TOKYO: Japan’s crackdown on licensed solar power providers who never began operations could set back renewable energy development in the country and put more facilities in the hands of a few major players. Like a number of its peers, Enblue was forced recently to scrap a pending megasolar project. The Tokyo-based energy consultancy and solar power operator had planned to buy for 100 million yen ($882,500) the necessary land in Gunma Prefecture and a license to sell power at a hefty 36 yen per kilowatt-hour from the owner of those sales rights. But that licensee failed to reach a sales deal with the Tokyo Electric Power Co. Holdings unit that would distribute the power, and the license was revoked by the government. If Enblue cannot get 36 yen per kilowatt-hour, the project “makes no business sense,” President Hiroyuki Miura said, citing the high costs of developing the mountainous terrain where the solar farm would stand. Changes in April to legislation concerning Japan’s feed-in tariff scheme, which lets renewable energy producers sell their power to local utilities at government-set prices, stripped power-sales licenses from as many as 460,000 entities that have not used those rights, the Ministry of Economy, Trade and Industry estimates. This nullified some 28 million kilowatts of potential solar power generation — enough to power 5.6 million households, or around 10% of Japan’s total. The reform also slashed the set purchasing price for solar power to 21 yen per kilowatt-hour.
This mass revocation is Japan’s way of cleaning up after a solar power bubble that sprung from the 2012 introduction of a feed-in tariff system for solar power. With the Fukushima nuclear power disaster still top of mind, clean energy was a hot topic back then. Solar facilities were seen as comparatively easy to build, and would receive 40 yen per kilowatt-hour to start — among the highest such prices in the world and more than twice that offered in Germany. Seeing a chance for sizable returns compared with those offered by stocks or bonds, applications for licenses came flooding in, creating what some call the solar bubble. Many licensees simply sat on their sales rights, putting off construction while waiting for the price of solar panels to fall, or they treated solar power operations as a mere sideline business. Some applicants intended to resell their licenses from the start. Panel prices have dropped nearly 50% over the past five years, giving companies a welcoming environment in which to finally build — or so it would seem. But just 40% of the approved projects are actually operating today. Issues not directly associated with power production account for part of this gap. In regions such as the southern island of Kyushu where solar farms are widespread, the cost of connecting such facilities to the local grid has skyrocketed, “even equaling the cost of construction” in the case of a 200 million yen megasolar plant, one solar company said. Other areas mandate that farms include storage batteries, which help moderate the flow of electricity but drive up the necessary investment.