Utilities Stymie Japan’s Solar Developers Over Grid Connections

New entrants to Japan’s solar power market are being told they may be unable to sell all the power to Japan’s utilities that their projects can produce.

The restrictions, a result of what the utilities say is inadequate grid capacity, underscore potential roadblocks in Japan’s efforts to promote renewable energy following the Fukushima nuclear disaster almost four years ago.

New solar producers could be asked to cut output by more than 30 percent so that the grid can handle all the new energy from renewables, Kyushu Electric Power Co. said Wednesday.

The estimate is one of several scenarios presented by Kyushu Electric to a trade ministry panel reviewing the capacity for Japan’s grid to accept clean energy. The review comes after utilities said last year they can’t deal adequately with all the renewables producers want to sell.

Kyushu Electric, which serves the southern island of Kyushu, is at the forefront of the debate since it’s the utility dealing most urgently with the excess capacity. Kyushu is at the epicenter of the boom in solar development since Japan’s policy makers introduced incentives in July 2012 to encourage investments in renewables to diversify the nation’s energy mix.

Solar Developments

Kyushu, which accounts for about 20 percent of Japan’s solar capacity, said last year that its grids can take as much as 8,170 megawatts of solar, but that capacity is already full because of the projects either approved or already in operation. There are more than 11,000 megawatts of solar projects being planned or considered for the Kyushu region, according to Kyushu’s submission to the ministry panel.

Hokkaido Electric Power Co., Tohoku Electric Power Co., Shikoku Electric Power Co. and Okinawa Electric Power Co. also each presented tentative estimates for how much solar output would need to be reduced to accommodate their grid constraints.

The ministry panel will continue its review of output reductions and is also discussing the suitability of various technologies solar producers could be asked to install to improve grid operations.

“If there is no fundamental shift in policy very soon, Japan will not have a utility-scale solar market post 2017 if not earlier,” said Ali Izadi-Najafabadi, an analyst at Bloomberg New Energy Finance in Tokyo.

In December, the ministry announced changes to a rule that allows utilities to stop accepting renewable energy for as many as 30 days a year without compensating the suppliers.

That rule, for when supply exceeds demand, previously applied to producers with capacity of 500 kilowatts or more. It is now applied to solar and wind projects regardless of size.

Once utilities reach their maximum grid-connection capacity, new entrants will only be able to qualify for access if they agree not to be compensated for any output reduction.

Copyright 2015 Bloomberg

Lead image: Stop sign via Shutterstock

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