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15:12 8 March 2017

FEATURE: Japan's firm sees renewable energy on rise, but challenges remain

By Noriyuki Suzuki
TOKYO, March 8, Kyodo

Ken Isono has an insatiable appetite for going to different places, learning about them and connecting with local people.

It was when he traveled to over 30 countries as a backpacker in his final year of university that he became aware of the gravity of global environmental challenges and started to believe in the potential of renewable energy as a viable solution.

Three months after the 2011 Fukushima nuclear accident, Isono set up a venture with his fellow workers at a wind power firm in the hope of promoting renewable energy. Since then, he has witnessed disaster-prone Japan's gradual shift toward green energy.

"You can't deny that renewable energy has become a new energy source in Japan. The momentum is with us," Isono, the 36-year-old founder of Shizen Energy Inc., said in a recent interview.

"One of the strengths as a venture is that we can make decisions quickly," Isono said. "We are not afraid of going wherever needed and do the kind of work that bigger companies wouldn't want to do."

Unafraid of taking risks, Isono has wanted to be a trailblazer of sorts since he studied about the California Gold Rush in the United States, where he spent his teenage years. Nature has always been close to his heart as he enjoys surfing.

Shizen Energy, based in Fukuoka Prefecture in southwestern Japan, is now part of the Shizen Energy group that does everything related to green energy from design, construction to maintenance and repair work. It has a joint venture with Germany's renewable energy firm juwi AG.

So far, the group has been engaged in the development of solar power stations with a combined capacity of around 700 megawatts in various parts of Japan. The amount may be still small when compared with the 1 gigawatt goal that the group is aiming at, roughly equivalent to one nuclear reactor that can supply electricity to around 330,000 households.

Securing land for power-generating facilities, which includes gaining consent from landowners and other stakeholders such as banks, has not always been easy, Isono revealed.

"I got caught by every pitfall," Isono said. Nearly six years on, he believes the seriousness of renewable energy providers in Japan will be tested as energy projects require long-term investment and commitment.

Energy experts say ensuring stable supplies and reducing costs shouldered by users is a critical challenge for renewable energy to gain a bigger share of Japan's energy market.

Still, the March 11 disasters served as a wake-up call to resource-poor Japan, having lagged behind European countries such as Germany and Spain in the field of renewable energy.

Japanese companies are also looking to renewable energy as electricity is vital for their businesses.

Mayonnaise maker Kewpie Corp. is planning to boost its output capacity to around 2 percent of its total electricity used a year in its production process at its solar power facilities, including one in Fukushima that is scheduled to start power generation in late March following an expansion.

"Since the quake, we have been taking a fresh look at energy sources," a Kewpie official said. The company uses some of the electricity generated and sells the rest to utilities.

Reducing its dependence on nuclear power, Japan is now aiming to meet 22 to 24 percent of the country's energy needs with renewable energy -- solar, wind, hydroelectric, geothermal and biomass power -- in fiscal 2030, up from around 10 percent.

In 2012, the government introduced a feed-in-tariff system to inject momentum into the spread of renewable energy, obliging utilities to buy electricity generated by providers with renewable sources at a fixed price for a predetermined period of time.

The scheme led to an influx of newcomers, particularly in the easy-to-enter solar power business as energy experts and officials in the business have said relatively high purchase prices for solar power were appealing. In fact, solar power dominated some 90 percent of the electricity purchase approved under the FIT system, according to government data.

On the flip side, however, it also prompted some utilities to suspend accepting purchase requests from providers out of fear of electricity generated from renewable sources oversupplied to their power grids and of big fluctuations in output due to weather conditions.

"Solar power has seen a bubble in recent years, so there needs to be a shakeout to set the stage for only those that are serious about solar power generation to survive," Isono added.

Purchase prices for solar power are expected to be cut in coming years under the FIT system, potentially denting the appeal of the photovoltaic power business and raising the need for making the sector sustainable.

The market size of Japan's renewable energy generation systems is projected to halve to around 1.71 trillion yen ($15 billion) in fiscal 2020 from an estimated 3.31 trillion yen in the current business year through March, led by shrinkage in solar power, according to the Fuji Keizai Group, a research firm.

Shizen Energy's Isono views solar energy as a starting point for his drive to promote use of renewable energy both at home and abroad. He plans to diversify the company's business portfolio to include wind, biomass and hydroelectric power and is now setting his eyes on overseas markets such as Brazil, Indonesia and the Philippines.

"Each area has its own best mix of energy sources that reflects its geographical features and weather conditions," Isono said."We wouldn't change our policy of heeding to local needs wherever we go."

==Kyodo

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