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Climate Change

Japan lags as economies worldwide shift to renewable power

Flexibility in grid operation holds key to expanding green energy

A demonstration unit of the world's largest wind turbine, manufactured by General Electric, in Rotterdam, the Netherlands

TOKYO/FRANKFURT -- The 21st century is becoming the age of renewable power as economies around the world ramp up their decarbonization efforts. But as the costs of solar and wind generation dramatically decline, Japan is lagging behind in its efforts to implement green electricity.

In the port of Rotterdam, in the Netherlands, a demonstration unit of the world's largest wind turbine, manufactured by General Electric, has been built. It is 260 meters high, with 107 meter blades, and each rotation produces enough electricity to power one household for about two days. The Dogger Bank wind farm off the coast of the U.K., which is under construction, will boast 190 of these turbines. When complete, it will have a generation capacity of 3,600 megawatts.

The world's first offshore wind farm, built 30 years ago off the coast of Denmark, had an output of 5 megawatts. The number of days required to build each unit has been reduced from 28 days to only half a day, and the cost of construction has rapidly declined, as has the cost of power generation.

"We are surprised at the low prices offered by European companies," said Toshiaki Kushima, deputy mayor of Yurihonjo, Akita Prefecture. European companies are interested in a large-scale wind farm off the coast of Yurihonjo. The tender will take place in May.

According to an estimate by the International Renewable Energy Agency, the world's electricity demand will increase to 48 terawatt-hours by 2050, 2.2 times that of 2017. This is because electricity will replace oil and coal in the transportation and industrial sectors.

Moreover, as economies aim for carbon neutrality, investment in green electricity generation that does not emit carbon dioxide will grow. The amount of electricity generated by renewables will increase 7.5 times, and their share of the total will rise from 25% to 86% in the same period.

Like countries in northern Europe, the Japanese government is trying to expand offshore wind power, which is currently almost non-existent in the country. The plan is to increase wind power capacity to a total of 4,500 megawatts by 2040, but the offshore facility planned for Yurihonjo will have an output of 730 megawatts, only one-fifth of Dogger Bank's.

Currently, Japan is well behind Europe in terms of renewables. Their share in 2020 was 42% of U.K.'s and 45% of Germany's, while Japan's share was only about 20%.

Research firm Bloomberg NEF looked at which power sources are cheapest for new power plants in each country and region. According to the study, the cheapest per megawatt-hour was coal at $74 in Japan, solar at $33 in China, wind at $36 in the U.S. and wind at $42 in the U.K. Japan's renewables were expensive -- solar was $124 and wind $113.

The combined gross domestic product of the countries and regions where renewable energy is cheapest is close to three-quarters of the world's total. Japan and Southeast Asian countries were the anomalies, with coal as the cheapest source.

Until a few years ago, coal and natural gas were competitive around the world, but innovation and economies of scale in the past decade have made solar power 80% cheaper and onshore wind 40% cheaper. Markus Krebber, CFO of German utility RWE, which is in the process of divesting coal-fired power plants, said, "We need to transform to become a major renewable player. It was clear that our operating business [running a huge conventional generation fleet] had no long-lasting future."

In Japan, the utilities in each region own and operate the transmission lines. This makes it difficult for independent power producers that invest in wind and solar power to connect to the grid, as the utilities' coal, gas and nuclear plants get priority.

Since 2011, the U.K. has made it easier to connect renewable energy to the grid by curtailing wind generation when there is excess supply. The amount of renewable energy installed in England has expanded from about 6,000 megawatts in 2011 to about 250,000 megawatts in 2017.

Japan is implementing a rule modeled after the U.K. across the country this year to enhance renewables. However, in the U.K., transmission companies pay compensation to renewable energy IPPs when they have to curtail generation; in Japan, there is no such rule. An executive from a Japanese utility who asked not to be named said, "It's an easy rule for large utilities."

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