On Monday the Japanese government approved inventive pricing for renewable sources of energy that will result in subsidized pricing and could lead to billions of dollars of investment in clean energy. Yukio Edano, the Minister of Industry, authorized the introduction of feed-in tariffs, which means that higher prices will be paid to suppliers of renewable energy. With the reactivation of first two nuclear reactors beginning, it certainly doesn’t seem like the government has intentions of weaning Japan off of nuclear power, but with this approval of incentive pricing, it certainly is a first step in that direction.
Going into effect on July 1st, the feed-in tariffs are believed by brokerage firm CLSA to increase revenues related to renewable energy to over $30 billion by the year 2016. Despite the return to nuclear power for the immediate future, the Japanese government is pushing for the use of renewable energy so it can not only decrease the nation’s reliance on nuclear energy, but also move away from the use of expensive oil and liquefied natural gas, which has drastically risen since last year’s Fukushima disaster.
The new pricing incentives will be put into effect for the next 20 years, and requires that utility companies in Japan buy their electricity from sources such as solar, wind, and geothermal at premium prices. Solar-generated electricity will be priced at 42 yen (approx. $0.53) per kilowatt-hour, which is double the tariff offered in Germany, and over triple that of China. Electricity from wind power is priced at 23.1 yen ($0.29) per kilowatt-hour. The Japanese government is hopeful this will lead to a rapid adoption of renewable energy, such as what happened in Germany with its tripling of output in less than a decade.
Numerous companies have already begun making their moves into the Japanese market to take advantage of pricing incentives. Japanese companies like Softbank and Kyocera have already shared their plans to build huge solar farms in Hokkaido and Kagoshima, respectively. Canadian Solar have said they will be among the first foreign firms to get involved. And a group of Japanese banks made a loan of over 20 billion yen ($253 million) to buy the wind power firm Seajacks, with the intention of setting up off-shore wind farms.
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