago; and the government is looking to grow the coal sector.

None of this bodes well for Japanese wind, which is installing wind farms at a rate that could generously be called sluggish. And yet the JPWA forecasts that wind capacity could hit 10GW by 2020. We know it is the job of bodies like JPWA to be positive but that prediction is not credible given the recent history of Japanese wind.

There are small rays of hope. Energy companies Eurus Energy and J-Power are planning to each invest more than $500m in wind by 2020, to take them to total capacity of 850MW and 600MW respectively. They are now looking to develop schemes that have cleared the drawn-out approvals process. Meanwhile, Pattern Energy is planning to install 1GW.

But our feeling is that the time for wind to make its big impact was in the immediate aftermath of Fukushima. This did not happen, for reasons outside the industry’s control, and the impetus is slipping away. It will take some strong investors to prove us wrong.

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Not a member yet?

Become a member of the 6,500-strong A Word About Wind community today, and gain access to our premium content, exclusive lead generation and investment opportunities.