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Marketing Renewable Energy in Japan

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Marketing Renewable Energy

Part of the book series: Management for Professionals ((MANAGPROF))

Abstract

This chapter provides a comprehensive analysis of Japan’s policy framework and regulatory context for marketers of renewable energy (RE) and describes recent developments in Japan’s market for RE, its competitive landscape, and emerging RE-based business models. Fundamental regulatory reform of Japan’s energy system, the complete liberalization of its electricity and gas markets, and policies to promote the deployment of RE have expanded consumer choice and created new business opportunities for RE in Japan. In the aftermath of the Fukushima nuclear disaster, the interest of Japanese consumers in RE is growing. However, market transparency and disclosure rules regarding power sources are still wanting, and constraints in the supply capacity for RE still limit the sourcing opportunities for RE marketers. Furthermore, uncertainties regarding the outcome of the market liberalization process and the future course of RE-related policies remain high, while the commercial viability of differentiation strategies based on environmental value added must still be tested.

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Notes

  1. 1.

    Though the promotion and expansion of RE is a declared important policy objective, the Japanese government stresses the continued importance of large-scale “baseload technologies” such as nuclear, hydro, and coal, aiming for a 60 % share of the electricity supply for these baseload technologies. These targets are, however, highly controversial. On the one hand, the targets for nuclear power are deemed unrealistic because they would require the extension of the lifetime of existing nuclear facilities beyond the formerly restricted lifetime of 40 years or the construction of new nuclear facilities (Bloomberg 2015a). On the other hand, the Ministry of the Environment, leading think tanks, and nongovernmental organizations call the targets for RE unambitious and too low. Furthermore, the targeted expansion of RE relies to a large degree on solar and biomass, while wind and geothermal continue to play a minor role (Nikkei Technology Online 2015).

  2. 2.

    The electricity market is subdivided into several segments based on connected power and voltage: very large-scale users with a capacity exceeding 2000 kW and above 20,000 V, large-scale users with a capacity of 500–2000 kW and up to 20,000 V, mid-scale users with a capacity of 50–500 kW and 20,000 V, small-scale users (6000 V), and households (100~200 V) consuming less than 50 kW (METI 2014). Similar reforms were enacted in the gas market between 1995 and 2007, in principle opening the market up to competition except for small commercial customers and private households (consumption of less than 100,000 m3).

  3. 3.

    With about 84 million customer contracts valued at JPY 75trillion (approx. USD 825 billion), this segment accounts for around 40 % of Japan’s electricity market.

  4. 4.

    The exception is PV power installations below 10 kW, where purchases have been limited to surplus energy at tariffs guaranteed for only 10 years. The FITs are subject to an annual review and have been revised four times since 2012, most recently on April 2016, mainly lowering the rates for solar power.

  5. 5.

    In the case of biomass, only the use of biomass fuel that does not harm other industries that use the material are subject to a FIT. The energy producer must provide documentation on the source of the certified biomass material and regularly calculate a biomass ratio (METI 2012). The reform of the FIT law in 2015 further separated wood-fired power plants using timer from forest thinning into smaller plants consuming less than 2000 kW and plants consuming 2000 kW to promote smaller-scale installations. It also introduced a tariff for offshore wind.

  6. 6.

    Under the original scheme, the FIT was granted as soon as the planned facility had been certified. Eager to secure higher tariffs and to increase profits, investors often certified projects with questionable economic feasibility or postponed the start of operations, hoping for lower investment costs. As a result, many certified facilities have not yet become operational.

  7. 7.

    As of April 2016, METI also revised the method to calculate the compensation of purchasing costs of RE under the FIT system: instead of calculating the so-called avoidable cost by referring to the production costs of conventional power sources, they are now linked to trading prices on the wholesale market. While the measure will not come into force for most existing contracts until 2020, it is applied to all new RE installations as well as for retailers who sell the purchased RE on the wholesale power market (METI 2015h).

  8. 8.

    As of 31 March 2016, 1092 facilities with a capacity of 422 MW have been certified, and 37 partners have been signed up as intermediaries (Green Energy Certification Center website).

  9. 9.

    Note: Although the Japanese government aims to stimulate the development of a liquid and deep wholesale power market, the market is still rather small. For example, the volume that was traded on the JPeX spot market in the first half of 2015 amounts to around 1.5 % of Japan’s total power consumption (METI 2015i).

  10. 10.

    The figures include RE that is not covered by the FIT system, in particular hydropower plants with a 10–30 MW capacity. Large-scale hydropower is a long-established pillar of Japan’s energy system, serving also as a power storage reserve for its nuclear power plants.

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Authors and Affiliations

  1. College of Business Administration, Ritsumeikan University, Osaka, Japan

    Jörg Raupach-Sumiya

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  1. Jörg Raupach-Sumiya
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Correspondence to Jörg Raupach-Sumiya .

Editor information

Editors and Affiliations

  1. University of Nuertingen-Geislingen , Nuertingen, Germany

    Carsten Herbes

  2. Friege-Consulting, Stuttgart, Germany

    Christian Friege

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Raupach-Sumiya, J. (2017). Marketing Renewable Energy in Japan. In: Herbes, C., Friege, C. (eds) Marketing Renewable Energy. Management for Professionals. Springer, Cham. https://doi.org/10.1007/978-3-319-46427-5_19

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