TOKYO -- Cities and towns across Japan are reaching for resources near at hand, such as scrap wood and underground heat, to meet their own energy needs.
Fourteen local governments are planning to set up energy companies as the country moves toward full deregulation of the business of selling power to homes in 2016. Such initiatives could create much-needed local jobs. The national government will support locally run power providers as a central part of efforts to invigorate small-town economies.
The town of Shimokawa on the northern island of Hokkaido is already a hotbed of biomass energy. Burning woody waste provides 60% of the heat for public buildings, saving 16 million yen ($146,000) in annual electricity and gas costs. By branching out into biomass power, this town of 3,500 residents aims to supply about 80% of its total energy needs.
Far to the southwest, the city of Tsushima can generate up to 9,000kW or so of power from sunlight, wind and other renewable sources. It has a contract to sell this output to a local utility. But none of the locally generated electricity stays on the island, located about halfway between Japan and South Korea. So the city wants to establish a power provider that need not rely on purchasing contracts with utilities, an official says.
Other local governments see opportunities to exploit geothermal or tidal power. The city of Hirosaki in northern Japan is looking to harness heat from sewer pipes to melt snow on its streets.
To support such efforts, the national government will let cities and towns issue municipal bonds to fund investments in local energy companies, with Tokyo subsidizing half the interest payments.
The internal affairs ministry will set a goal of establishing around 1,000 local energy companies over a roughly five-year period starting in fiscal 2015. Its model is Germany, which began deregulating its energy sector in 1998.
The 2011 meltdowns at the Fukushima Daiichi nuclear power plant undermined Japan's electric grid, which relies on massive facilities to supply wide swaths of the country. Indeed, the ruined Fukushima reactors had helped keep the lights on in faraway Tokyo. On average, 5% of electricity is lost in such long-distance journeys through transmission lines. Keeping power production close to consumers can reduce transmission losses and allow communities to make effective use of waste heat from the generating process itself.