No. 48: The action to stimulate the renewable energy business induces a trading company to build small hydraulic power plants (April 26, 2012)

Business trend

The special measures to purchase electricity generated by renewable energy will start coming July. This action prompted capital-rich companies, such as generation trading companies, to invest in the renewable energy business. Marubeni, one of Japan’s leading trading companies, will build more than 20 small-scale hydraulic power plants across the country by 2020. The small-scale hydraulic power plant generates electricity using water stream of rivers and irrigation channels. Blessed with many mountainous areas and much rainfall, Japan has abundant number of places suitable for small-scale hydraulic power generation.

The company started the operation of the three plants in the Kanto district on April 25 to make the total number six. The three plants inaugurated on 25th were built jointly by the local government and Mibugawa Power Company that is Marubeni’s wholly-owned subsidiary. The three plants have a combined generation capacity of 650 kW. The small-scale hydraulic power plant invites a wide attention as an environmentally-friendly generation system. In addition, unlike photovoltaic generation, it can generate electricity for 24 hours.

 A small-scale hydraulic power plant using agricultural water 

No. 47: The purchase price of electricity generated by photovoltaic generation is preliminarily set at 42 yen per kW (April 25, 2012)

Business trend

The Japanese government started making arrangements with authorities concerned to set the purchase price of electricity generated by photovoltaic generation at 42 yen per kW including tax. The system that asks electric power companies to purchase all electricity generated by such renewable energies as sunlight and wind at a fixed price will be enacted coming July. The system is expected to remain effective for about 20 years.

Some authorities insisted that the purchase price should be less than 40 yen, but the committee on the purchase of renewable energy gave higher priority to stimulating generation by renewable energy. The preliminary price will be submitted to the meeting of the committee. The Minister of Economy, Trade and Industry will give the final approval to the decision of the committee.

 Photovoltaic generation on the rooftop of a house

No. 46: Fund raising for the construction of mega solar power plants grows more active (April 23, 2012)

Business trend

The move to raise funds from investors for the investment in mega solar power plant is growing more active toward coming July when the special measures to stimulate the renewable energy business are enacted. Orix, one of Japan’s leading financial service companies, will create an investment fund of 30 billion yen, and it will be followed by other companies.

As the first step, Orix will create a fund of 10 billion yen by the summer of 2013 and construct 5-10 mega solar power plants. All stocks of the fund will be sold to institutional investors when these plants go into operation, and electricity generated by photovoltaic generation will be sold to the local electric power company. The investors will receive dividends of the fund that is expected to be 5%. Orix will create another two funds of the same kind by the summer of 2015. That is, the company will construct 5-10 mega solar power plants that have a combined output of 100,000 kW enough to supply electricity to 30,000 households in three years.

Tokyo Marine Asset Management will create a fund to raise investment for the construction of 10 mega solar plants across the country in alliance with Mitsui and Co. The output is scheduled to be 1,000-2,000 kW each. Toyota Tsusho and Eurus Energy in which Tokyo Electric Power invested will invest 40-50 billion yen to construct three 100,000 kW class mega solar power plants. The financing method will be the project finance that gets finance from the bank on security of the revenue from selling electricity. The two companies plan to create a fund and collect capital from institutional investors in the future.

Generation by renewable energy accounts only for 1% of total generation in Japan, but the moves to construct the mega solar power plant is expected to grow against a backdrop of the increasing sentiment of anti-nuclear power generation.   

 The large-scale mega solar power plant outside Osaka

No. 45: Japanese companies grow energetic on the geothermal generation (April 18, 2012)

Technology

The feed-in tariff program to purchase all power generated by renewable energy will be enacted staring in July in Japan. Leading companies are busy with preparing to develop technology and construct system in time for the launch of the program. Toshiba developed a highly efficient geothermal generation technology that reuses waste energy used geothermal generation and increases output by 30%. This technology can decrease generation cost by 10-20% in the long run. Contrary to the conventional system that mostly uses only one turbine, Toshiba’s new system runs the first turbine using steam higher than 150 degrees centigrade collected several hundreds meters below the ground surface and the second turbine using waste heat that is below 150 degrees centigrade.

The initial cost will be higher for the additional functions, but the increased part of investment can be collected in 10-15 years because output is greater. And the generation cost will be 20-30% lower after the return of investment. Geothermal generation has the potential to generate 24 million kW that is about 10% of Japan’s total generation capacity, but the business has been slow because locations suitable for geothermal generation are mostly inside the national park and because the regulation of development is rather strict. Deregulation scheduled to start coming July stimulates technological progress of the Japanese companies concerned.

In the world geothermal generation market, Toshiba, Mitsubishi Heavy, and Fuji Electric are the three leading companies, and they have a combined share of 70% in the world market. The move to develop geothermal generation is growing widespread in the U.S., Asia, and Africa. Mitsubishi Heavy has been conducting feasible study of geothermal generation in East Africa including Djibouti in alliance with Marubeni since last autumn. Fuji Electric established a company in India to sell industrial products in Asia.  

A geothermal generation plant in the Tohoku district    

The largest geothermal generation plant in Japan