Why this is important to Wisconsin businesses: A big investment in renewable power opens the door to companies with clean energy solutions.
Over the years, electricity generation from nuclear and thermal sources has grown much faster than from renewable sources in Japan. As a result, electricity generation from renewable resources dropped from around 25% in 1970 to around 10% in 2012. Japan’s government and industry associations announced aggressive plans to reverse that trend and Japan’s Feed-in Tariff scheme started in 2012. The plan required power companies to buy renewable energy at fixed prices for a specific time period, and it boosted installation of solar panels and other renewable energy sources. The percentage of renewable energy (including large-scale hydropower) rose to 14.5% of the total domestic power generation capacity in 2015.
However, Japan was behind the curve in its energy policy and had one of the highest volumes of carbon emissions per capita, ranking eighth on a global scale. Now, the government has set ambitious policies and a goal of achieving net-zero emissions and carbon neutrality by 2050, and the country is starting to change course. Japan’s official goal for the ratio of electricity from renewable power is 36-38% by 2030, according to a plan passed by Japan’s government last October. Japan has begun shifting from a situation where a very small amount of renewable energy exists as a baseload power source to a situation where renewable energy is a main power source, while thermal power is used to compensate for fluctuations in renewable energy supplies.
Japan consists of 6,850 islands while 70% of its territory is a mountainous region. It takes just a single look at Japan’s map to understand the great potential of the archipelago for offshore wind power generation. Yet, wind only accounted for 0.6% of the energy mix in 2017. Onshore wind development projects are considered challenging due to the lengthy approval process and land-use restrictions.
Currently, the price of solar energy in Japan is almost double the price in Germany. In addition, the country can’t capitalize on having the third-biggest potential for geothermal power generation in the world because many of the sites are in rural and mountainous areas, as the power transmission network there still isn’t stable enough to allow this.
Japan has 10 electric power companies, each with its own service area, from Hokkaido in the north to Okinawa in the south. According to records on hourly demand and supply for electricity in each service area, renewable energy accounted for 15.7% of the nation's total electricity demand, on average, in the first half of the 2016 fiscal year.
Japan now aims to ensure that renewable energy meets up to 38% of its electricity needs by 2030. As of 2018, the share was 17%. Under the terms of a new strategic energy plan approved in 2021, the country will devote a bigger slice of the budget to foster renewable energy development, employ new policies to stimulate investment in renewable energy and mount private sector activism in climate initiatives. These developments make Japan a potentially attractive target for long-term profit in renewables and products across the energy transition spectrum, including clean tech, grid flexibility and storage. While the road toward renewable energy dominance in the country’s mix may not be smooth, it is indeed feasible and will unlock a plethora of clean energy investment opportunities.