Japan Wind Lobby Says Environment Reviews Curb New Work

Photographer: Kiyoshi Ota/Bloomberg

A woman dries off after swimming in the sea while wind turbines manufactured by DeWind Co. stand at a wind farm operated by EcoPower Co. in Kamisu, Ibaraki Prefecture, Japan. Close

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Photographer: Kiyoshi Ota/Bloomberg

A woman dries off after swimming in the sea while wind turbines manufactured by DeWind Co. stand at a wind farm operated by EcoPower Co. in Kamisu, Ibaraki Prefecture, Japan.

Japan’s effort to obtain more power from wind turbines is being held up by requirements for developers to conduct environmental impact assessments, undermining government support for the industry, a lobby group said.

The rules requiring the assessments for wind developers took effect in October 2012, three months after the government introduced an incentive program for wind, solar, small hydro, biomass and geothermal power.

“Wind is far from being accelerated,” Tetsuro Nagata, president of the Japan Wind Power Association said in an interview in Tokyo. “We aren’t even at the starting block.” The trade group’s 240 members include turbine makers such as Mitsubishi Heavy Industries Ltd. (7011) and Hitachi Ltd. (6501) The comments are aimed at coaxing Prime Minister Shinzo Abe’s government away from making cuts to support for wind power.

Incentives for cleaner forms of energy were rolled out to build up alternatives to nuclear energy after the disaster in Fukushima almost three years ago. Solar accounts for 96.8 percent of the capacity added since the program started, with wind only about 1.2 percent, according to government data.

Japan installed 73 megawatts of wind capacity in fiscal 2013 ending March 31, according to estimates by JWPA. That’s the lowest since fiscal 2001, when the group began collecting data.

Expert Committee

A committee of experts advising the Ministry of Economy, Trade and Industry is reviewing tariffs for fiscal 2014 covering new applications for support. The solar tariff was reduced by 10 percent for fiscal 2013 to reflect falling system cost as the use of solar panels spread. Tariffs for other renewables such as wind remained unchanged in the first two years of the program because little new capacity was added.

Fiscal 2014 will be the last of the three-year period when tariffs for new applications are set at favorable prices to boost clean energy.

The incentive for wind, currently 23.21 yen (23 cents) a kilowatt hour, including sales tax of 5 percent, was set to grant developers an internal rate of return of 8 percent. The tariff is good for 20 years.

The lobby group is urging the government and ruling parties to retain the current return level as a way to encourage more investment as the industry isn’t yet taking advantage of the support program, Nagata said.

The group is also calling on the government to speed up and simplify the process of environmental impact assessment, Nagata said. Many projects have been delayed because developers have been asked to study items that may seem unrelated, such as dust, he said.

The wind industry will benefit from the incentive program in the long run despite the lack of immediate impact, Nagata said. The feed-in tariffs give clarity to developers about business potential for each site. Before the program was introduced, how much wind power producers can earn was decided through negotiations with utilities, he said. “The price was very low.”

To contact the reporter on this story: Chisaki Watanabe in Tokyo at cwatanabe5@bloomberg.net

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

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