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Posted by: Kenji Hall on February 25, 2009
If Japan were to dream up a realistic ad promoting solar energy it would go something like this: Want to save up to $800 a year on your electricity bill? For just $7,000, you can install solar panels on your home. And if you buy now your government will cut you a small rebate check.
Not very enticing, if you ask me.
But such publicity would help get consumers to spend more on solar energy, according to a Ministry of Economy Trade and Industry committee report released yesterday. The committee’s job was to come up with ways that Japan could boost its solar power output 10-fold by 2020, from 2005 levels, and 40-fold by 2030. The report comes after Japan reinstated government subsidies in January for homeowners who spend on solar power systems.
The policy proposal that could make the biggest difference: Force utilities to pay fixed rates for homeowners’ surplus solar power. Under such a plan, utilities would pay a government-regulated price. Theoretically, as more people join over time, rates are likely to fall. And utilities could recoup some of their spending by tacking on an extra $1 per month to each household’s electricity bill. (Germany has a similar system to promote the use of renewable energy such as solar and wind power.) The proposal, which could go before Parliament soon, could spur local demand for solar panels.
Japan wants more of its energy to come from renewable sources for a few reasons. The country has fretted over its dependence on oil imports since global oil prices skyrocketed in the 1970s. Anything that weans the country off its dependence is generally considered a plus. Renewable energy would also help Japan lower its emissions of carbon dioxide and other greenhouse gases--the main culprits of global warming—for which coal-fired electricity plants are a huge contributor. It could also ignite a homegrown solar industry. Companies like Sharp and Sanyo have seen domestic sales sink since Japan ended subsidies for solar systems in March 2006.
Japanese consumers pay high electricity rates compared to other wealthy nations. Giving them an affordable alternative in solar would lead to manufacturers churning out more panels, thereby reducing costs. Solar energy costs (per kW) have already fallen by roughly 40% over the past decade.
Getting homeowners to put solar panels on rooftops is key because homes are Japan’s biggest producers of solar energy. They generated about 80% of a total of 1.9 million kilowatts of solar energy in the fiscal year through March 2008.
The problem is that Japan’s proposed scheme would put a burden on both consumers and companies at a time when corporate profits are down, joblessness is soaring, and household incomes are static. That’s likely to make it a hard sell at the moment.
Still, I wouldn’t bet against Japan. It has passed energy-efficiency standards and high fuel taxes to try to cap overall energy consumption since the 1970s. They seem to have worked well: The country used half as much energy per dollar of economic activity as the U.S. or European Union in 2005, according to the Paris-based International Energy Agency.
BusinessWeek’s team of Asia reporters brings you the latest insights on business, politics, technology and culture from some of the world’s biggest and fastest-growing economies. Eye on Asia’s bloggers include Asia regional editor Bruce Einhorn, Tokyo reporter Ian Rowley, Korea bureau chief Moon Ihlwan, Asia News Editor and China Bureau Chief. Dexter Roberts, and Hong Kong-based Asia correspondent Frederik Balfour.