Renewable Energy Policy in Japan

Transcription

1 Renewable Energy Policy in Japan Kenji Kimura February 6, 2018 Researcher, New and Renewable Energy Group The Institute of Energy Economics, Japan IEEJ Feb. 2018

2 Table of Contents 1 Ⅰ. Status of Japan Ⅱ. FIT and Its Effect Ⅲ. Issues Ⅳ. For More RE Deployment Ⅴ. Conclusion

3 I. Status of Japan (1/4) 2 Electricity generation mix in Japan Fossil fuels: 81.9%, renewable: 15.8% (8.1% excluding hydro) Solar photovoltaic (PV) is relatively high. (TWh) 1,400 1,200 1, Electricity Generation Hydro Nuclear Oil Coal Other renewables Natural gas Oil 7.2% Natural gas 40.6% Generation Mix in 2016 Total 1,018 TWh Coal 34.1% Source: IEA, World Energy Statistics and Balances Hydro 7.7% Nuclear 1.8% Other renewables 8.1% Geothermal 0.2% PV 4.3% Wind 0.5% Biomass 3.1%

4 3 I. Status of Japan (2/4) Japanese government has published Long-Term Energy Supply and Demand Outlook ( ). Three objectives for Energy independence 6% 25% 2. Generation cost reduction - 5% (from 2013) 3. CO 2 emission reduction - 25% (from 2013)

5 I. Status of Japan (3/4) 4 (TWh) 1,400 1,200 1, Generation Mix for 2030 Economic growth = More Energy consumption Renewables 14% Natural gas 39% Nuclear 1% % % Geothermal % Biomass % Wind 1.7% PV 7.0% Hydro % FY Coal 32% Oil 14% 27% 26% 3% Source: METI 3 measures for 3 objectives: 1 Energy Saving 2 Renewables 3 Nuclear

6 I. Status of Japan (4/4) 5 Breakdown of Biomass Power Generation in FY2030 (MW) 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 FY Biomass total: 6,020-7,280 MW Wood biomass, etc.: 2,740-4,000 MW * Power generation by non-renewable ingredients is excluded. ** Detailed breakdown is not published. Equivalent to TWh ( % of total power generation) Forest residues: 240 MW Wood waste from buildings: 370 MW Biogas: 160 MW Municipal waste, etc.: 1,240 MW* Installed before FIT**: 1,270 MW Source: METI

7 Table of Contents 6 Ⅰ. Status of Japan Ⅱ. FIT and Its Effect Ⅲ. Issues Ⅳ. For More RE Deployment Ⅴ. Conclusion

8 II. FIT and Its Effect (1/5) 7 Various support schemes are available in Japan. Currently, Feed-in Tariff (FIT) plays a key role. In Japan, RPS didn t have enough impact. Support for initial cost Subsidy Financing Support for generation Tax incentive Feed-in Tariff Tax reduction for renewables Additional tax on fossil fuels Obligation Support for R&D Regulation RPS (ended) Biofuel obligation National budget National organization (NEDO, AIST, etc.) Regulatory flexibility (Environmental impact assessment)

9 II. FIT and Its Effect (2/5) 8 Buyback Program for rooftop solar PV ( ) Feed-in Tariff (FIT) (from 2012) Fixed (and high) purchase price Incentive for producers Paid by electricity users (ordinary bill + surcharge) Renewable Electricity Producers Adjusting organization Electricity Users Rooftop PV Solar PV Wind Geothermal Hydro (less than 30MW) Biomass Fixed price Renewable electricity Electric Power Companies Electricity bill + surcharge Renewable electricity

10 II. FIT and Its Effect (3/5) 9 (yen/kwh) 60 FIT Rate (Purchase Price) * 1 USD 110 JPY Wind (< 20 kw) PV ( 10kW) PV (< 10 kw) Offshore 20 Wind ( 20 kw) Onshore 10 FY Source: METI

11 II. FIT and Its Effect (4/5) 10 (yen/kwh) FIT Rate (Purchase Price) These prices are only applicable for power generation by renewable ingredients included in the fuel. < 2 MW * 1 USD 110 JPY 30 Forest residues Wood biomass 2MW < 20 MW Municipal Waste Incineration plant operators should calculate the renewable ratio of their burned waste. 20 MW FY Source: METI

12 II. FIT and Its Effect (5/5) 11 FIT accelerated solar PV deployment in Japan GW (2016) of PV: 2 nd largest in the world (GW) Installed Capacity of Renewable Electricity Solar Wind Geothermal Biomass FIT GW RPS Source: IRENA

13 Table of Contents 12 Ⅰ. Status of Japan Ⅱ. FIT and Its Effect Ⅲ. Issues 1. Cost for FIT Support 2. Grid Connection Ⅳ. For More RE Deployment Ⅴ. Conclusion

14 III-1. Cost for FIT Support (1/2) 13 PV generation cost is decreasing but still expensive in Japan. This cost is reflected to the purchase price and born by people. (USD/kWh) 0.25 PV Capacity Factor and Generation Cost As of U.K. Germany Japan Spain, Turkey China Brazil India France Australia U.S. 0 0% 5% 10% 15% 20% 25% Source: Bloomberg New Energy Finance (cited by METI) (Capacity Factor)

15 III-1. Cost for FIT Support (2/2) 14 As (expensive) renewable energy deployment goes, people must pay more and more money for FIT surcharge. FIT Surcharge ( /kwh) Germany Japan Total Amount (Billion ) 30 Japan Germany (estimation) JPY Source: METI (Japan), BMWi (Germany)

16 III-2. Grid Connection (1/3) 15 There are 10 electric power companies in Japan. They are responsible for the electricity supply in each area. Supply Area of Each Electric Power Company Hokkaido Kyushu Chugoku Hokuriku Tohoku Chubu Kansai Shikoku Tokyo Okinawa Source: METI website

17 III-2. Grid Connection (2/3) 16 7 power companies announce its own grid capacity. Approved projects are going over the grid capacity. (MW) 25,000 20,000 Installed and Approved Capacity of PV / Wind As of Mar Tokyo, Kansai and Chubu: Enough capacity Source: METI Approved Installed Grid Capacity 15,000 10,000 5,000 0 PV Wind PV Wind PV Wind PV Wind PV Wind PV Wind PV Wind PV Wind PV Wind PV Wind Hokkaido Tohoku Tokyo Chubu Hokuriku Kansai Chugoku Shikoku Kyushu Okinawa

18 III-2. Grid Connection (3/3) 17 In the 7 areas, when oversupply occurs, power generation would be curtailed. Priority: thermal, pumped hydro > PV, wind (MW) 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Kyushu, PV PV Can be curtailed with no compensation unlimited hours (if necessary) Can be curtailed but with compensation if curtailment exceeds the limits Limit of; PV : max. 360 hours/year wind : max. 720 hours/year

19 Table of Contents 18 Ⅰ. Status of Japan Ⅱ. FIT and Its Effect Ⅲ. Issues Ⅳ. For More RE Deployment 1. Reform of FIT 2. Nationwide Grid Management 3. Distributed Energy System Ⅴ. Conclusion

20 IV. For More RE Deployment 19 Various approaches to deploy more renewable energy 1. Reform of FIT (effective from April 2017) Improvement of cost-effectiveness 2. Nationwide grid management Increasing grid connection 3. Distributed and smart energy system Less dependency on the nationwide grid

21 IV-1. Reform of FIT (1/3) 20 Reform of purchase price determination Wait for Lead the cost reduction ex. FIT Reform for Solar PV Residential PV < 10 kw Non-residential PV Purchase price Pre-determined (3 years in advance) Target Electricity price for households (2019) Electricity wholesale price (ASAP) 10-2,000 kw Lower standard price 14 yen/kwh (2020) 2,000 kw Auction 7 yen/kwh (2030) Finally, renewables should be independent from FIT. Source: METI

22 IV-1. Reform of FIT (2/3) 21 Pre-determination of purchase price: helps producers to predict their future benefit, encourages industries to reduce cost Determination in: FY 2014 FY 2015 Pre-determination of FIT Rate Price for: FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2016 FY 2017 FY 2018 Former scheme New scheme Source: METI

23 IV-1. Reform of FIT (3/3) 22 The first auction for PV ( 2 MW) was concluded in Nov The lowest price is yen/kwh. The highest price is yen/kwh (= FIT rate, = ceiling price). 2 more auctions are planned in And METI is planning auctions for wood biomass in Result of the First PV Auction in Japan Bidder (company name) Bidding price (yen/kwh) Awarded capacity (kw) HINA Corp ,260 Canadian Solar Projects K.K ,400 Shizen Energy Inc ,000 Shizen Energy Inc ,500 Q Solar B G.K ,000 X-Elio17 G.K ,000 Hanwha Energy Corp. Japan ,006 Royal Lease Corp ,600 Shinnippou Ltd ,600 Source: GIO

24 IV-2. Nationwide Grid Management (1/2) 23 OCCTO was established in (Organization for Cross-regional Coordination of Transmission Operators, JAPAN) Electricity supply-demand balance Frequency control for cross-regional operation enables to connect more renewable electricity Area A: too much electricity OCCTO Request Electricity supply Area C: insufficient electricity Electricity supply Area B: too much electricity Source: OCCTO

25 IV-2. Nationwide Grid Management (2/2) 24 Storage battery can increase the grid capacity, but expensive. There are demonstration projects in each part of Japan. And there are some cases where power producers use battery. ex. Lithium Ion Battery Demonstration in Tohoku Wind power station Frequency In Operation from 2015 Substation Large scale PV plant Frequency Monitoring the influence of the fluctuation of renewable electricity PV for residential users Sendai substation battery system Order Control Center Adjusting frequency 11 Thermal power station Tohoku area Tokyo area Frequency stabilized by batteries and thermal power generation Source: NEPC

26 IV-3. Distributed Energy System (1/2) 25 Small and narrow land area Insufficient interregional connections Frequency difference between East and West Difficult nationwide management Small-scale grid management Conversion required 60 Hz 50 Hz 50 Hz: Germany 60 Hz: The U.S.

27 IV-3. Distributed Energy System (2/2) 26 Distributed renewable energy Efficient energy management (IoT, energy storage, etc.) Energy system less dependent on nationwide grid Large scale facilities Smart bldg. Thermal Biomass PV Wind Storage battery Community Energy Management CEMS System (CEMS) CHP Information system PV Energy storage Renewable energy Wind Storage battery Waste heat PV Advanced transportation system Smart house Smart meter Source: JSCA (modified)

28 Table of Contents 27 Ⅰ. Status of Japan Ⅱ. FIT and Its Effect Ⅲ. Issues Ⅳ. For More RE Deployment Ⅴ. Conclusion

29 V. Conclusion 28 FIT dramatically accelerated renewable energy (especially PV) deployment in Japan. But it also causes some issues. Japan takes various kinds of measures to keep sustainable renewable energy deployment. First Step As rapid deployment as possible Protection for RE producers Next Step Control and keep steady deployment Market mechanism and cost-effectiveness

30 Appendix Japanese FIT Rate from Solar Wind Geothermal Hydro Biomass Purchase prices (JPY/kWh) FY2017 Apr.- Sep. Oct.- Mar. FY2018 FY2019 Less than 10 kw when output control system are required Less than 10 kw (+ energy storage system) when output control system are required ,000 kw 21 2,000 kw or more Auction Less than 20 kw 55 Onshore 20 kw or more replace Offshore 20 kw or more Less than 15,000 kw replace whole equipment replace above-ground equipement ,000 kw or more replace whole equipment replace above-ground equipement Less than 200 kw Fully new 200-1,000 kw facilities 1,000-5,000 kw ,000-30,000 kw Utilize Less than 200 kw existing 200-1,000 kw headrace 1,000-5,000 kw channels 5,000-30,000 kw Wood Less than 20,000 kw (general) 20,000 kw or more Forest Less than 2,000 kw residues 2,000 kw or more Wood waste from buildings Municipal waste Biogas Purchase period 10 years 20 years 20 years 15 years 20 years 20 years If auction scheme will be implemented, these announced rate would be re-determined.