Following the 2011 nuclear plant disaster in Fukushima along with the country’s heavy and expensive reliance on imported fossil fuels, in recent years the Japanese government has announced several policies intended to increase Japan’s use of renewable energy sources, while also encouraging energy conservation and efficiency to secure its energy transition. There are significant opportunities for renewables in Japan. Terrie Lloyd, Asian Insiders’ partner in Japan, offers some insight.

Japan is ranked 27 of 120 countries on the Energy Transition Index (ETI) due to stable system performance and transition readiness over the past ten years. ETI benchmarks countries on their energy system performance as well as readiness for transition to a secure, sustainable, affordable and reliable energy future. An important element in this calculation is the measure of the shift from a mix based on fossil fuels to one that produces very limited, if not zero, carbon emissions, based on renewable energy sources.

Japan is at a natural disadvantage due to its dependence on energy imports however maintains its ranking through diversification of energy sources along with import counterparts. Japan has notably grown in sustainability by reducing energy intensity and improving efficiency. The government has demonstrated strong political commitment backed by strong regulation, improved infrastructure and significant investment in education and training. The Sixth Strategic Energy Plan, released in October 2021 target renewables to account for 36-38% of Japan’s energy mix by 2030, promoting the deployment of solar, wind, hydropower and hydrogen.

Japan is densely populated with around 125 million people, limiting land availability for large scale renewable projects. In December 2022, Japan announced its plans to re-engage its nuclear capacity to address its looming energy shortage and to reduce dependence on imported fossil fuels. Following Fukushima, this triggered considerable public consternation, requiring government assurances over improved technology and safety protocols in nuclear facilities. For now, the country’s 50+ nuclear plants are being returned to service, with a further two under construction. The government intends that the energy mix by 2035 includes 20% nuclear and only 10% coal and gas fired, with these plants due to be phased out completely.

Solar remains somewhat ahead in the planning for renewables in Japan, facilitated by the generous feed-in tariff (FIT) scheme, incentivising ongoing investment in solar installations, along with wind and biomass. This despite Japan being 70% mountainous where flat land is considered better for solar. Japan is looking to become a world leader in wind power also, with Japan’s first commercial wind farm, with a capacity of 140MW  going online in December 2022. There are at least nine other major projects planned and the government hopes to see 10 GW under construction by 2030, making Japan the third largest wind power generator.

In addition, an auction system for renewable energy projects has been introduced to further promote efficiency while Japan’s grid infrastructure, initially designed for large, centralised power generation required significant upgrades to allow for a more distributed and diverse energy system including microgrids, local storage systems and demand response technologies. Japan’s energy market has gone through considerable liberalisation, allowing for increased competition and market participation while the government provides subsidies and other strategic incentives to support the development of new models and smart technologies.

Japan is also considered a global leader in hydrogen energy technologies and has made considerable progress towards developing an efficient system for production, transmission and the efficient industrial use of hydrogen power. Further, officials and industry leaders are projecting that hydrogen powered vehicles may be as common on Japanese roads as EV vehicles by 2030.

Japan is at present the world’s fifth largest carbon emitter and in February 2023 adopted the Green Transformational Policy, their initiative to achieve carbon neutrality by 2050, although has yet to release a comprehensive plan on how to achieve this beyond economic growth and energy security. Recent studies focus on the significant increases in clean energy production along with strong support for decarbonisation technologies and ever more emphasis on improved models for the circular economy. Japan holds an interim target of 46% reduction in green house gases compared to 2013 levels by 2030.

Even as Japan secures its own energy future and commits to significant plans for its transition to renewables, the country also has embarked on an ambitious round of energy diplomacy with commitments being made in the Gulf, in Southeast and Central Asia reinforcing Japan’s energy security, promoting Japanese green technology and boosting long term energy-economic ties.  At the heart of this strategy is the Asia Energy Transition Initiative (AETI), announced in May 2021 with the aim of developing a practical framework towards decarbonisation, leveraging Japanese technology and clean energy systems together with other Asian and Middle Eastern nations.  AETI is centred around the concept of balancing the 3Es: energy security, environment and economic growth. As part of this initiative, Japan will take the lead in leading energy transitions as well as establishing an Asian transition finance framework and with USD 10 billion already pledged to supporting a range of technologies and initiatives.  Investments have already been announced in Thailand, Vietnam, Indonesia and Malaysia and that includes the transfer of Japanese technologies developed under its Green Innovation Fund.

While Japan is perhaps looking to compete with rising Chinese, Indian and Korean influences across the wider Asian energy sphere, the country is doing so based on its own strengths and experiences as well as long-term Japanese-oriented technical solutions. In the meantime, renewables in Japan continues to attract international investment from multinational energy concerns with recent projects inked with British Petroleum and with the Danish government. Further international partnerships are also under discussion in the development of geothermal capacity.

Asian Insiders recently attended Smart Energy Week 2024 in Tokyo, as we continue to develop our connections to and understanding of the market for renewables in Japan. We are available to discuss opportunities in wind, solar, biomass, hydrogen, smart-grid and battery technologies, thermal and a wide range of related cleantech systems in Japan. For a no obligation call to discuss this please contact Managing Partner Jari Hietala: jari.hietala(at)asianinsiders.com or Terrie Lloyd, Japan Partner: terrie.lloyd(at)asianinsiders.com