Potential of Renewable Energy in Japan

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Potential of Renewable Energy in Japan

A Solar Plant in Shuzenji, Izu, Japan

Japan's road towards renewable energy dominance in the country's mix won't be smooth, it is feasible and will unlock several energy investment opportunities.

12 May 2022 – by Viktor Tachev

Japan is among the most technically-advanced and innovative countries in the world. Yet, it is behind the curve with its energy policy and currently has one of the highest volumes of carbon emissions per capita, ranking 8th on a global scale. Despite this, Japan’s renewable energy potential is vast, and its starting to change course. The government’s ambitious policies and goal of achieving a net-zero society and carbon neutrality by 2050 are in motion.

Japan’s Great Renewable Energy Potential

It takes just a single look at Japan’s map to understand the great potential of the archipelago for offshore wind power generation. Yet, wind only accounted for 0.6% of the energy mix in 2017.

The government plans to increase this capacity to 10 megawatts (MW) by 2030. The figure is set to reach between 30 and 45 gigawatts (GW) through offshore wind power by 2040. As a result, this will turn the country into the third-largest generator of clean wind power.

Offshore wind potential graph of Japan, Europe, USA, China & India
Offshore Wind’s Potential. Source: IEA

Geothermal potential, according to IRENA, sees Japan having the third-highest potential for geothermal energy in the world at 23 GW. Yet, it currently utilises only around 2%. The case is quite similar with Japan’s solar energy. Although it has the potential to account for over 12% of the country’s energy mix come 2030, in 2018, it only accounted for 4%.

What Holds Back Renewable Power Generation in Japan?

Japan’s renewable energy potential contains an interesting paradox. Many Japanese investors, including the Japan International Cooperation Agency, Japan Bank for International Cooperation, and Sumitomo Mitsui Banking Corporation of Japan, back renewable energy projects overseas. Meanwhile, investments in the country’s green energy projects are stagnant.

Financial Challenges

Among the main reasons are the higher costs and challenging project development procedures. Currently, the price of Japanese solar energy is almost double that of Germany. To overcome this issue, the country will have to improve its FIT system (Feed-In-Tariff) immediately.

Fortunately, the government has recognised the problem, and an auction system for non-residential solar power is currently underway. To address this, officials plan to ensure financial support for R&D relating to battery storage technologies and solar panel development. Additionally, the government intends to make generating electricity from offshore wind power cheaper than thermal energy between 2030 and 2035.

Geographical Obstacles

Currently, onshore wind development projects are considered challenging due to the lengthy approval processes and land-use restrictions. Japan consists of 6,850 islands, while 70% of its territory is a mountainous region. Due to it being an island, Japan’s grid is also isolated from other countries. It is segmented and consists of many smaller grids with weak interconnections. The supply-demand balance should be maintained at each of the small grids, which further challenges the renewable energy transition.

Japan city & mountain view

Moreover, the country can’t capitalise on having the third-biggest potential for geothermal power generation globally because many of the sites are in rural and mountainous regions. The power transmission network in those areas is still not stable enough. Another part of high-potential regions are within national parks, which are subject to nature conservation programmes. These combined factors make the development of geothermal plants costlier and more time-consuming.

In regards to hydropower, its slow growth is attributed to the fact that the most fruitful locations have already been identified. This means little potential remains within areas for the development of new power plants.

Net Zero Society and Carbon Neutrality Are Feasible Goals

Achieving net-zero is an urgent task for Japan. The country is targeting to reduce its emissions by 26%, or more, by 203. As a result, it aims to achieve carbon neutrality by 2050. Putting environmental causes aside, renewables would also reduce the country’s massive reliance on foreign sources to fulfil its energy consumption needs, which is over 96%.

To achieve these goals, in October 2020, Hiroshi Kajiyama, Japan’s economy minister, revealed ambitious plans to make renewable energy a major power source within the local energy mix.

Under the current plans, Japan aims to ensure that renewables meet up to 24% of its electricity needs by 2030. As of 2018, the share is 17%. The targeted growth rate isn’t significant, since other much less technologically-advanced countries in the region like the Philippines, for example, aim at a 35% total share of renewables for the same period, while others are aiming at figures of approximately 25% by 2025. Although a bit conservative, Japan’s goals are a step in the right direction.

To ease the process, the government plans to introduce a new strategic energy plan in 2021. The country will devote a bigger slice of the budget to foster renewable energy development in the country. This will focus on improving transparency and make it easier for the electric power industry regarding planning and investment decisions on future projects.

Map of Japanese districts with plans for offshore wind power projects
Districts with preparations for offshore wind power projects currently underway. Source: IEE, Japan

The Bright Renewable Energy Future Ahead for Japan

If the country remains true to its plans, it could create more than 67,000 new jobs related to clean energy by 2050. Corporate environmental activism also matches the government’s efforts. The Japan Climate Leaders’ Partnership promotes low carbon business activities and some of Japan’s largest banks and airlines are heavily advocating for the green energy transition, which is why the initiatives are already making their marks.

Japan aims to ease renewable energy adoption through several ways. These include shifting concerns around energy security, new policies to stimulate investment in renewable energy and mounting private sector activism in climate initiatives. All this makes the country a potentially attractive destination for long-term profit in renewables and across the energy transition spectrum, including clean tech, grid flexibility and storage. While the road towards renewable energy dominance in the country’s mix won’t be smooth, it is indeed feasible and will unlock several clean energy investment opportunities.

by Viktor Tachev

Viktor has years of experience in financial markets and energy finance, working as a marketing consultant and content creator for leading institutions, NGOs, and tech startups. He is a regular contributor to knowledge hubs and magazines, tackling the latest trends in sustainability and green energy.

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