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Are Japan's Megasolar Plans Falling Apart?

The notable absence from a recent Japanese renewable energy meeting by many political backers — plus blunt comments from some of them — are being interpreted as a sign that Softbank's ambitious plans for multiple megasolar plants are falling apart.

Last summer Masayoshi Son, president of Japanese conglomerate Softbank, pledged to build ten 20-megawatt solar power plants across the nation at a cost of nearly a billion dollars. To spur investment, he said he’d personally contribute up to $100 million. The company also forged deals with 19 prefectures to promote renewable energy. He was inspired in part, he claims, by the March 11 disaster and the controversy following the nuclear plant meltdowns. Later in the year the company Softbank showed off a 100 kW demo solar installation.

However, the November-held second meeting of the Renewable Energy Council, created in the summer by Son and 35 prefecture leaders, attracted only four governors (versus 19 at the first meeting), points out the Nikkei Weekly [subscription required]. Several remarks from participants were interpreted as either slights against the no-shows or apparent attempts to liven up a "dull atmosphere." Many of the absentees apparently were attending the National Governor's Conference earlier in the day -- but had plenty of time to get to the scheduled council meeting, the paper notes, suggesting their "concern over Japan's power needs had given way to interest in fostering international exchanges." Or, perhaps more ominously, that they sent "stand-ins" to the meeting as a signal that they are "distancing themselves from Son's megasolar project."

In addition, the paper cites a late-November press conference at the Saitama prefectural government offices about a local eco-town project, where Gov. Kiyoshi Ueda "grimaced" when asked about Softbank's megasolar project, then replied that interest in the proposed ¥8 billion construction project "appears to have vanished" even with Softbank footing all but ¥100 million of the deal. He also "seemed to indicate indignation" about Son's ultimate commitment to such a project, the paper says. Two unidentified governors in eastern and western Japan contacted by the paper reportedly shared those sentiments.

So what has happened in such a short time to seemingly dissolve Softbank's grand solar plans? A renewable energy law passed by former Prime Minister Kan (a Son ally) requires power utilities to buy renewable-sourced energy at fixed prices, but without direction in either the level or duration of pricing, the Nikkei said. For prefectures that creates a no-win scenario: assuming a ¥35/kWh starting point, any higher prices would simply be passed on to consumers, but low purchase prices wouldn't allow the plants to make a profit (they'd need ¥40/kWh). "Kan, who intended to use the megasolar project to extend his Prime-Ministership, instead left behind an awkward parting gift," the paper muses.

Son, quoted by the paper, has pledged to press on with the 200-MW target "no matter what level the purchase price is set at," explaining that "if we spill red ink, other companies would wither." But with Kan no longer in the picture, that purchase price clarity and stability is likely gone as well, and Son's dreams of a megasolar future "could end up as pie in the sky."

"Not so long ago, the solar power business was being looked at as a driving force that would reinvigorate Japan's stagnant economy," the paper editorializes. But with primarily Chinese suppliers squeezing prices for everyone, compounded by the yen's continued historic valuations, "it is not turning out that way."

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