‘Bragging Rights’ Seen Winnable on Japan Clean Power Exchange

  • Country’s solar power capacity has almost tripled since 2012
  • Nation may set up clean energy market as soon as 2017: Nikkei

A renewable power exchange in Japan would give companies a chance to tout their clean energy credentials, even if it costs more than electricity from fossil fuels, according to a solar developer.

Firms would be willing to pay a premium for power through a market dedicated to renewable sources if it offered an edge with customers concerned about the impacts of burning coal and natural gas, according to Peter Goodman, president of Toronto-based Solar Power Network, which also operates in Japan and develops rooftop solar projects for commercial customers.

“I can buy 20 percent of my energy that’s pure clean in this premium market, where the price has been established through market forces,” Goodman said, referring to how Japan may organize such a market. “I can go 100 percent, and I can use those very specific bragging rights.”

Japan’s Ministry of Economy, Trade and Industry is considering setting up a clean power market, Aya Miyai, an official at the ministry, said Friday. Japan Electric Power Exchange may be tapped to manage the exchange, which would start as early as 2017, the Nikkei newspaper reported earlier this month, without attribution. JEPX declined to comment.

A clean energy exchange in Japan would make it easier for companies to fulfill commitments to use renewable power, according to Goodman. Renewable credits, which many companies use to offset emissions, can vary according to the regulations of a given country or jurisdiction, he said.

Corporate Commitments

Currently, if a company in Japan wants to buy clean power from a plant located outside the region of their local utility, they must pay charges to all the regional utilities owning network assets between where the power is generated and the customer, making the final cost uneconomical, according to Ali Izadi-Najafabadi, a Tokyo-based analyst at Bloomberg New Energy Finance.

Corporate demand for clean power is increasing and companies -- such as Apple Inc. suppliers Murata Manufacturing Co. and Sharp Corp. -- will seek more electricity from renewables as firms commit to reduce supply chain emissions, he said. Toyota Motor Corp., has committed to reducing emissions from manufacturing by adopting renewable energy sources such as solar and wind power, according to the company’s website.

A dedicated clean energy market may also help solar producers in Japan that are struggling as the country’s feed-in-tariff declines, according to Goodman. The government-guaranteed price for sun-generated power fell to 24 yen per kilowatt hour this fiscal year from as much as 29 yen the previous year.

“In our market we are seeing less and less competition in terms of bids” related to renewable power projects, said Goodman. “It is because the FIT rate is going down and it’s also because developers can’t find a way to make the margins that they would have made a year or a year and a half ago.”