Home > NHK WORLD News > On Business


On Business

Dimming Prospects for Solar Energy

With all of Japan's commercial nuclear reactors currently offline, the movement to develop alternative energy sources is growing. This has been a boon to renewables, which make up just 2.2 percent of the country's energy supply excluding hydroelectric power. In 2012, a law was passed requiring power companies to buy electricity from approved renewable energy projects. But now utilities are trying to block the inflow from new providers.

"We sincerely ask for your understanding. We are truly sorry."
Tohoku Electric Power Official

In late September, major utilities announced they would no longer accept applications from many renewable sources to supply electricity. This has raised an outcry.

"They're making fools of us. It's outrageous."

"They're not answering our questions. I'm not convinced."

Altogether, 5 companies have stopped approving applications.

They say too many people and companies want to supply renewable energy. Most of it is solar power, which is dependent on the weather. They say over-reliance on unpredictable solar power could upset the balance between supply and demand, potentially leading to blackouts.

In 2012, the government set purchase prices for renewable power. It set those prices higher than the cost of generation to entice as many people and companies as possible to enter the market.

In addition, those recognized as power producers within the first three years were guaranteed even higher prices. Because it is quite easy to set up solar panels even on large tracts of land, applications for licenses flooded in.

Many who have already invested in solar panels are alarmed by the utilities' decision.

Yoshihiro Oe is a rice farmer in Oita Prefecture in southern Japan. Unable to earn as much as before from his crops, he borrowed 1.75 million dollars from a bank to convert his land to a solar farm. He had just set up his solar panels when Kyushu Electric Power announced it would stop purchasing renewable energy.

Oe's panels now stand unused in his fields.

"This is a life-or-death matter for me."
Yoshihiro Oe

This company in Fukushima Prefecture has 8 solar farms around the prefecture. It was planning to set up 7 new facilities in the next fiscal year. Now those plans are in doubt.

"We're not sure what to do about the land contracts, or our bank loans or anything. We've already started working on the facilities."
Yauemon Sato / CEO, Aizu Electric Power

An energy policy expert says the original plan was flawed.

"The main reason for this problem is that the purchase prices set for solar power were too high, especially from large-scale solar power generators."
Toshihiro Matsumura / Professor, University of Tokyo

In 2012, the purchase price set for large-scale solar power was 34 cents per kilowatt hour, which was much higher than those of other resources.

"The government should alter the purchase prices, using tighter cost assessments and introducing a bidding system. The timing for setting the purchase price needs to be appropriate. The entire system needs to be overhauled, so it can promote renewable energy in a sustainable way."
Toshihiro Matsumura / Professor, University of Tokyo

The Industry Ministry has announced it is considering a reduction in the purchase price for solar power. A panel of experts will draw up measures to adjust the system by the end of this year.

*You will leave the NHK website. 


More on Business