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Consumer (Co-)Ownership in Renewables in Japan

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Energy Transition

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Abstract

The Japanese Ministry of the Environment is actively supporting the spread of “community power” initiatives. The Feed-In Tariff (FIT) Law itself apparently does not actively seek to promote consumer (co-)ownership providing disadvantageous conditions for citizen- and community-based projects. At the same time, the Japanese government views distributed RE as an important vehicle to promote regional economic growth and employment, as well as resilience against natural disasters; it has initiated budgetary measures to promote regional deployment under the guidance of various ministries such as the Ministry of Economy, Trade and Industry, the Ministry for Agriculture, Forestry and Fisheries, or the Ministry of Environment. With the exception of cooperatives RE business can take all possible legal forms of business associations under Japanese commercial and corporate law such as joint stock company (KK), limited liability company (LLC), or limited liability partnership (LLP), but also not-for-profit organizational schemes. The RE project itself is often housed in a Special Purpose Company (Tokubetsu mokuteki kaisha/SPC) for transactional, tax, and accounting reasons. To avoid capital market regulation, citizens often form an anonymous partnership with less than 49 members that will invest the privately solicited funds in RE projects; such a scheme only requires notification to, not registration with, the Local Financial Bureau. Alternatively, citizens entrust their funds with a trust company (Shintaku Kaisha) registered with the FSA that will establish a Special Purpose Company to invest and operate RE projects.

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Notes

  1. 1.

    The Fukushima nuclear disaster in 2011 resulted in a shutdown of nuclear power, which had accounted for 11–13 per cent of Japan’s primary energy prior to the disaster, thereby further increasing Japan’s traditionally high dependency on fossil fuels.

  2. 2.

    The Japanese government continues to also promote nuclear power, which it considers an important base-load technology; the targeted share for nuclear power in the energy mix is 20–22 per cent by 2030 (METI 2015).

  3. 3.

    For example, 1.2 million small-scale PV units with a capacity less than 10 kW having a total capacity of 4.7 GW that had been installed before July 2012 and were transferred into the FIT system.

  4. 4.

    A major issue with Japan’s FIT system is the large number of “non-operating projects”, referring to the high difference between certified facilities (80.9 GW as of November 2017) and FIT-certified facilities that actually operate (36.5 GW) (REI 2017b). This is due to a facility registration procedure that guarantees investors the feed-in-tariff at the point of project certification, but allows them to postpone operation in expectation of falling investment costs. The bi-polar structure of ownership becomes even more distinct when considering certified facilities. Large-scale solar power plants (>1 MW) account for almost 49 per cent of the certified capacity compared to 40 per cent for facilities less than 50 kW. The revisions of the FIT system have severely tightened the certification process, but the number of “non-operating projects” is still very high.

  5. 5.

    Many facilities are owned by the woodworking, paper and pulp, and chemical industry for captive use of power and heat, while some power companies have invested in large facilities to sell power under the FIT scheme (MAFF 2017). Also a significant number of large-scale facilities using solid biomass use waste materials and wood or crop residues with a comparatively low biomass content.

  6. 6.

    Furthermore, three basic laws regulating the Japanese energy industry generally also affect the RE sector, for instance in respect to obligations of power providers and power retailers, namely the Electricity Business Act of 1964, the Gas Business Act of 1954 and the Nuclear Power Basic Law of 1955.

  7. 7.

    In autumn 2014, four of Japans ten regional power utilities (Kyushu Electric, Tohoku Electric, Hokkaido Electric, Shikoku Electric) used this provision to announce their suspension to accept new application for grid connections from RE producers, citing limits to their connection capacity within their service area (Matsubara 2015b).

  8. 8.

    However, the Japanese government has decided to establish a new market for trading the environmental value added of zero-emission RE (and nuclear power) as separate certificates in order to promote procurement of clean energy (METI 2017d)

  9. 9.

    The Japanese law for cooperatives does not cover energy, making it impossible for citizens to incorporate collectively owned enterprises as “energy cooperatives” (Wada et al. 2014).

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Authors and Affiliations

  1. College of Business Administration, Ritsumeikan University, Osaka, Japan

    Jörg Raupach-Sumiya

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  1. European University Viadrina, Frankfurt (Oder), Germany

    Jens Lowitzsch

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Raupach-Sumiya, J. (2019). Consumer (Co-)Ownership in Renewables in Japan. In: Lowitzsch, J. (eds) Energy Transition. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-93518-8_27

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  • DOI: https://doi.org/10.1007/978-3-319-93518-8_27

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