Softbank Renewable Plan Hinges on Grid Access, Think Tank Says

Softbank Corp. (9984) chief Masayoshi Son’s $246 million plan to reduce Japan’s dependence on nuclear energy will hinge more on a freer power market than on subsidies, according to the think tank he set up.

Son, chief executive officer of Japan’s third-biggest mobile phone company, plans to invest as much as 20 billion yen with partners to develop clean-energy projects. The prospects for wind, solar and other technologies would be boosted by ending monopolies held by Japan’s power companies or by guaranteeing access to the utility-owned grid, Tomas Kaaberger, head of the Japan Renewable Energy Foundation, said today.

“The most important development in northern Europe that facilitated the modernization of the electricity system was the introduction of a competitive market on a regulated, neutral grid,” Kaaberger said in Tokyo. “I would never believe that companies controlling existing power plants would be fair in accepting new competitors onto the grid, if they own the grid.”

Following the nuclear disaster at Tokyo Electric Power Co. (9501)’s plant in Fukushima last March, Japan’s government introduced a law to promote a shift from nuclear power toward renewable energy, including preferential rates for clean energy. The law, which goes into effect on July 1, doesn’t rule on grid access or address the issue of who bears the cost for new transmission lines or increasing grid capacity.

Challenge to Utilities

Passage of the legislation was a victory for outgoing Prime Minister Naoto Kan and was viewed as a challenge to the country’s regional utilities, which dominate production, transmission and distribution of power throughout the country, generating combined annual revenue of 15.7 trillion yen ($193 billion), according to data compiled by Bloomberg.

The government also began a review of the industry, including exploring changes to the law to spin off the transmission businesses from power plants.

Existing energy costs are above the level that would make wind, and perhaps solar, competitive without subsidies, Kaaberger said. The government needs to clarify the rights of new producers and the conditions of their grid access to stimulate investment, he said.

Son has said previously his investment plans depend on the government guaranteeing access to the grid.

“You don’t need a feed-in tariff, you just need to be allowed to enjoy the market price that would be set if this country had an open electricity market,” Kaaberger said. As a new investor, “if you can’t predict how your plant will be treated, you won’t even start.”

SB Energy Corp., a Softbank unit, said today it will build a 2.4-megawatt solar plant with Sharp Corp. (6753) in Gunma prefecture in central Japan. The company also won a contract with Kyocera Corp. (6971) to build and operate a 4.2-megawatt solar plant in Kyoto, the company said in a separate statement. Both are expected to start output in time for the introduction of feed-in tariffs.

To contact the reporter on this story: Stuart Biggs in Tokyo at sbiggs3@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net.

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