Japan’s $21 Million Microgrid Investment Boosting Renewable Sector, says GlobalData

Ministry of Energy encouraging microgrid development in Japan, with $21 million funding for independent demonstration projects ---- Reduced approval time for renewable projects will help Japan’s renewable energy capacity to almost double between 2014 and 2025, says analyst

LONDON, UK (GlobalData), 23 April 2015 - Japan's increased focus on smart grid deployment, as part of its plans to boost energy efficiency and power generation from renewable sources, will drive the country to become one of Asia-Pacific's top markets in smart grid development, says research and consulting firm GlobalData.

The company's latest report* states that Japan was among the first countries globally to invest in smart grid research and development in the early 2000s, with the New Energy and Industrial Technology Development Organization (NEDO) funding a number of pilot microgrid projects from 2003 onwards.

More recently, the Ministry of Energy initiated a new program in 2014 to encourage microgrid development in Japan. With a budget of $7 million provided annually for three years, this program makes funding available for independent demonstration projects, such as electric vehicles for mobility and storage, renewable energy production and storage systems, and energy efficiency optimization.

Sowmyavadhana Srinivasan, GlobalData's Senior Analyst covering Power, says: "Following the Fukushima nuclear disaster in 2011, Japan suffered substantial damage to its grid infrastructure, along with a reduction in its base load generation. Consequently, there are more efforts to increase the country's energy efficiency and renewable power generation.

"However, the proliferation of renewable power projects in Japan is hindered by numerous difficulties with connecting to the grid, which is currently divided into 10 regions and operated by 10 different utilities. One of the major challenges for developers in 2014 was the requirement for an improved transmission system."

According to the analyst, this is further compounded by the fact that it had previously taken around three to four years for developers to overcome all regulatory hurdles involved in implementing renewable projects.

However, as Srinivasan continues: "This lengthy approvals process has led the Japanese government to reduce the waiting period to less than two years. Combined with the possible establishment of a centrally-operated grid, this may allow projects to be set up in less time, enabling the renewable sector to become a significant part of the country's power network.

"Renewable energy accounted for only 10% of Japan's total installed capacity in 2014, but we expect this to grow to 19% by 2025," the analyst concludes.
*Smart Grid Policy Handbook 2015

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