* Government expects up to $640 billion investment by 2030
* More than 30,000 households, companies sign up for
* Japan phasing out nuclear after Fukushima disaster
By Risa Maeda
TOKYO, Sept 12 Japan's subsidies for renewable
power suppliers have sparked more than $2 billion of investment
since they were launched two months ago, as companies and
homeowners try to profit from an anti-nuclear energy policy
after last year's Fukushima crisis.
That money, the government believes, is only a tiny fraction
of what could be a $640 billion spending boom by 2030 as Japan
tries to phase out nuclear energy.
Nuclear reactors supplied about 30 percent of its
electricity before Fukushima, but in response to a public
backlash, Japan is set to soon announce an overall energy policy
which may ultimately mean a total shutdown of atomic capacity.
Renewables - solar, wind, geothermal, biomass and water
power - will be called upon to make up part of that
A renewable energy law that came into effect on July 1
requires utilities like Tokyo Electric Power Co and
Kyushu Electric Power Co to buy electricity from
renewable sources at pre-set premiums for up to 20 years.
Taking advantage of those premiums are families installing
solar panels on their homes to sell power to utility grids, and
businesses across the economy buying into the market.
To encourage capacity-building, utilities must pay subsidies
as much as 42 yen ($0.54) per kilowatt hour (kWh) to owners of
solar, wind or other renewable energy capacity in this business
year, compared with generation cost of about 10 yen per kWh for
conventional gas or coal power plants.
That is double the tariff offered in world number one solar
market Germany, which this year said it would cut subsidies as
it tries to limit the impact of energy prices on consumers.
In the first month of the Japanese scheme's operation,
33,695 companies and individuals registered to sell renewable
energy, data from Japan's Ministry of Economy, Trade and
Industry (METI) shows. More than three-quarters of the
registered capacity is solar.
"People are in a hurry to wrap up solar projects to avoid
the uncertainty of whether the current high price level is
maintained next business year," said Teiko Kudo, a banker
involved in financing solar projects at Sumitomo Mitsui Banking
Corp. Japan's business year runs from April to March.
Utilities which pay the extra money to suppliers then pass
it on to consumers under a "feed-in tariff" (FIT) system.
When FIT began in July, consumers started paying an extra
0.22 yen per kWh to utilities to cover the subsidies for this
SOFTBANK'S SOLAR FARMS
Many companies outside the traditional energy industry are
keen to break into renewables. Mobile phone supplier Softbank
plans to install 10 solar farms with total capacity of
182.2 megawatts (MW), and a 48 MW wind farm by March 2015. Two
of its solar farms started commercial operation in July.
"We are hearing the voice of the public calling for a future
without nuclear power and may respond by adding more capacity
than planned," Masayoshi Son, president of Softbank, said at a
Tokyo seminar last week.
"We now expect total installed solar capacity to be near
10,000 MW by the end of this business year, up from about 5,000
MW before the scheme's launch," said Hiroshi Komiyama, chairman
of Mitsubishi Research Institute.
That would generate enough electricity for 2.7 million
households a year, or around 5 percent of the country's homes,
according to Reuters calculations.
Altogether, individuals and companies in July registered 567
MW of capacity that meets government requirements for selling
electricity to utilities, according to METI.
That adds up to 170 billion yen ($2.17 billion), assuming
capital investment of 300 million yen per MW, an industry
Solar Frontier, a unit of oil refiner Showa Shell Sekiyu KK
, forecasts this year it will sell more of its
photovoltaic panels in Japan than overseas for the first time
since it began commercial production in 2007.
"The passage of FIT really did increase interest," Executive
Officer Brooks Herring said. "The interest is coming from a very
Kyushu Electric Power, the regional monopoly on the southern
island of Kyushu, says it has received more applications to sell
it renewable power than it can process.
By Aug. 31, households and companies had applied to sell it
electricity from 830 MW of projects, almost the same capacity as
a reactor at its idled Sendai nuclear plant.
Kyushu has only been able to complete power supply
agreements for 5 MW of capacity, a spokeswoman said.
Altogether, renewable energy excluding large hydro-electric
dams currently supplies only 1 percent of Japan's electricity, a
figure which rises to 10 percent with hydro power. This may have
to hit 35 percent if Japan decides to fully phase out nuclear
energy by 2030, a government estimate shows. Despite the initial
burst of investment, some are sceptical.
"I don't think the share of renewable energy sources,
including hydro, in electricity will exceed 20 percent because,
for example, it requires some 3,000 times more area to put solar
panels on than a combined cycle gas power plant," said Akira
Ishii, senior visiting researcher in oil and gas business at
state-backed Japan Oil, Gas and Metals National Corp.