The Wall Street Journal wrote that the Japanese Prime Minister Naoto Kan has persuaded Japan’s Parliament to approve a historic bill that would break the stranglehold of the 10 utility companies that currently enjoy a monopoly over the Japanese power supplies.
The bill is meant to jump-start investment in renewable energy and reduce Japan’s dependence on nuclear energy following the worst accident in Japan’s nuclear history. Mr Kan had little chance of getting approval from the Parliament prior to the Fukushima disaster, but it’s Kan’s personal efforts that are also credited for its success. He said he was inspired by a visit in 1980 to a wind farm in Denver, Colorado.
The legislation which is called a feed-in tariff law will put the government in charge of setting the price at which utilities are obliged to buy electricity from renewable power sources. The bill is predicted to generate explosive growth in solar and wind power. Mr. Kan said he is committed to raising the share of renewable energy to at least 20% of total power by 2020. Currently it accounts for only 9% of total supply.
However a big hurdle is expected to be the difficulty in connecting this new source of energy to the existing grid. To upgrade the grid will cost about $26 billion dollars. And it will take time.
The Wall Street Journal article goes on to say:
“To ease the burden on heavy electricity users, such as electric-furnace steelmakers, the legislation leaves open the possibility of reducing a new surcharge for large power users.
The concession came after fierce opposition to the legislation from the steel industry. The feed-in-tariff is expected to galvanize Japan’s solar-panel makers, such as Sharp Corp. and Kyocera Corp., and give a much-needed boost to the wind-power industry. But even Sharp is of two minds, since it also ranks as a major consumer of electricity and doesn’t want to see costs go up as it tries to compete with foreign rivals.
The prospects of new opportunities in renewable energy has also spurred new entrants, such as mobile-phone group Softbank Corp., which is looking to develop mega solar projects in regions hit by the March 11 earthquake. Japan has been strong in solar-panel production, but that advantage is rapidly eroding in the face of competition from China. A boom in renewable energy could result in an increase in Chinese imports instead of developing a local green industry and creating jobs.”