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More precisely, that's one main purpose of the high rates for the first three years. And in three years, I don't expect more than a blunt (that is much less than say 60 GW of solar and 40 GW of wind): the growth speed of an industry and the amount of capital that can be drawn isn't infinite even if profitability will be stellar.
The latest IEA figures are for 2009.
You can get more current figures here. Based on Q1 figures, we are indeed looking at a combustible fuel use increase vs. Q1/2010 by a bit more than a third or about 75 TWh. Some other interesting points:
Your word choice makes me curious: by the "FiT regime" that may be harmed, do you mean the institutional framework or the plants working under the FiT taken together, or the whole renewables sector (including suppliers)? Either way IMO the danger is in the collapse of the manufacturing and installation industry if degression sets in too hard. But I don't think enough renewables will be installed in three years to seriously impact electricity prices and thus give a valid justification to destroy the institutional framework; and the way the rates are set, producers who install their plants in the next three years will be unaffected by future degression, not to mention conventional fuel competition. *Lunatic*, n. One whose delusions are out of fashion.
Just flat out purchasing enormous quantities of panels and then hireing people to put them up would have been much more economically efficient, far less inequitable and have the same virtue of market making and upscaling of production used to justify FiT's.
I still don't get why you think the (intended) profit-taking by renewables installers is supposed to be delegitimizing, nor do I understand why you focus on PV-installing homeowners only when Japan's feed-in law disfavours them (with the 10-year guarantee in place of the general 20-year one while the rate is the same, see upthread).
Regarding the explicit intention to give renewables installers good profits:
New feed-in tariff system a rush to get renewables in play | The Japan Times Online
There is a specific section in the new tariff law that calls on METI to aim for large-scale renewable energy use over the first three years of the new tariff. To accomplish this goal, the law adds, METI is supposed to give special consideration to the profits of renewable energy suppliers. Thus it is hoped high tariffs will encourage large-scale investment by current and new players in the renewable energy field, especially since the internal rates of return under the new system range from 4 percent for some biomass forms to 13 percent for geothermal, 8 percent for wind farms over 20 kw, and between 3.2 and 6 percent for solar.
There is a specific section in the new tariff law that calls on METI to aim for large-scale renewable energy use over the first three years of the new tariff. To accomplish this goal, the law adds, METI is supposed to give special consideration to the profits of renewable energy suppliers.
Thus it is hoped high tariffs will encourage large-scale investment by current and new players in the renewable energy field, especially since the internal rates of return under the new system range from 4 percent for some biomass forms to 13 percent for geothermal, 8 percent for wind farms over 20 kw, and between 3.2 and 6 percent for solar.
So what? On the other hand, I read of no similar exceptions for industrial consumers as in Germany.
Massive electricity rate hikes
Again with the strawmen... *Lunatic*, n. One whose delusions are out of fashion.
I expect something in the order of 50 GW at most (and 20 GW more realistically) until 30 June 2015. Last year, when installed capacity jumped from 3.6 to 4.7 GW, 2.15 TWh was fed back (and 2.25 TWh produced). Not an awfully high capacity factor, and indeed IEA-PVPS claims 1,000-1,1000 kWh per kW is "typical" (I guess clouds plax a role). Going with that, I would expect at most 55 TWh and more realistically 20 TWh annual production from what gets installed under the launch feed-in rates, that would be c. 5% resp. 1.8% of total production. For a significant price effect of a ¥42/kwh feed-in rate vs. retail prices in the ¥11.5-23.1/kwh range (from winter high-voltage industrial to large-consumption household, 2008 TEPCO figures quoted by IEA-PVPS) that negates the benefits via marginal pricing (which should be substantial due to the "peak-shaving" daily power curve), I think something well above 10% of annual production would be needed. *Lunatic*, n. One whose delusions are out of fashion.
Given Japanese household savings levels, and the impressive return on investment, that the islands of japan not could buy the entire 30 gw of potential production currently going without customers, but outbid other markets for the lion share of the entire global output and cause expansion of productive capacity. And I think they will. Further, given a market, said manufacturing capacity has increased by over 100% year-on-year before. so.. eh, might very well hit 50 gw rated capacity by year end. If this doesnt cause the government to slam on the breakes somewhere in the region of 400 GW (rated) at law expiry would not shatter the supply chain, nor exceed what japanese construction firms can manage to put up. This is just solar, mind.
Cleaner:
Global production capacity for solar volatic elements is currently around 60 gw (rated). About half of this productive capacity is in search of buyers.
The japanese government just gave them a market for the entirety of this potential output, and the average japanese household can make this investment without having to loan the money. I expect them to do so, because the return is so very high. Further, productive capacity in this sector has doubled year-on-year to meet new demands before. It is not a strech to suppose this will happen again. Thus, by the time the law expires, it within the realm of physical and engineering possibility that over 400 gw (Rated) of solar has been put up in japan. And as long as the law is on the books, financial incentives make this maximalist scenario quite likely. This is just the solar sector - sales of windmills and so on to Japan are also likely to be extremely strong.
What's more, I repeat that if we think of the specific investor circle of homeowners wanting rooftop solar, ¥42/kWh for just ten years (equivalent to c. 0.21/kWh over 20 years, ignoring maintenance costs and cell degradation) is not that stellar an offer, even with the somewhat higher annual yield per kW capacity than in Germany. *Lunatic*, n. One whose delusions are out of fashion.
Quantities of energy fall unharvested that are vastly greater than our present consumption even with our hoggish and wasteful (ab)use patterns at this time.
We are standing thirsty in a clean river and being conned into buying dirty water to slake our needs.
There is zero need for further Fuku-traumatisation of entire regions with anachronistic technology now the cat is out of the bag.
Who ever regretted installing solar panels? Compare with Chernobyl survivors.
QED...
Worrying about who gets rich off of this is an unaffordable luxury. They should be in car rooves, bus stops, malls, hospitals, industrial areas, land too poisoned by our little 'experiments' for growing food or living on. Sadly that's a Lot. Of. Land.
The new combination PV/greenhouse combos coming out of China look like a great step forward to diminishing the transport costs of food and other vittles.
The wonder if the internet is how robust it is, through distributed nodes of data. It's a great metaphor for PV too. The more people do it the less the strain on the grid. 'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty
No, that would eliminate competition between producers and thus development and thus limit economic efficiency. Also, it would be in a higher danger of a future government undoing it. *Lunatic*, n. One whose delusions are out of fashion.
Also, there are a number of variations here that could have been used that would limit this even more.
While PV isn't competitive with other sources in terms of generation costs, its generation costs are competitive for self consumption because this type of production avoids the distribution charge. Noting this, why not focus on that strength as the basis for a campaign. For example, installing solar street lights not only saves cities the cost of generation+distribution charges, they limit the need for building and maintaining infrastructure for this purpose. Again because self-supply evades the distribution charge, another good policy might would be to cover the roofs government buildings, schools, etc with panels to limit the amount of power they draw from the grid. The focus has to be on the margin.
The costs of distribution + infrastructure construction/upkeep mean that for isolated communities taking them off the grid might actually make economic sense because dropping these areas where the marginal costs of distribution are particularly high can lower distribution costs throughout the rest of the grid. While it may seem to be a step backwards to take rural areas off the electrical grid, it could very well be that because the marginal costs of delivering electricity to these areas is so high that it would actually save utilities money to remove them from the grid while maintaining a duty of service, albeit through local systems. And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg
PV can be competitive with other sources in terms of generation costs during daily peaks, just when it gives most (the market effect currently observed in Germany), but good point about saving the distribution charge with self-consumption. On one hand, self-consumption can be enhanced by focusing on rooftop solar (both rsidential and industrial), though the Japanese feed-in law doesn't focus on that. On the other hand, if surplus cannot be fed into the grid, then generated electricity will be wasted or needs storage, and in both cases real generation costs will increase, so grid connection is a key. I have nothing against solar streetlights, but they are beans compared to total consumption, hardly something to be the main focus. *Lunatic*, n. One whose delusions are out of fashion.
I'll be honest, I haven't taken the time to read through the law in detail. I was only responding to usurious solar FiT rates. Good FiT policy should be designed to foster economies of scale. The problem with solar PV is that it doesn't exhibit these. The net effect of growth is mathematical not geometrical. Doubling the manufacturing capacity of a panel plant doubles the output of the end product. Money poured into wind turbine production will help fuel increases in the size of wind turbines, mathematical increases in their radius result in geometric increases in their swept area, and electrical generation.
Your word choice makes me curious: by the "FiT regime" that may be harmed, do you mean the institutional framework or the plants working under the FiT taken together, or the whole renewables sector (including suppliers)? Either way IMO the danger is in the collapse of the manufacturing and installation industry if degression sets in too hard. But I don't think enough renewables will be installed in three years to seriously impact electricity prices and thus give a valid justification to destroy the institutional framework; and the way the rates are set, producers who install their plants in the next three years will be unaffected by future degression, not to mention conventional fuel competition.
I'd repeat Thomas's comments below, with a caveat. In the short term, given the tremendous expense of natural gas in Japan, this program probably will help to drive down consumer prices. Again, I haven't taken the time to read the law in detail, so I am interested in what you have to say about the rates being high for three years. The question I'd ask is how this plays out. First, what is the rate after the three years? Second, will panels installed in the first three years receive the full rate for the 20 year term?
As Germany and Spain have shown, two to three years of mania can produced a PV solar sector dominated by rooftop installations which consume the majority of FiT budgets while producing a small fraction of the renewable power in a country. Japanese interest rates are extremely low, which suggests that you're going to have a repeat of what happened in Europe.
Finally, you talk about the manufacturing and installation industry. This is really quite simple. There will be no manufacturing industry in Japan spurred on by this policy, instead what will happen is that Japan will suck up the excess capacity of Chinese suppliers for a few years. PV solar production is driven by the cost, not the quality, of labor. Moreover, the 2015-2020 period is likely to be one in which natural gas prices in Japan plummet as LNG imports from the US resume, at much increased scale, and China/India experiment with shale gas. It won't last, but that won't matter.
FiTs are a poor fit for solar PV. Panels can make sense for individual consumption, but they simply aren't efficient enough to warrant their integration into the grid. As such, policies targeting their installation should focus on financing instead of production incentives. Moreover, as a matter of decreasing CO2 emissions, and creating fuel price declines, support for solar water heaters is probably a much better choice.
PS, thanks for the link to more recent IEA stats. And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg
Obviously, but economies of scale are about costs, not capacity. A plant with double the capacity costs less than twice, especially if development costs (of both the product and the machinery) are taken into account. The part of the spread of mass production in the PV price cuts in recent years is generally recognised.
Money poured into wind turbine production will help fuel increases in the size of wind turbines
As well as their price, and also the distance between two neighbouring turbines in a wind farm. It's not that easy to evaluate whether unit costs reduce. (You also confused the economies of scale from the increase of manufacturing capacity and the economies of scale from the increase of the output of a single plant.) *Lunatic*, n. One whose delusions are out of fashion.
Me neither as I haven't seen a link to a full English translation, but you could have read my short summary of rates upthread.
what is the rate after the three years?
First, the Japanese FiT seems to be like the German one, that is, producers get a fixed rate set at the time of grid connection and guaranteed for 20 years (with sub-10-kW, that is residential rooftop PV being the exception, getting it for 10 years only). Second, this rate for new installations can be revised by future governments. The current law wants to maintain the current level for three years, and as far as I know the degression thereafter is not set.
As Germany and Spain have shown, two to three years of mania can produced a PV solar sector dominated by rooftop installations
Yawn. We have been through this before: no, the Spanish and German solar booms were quite different, with on-ground solar dominating in Spain (due to a lack of differentiation of rates; Japan's 10/20-year running time differentiation will further enhance the effect). What has been similar in both countries however is that legislators wanted to curtail on-ground installations (because of conflict with agriculture), not rooftop.
consume the majority of FiT budgets while producing a small fraction of the renewable power in a country
We have been through this, too.
The development of domestic industry (with cheap foreign competitors as a given) doesn't depend on the feed-in law alone, but tariffs, industrial subsidies and quality control, too (low-quality solar cells don't produce as much for as long, a reason Chinese producers haven't killed European ones off completely). But my point was not restricted to new manufacturing (what you speak about) or even just manufacturing.
the 2015-2020 period is likely to be one in which natural gas prices in Japan plummet as LNG imports from the US resume
You said his before, but didn't explain what it effects will be (hence my question "by the "FiT regime" that may be harmed, do you mean the institutional framework or the plants working under the FiT taken together, or the whole renewables sector (including suppliers)?").
they simply aren't efficient enough to warrant their integration into the grid
What meaning of "efficient" is this now? I think a contribution like below is rather efficient, however:
as a matter of decreasing CO2 emissions, and creating fuel price declines, support for solar water heaters is probably a much better choice.
You make it an either-or... Germany has both. (And the neolib anti-solar lobbyists in the federal government attacked both, not just PV.) *Lunatic*, n. One whose delusions are out of fashion.
eh.. one second.
Hmm. Okay, the japanses government is correct and solar gets hardcapped by running out of suitable spaces at 15%, and the reactors all get turned back on, natural gas imports will fall off a cliff. There is enough hydro in the islands to produce a nearly completely flat demand curve for baseload, assuming 15% solar. Still going to have to build at least a dozen new reactors to get to a completly carbon free power sector. Substantial wind build will wreck havoc with this logic since wind is far more wedded to gas.
What amounts are we speaking about? I tried to look, and found these figures:
And the rush is on. There are 18 bcfd of export projects here. On the West Coast alone there are 4.1 bcfd of proposed project, which are likely going to go to Asian markets. Using your conversion factor, that's 0.41 TWh daily. Divided by 24, you get something 17,000 MW of capacity. Or ~15% of total electrical generation.
Even if the Japan isn't supplied entirely from North America, this is going to seriously drive down costs.
And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg
Heated debate over the impact of liquefied natural gas exports on domestic prices is threatening to derail them at a crucial time for the U.S. industry....Massachusetts Rep. Edward Markey, a top Democrat on the House Natural Resources Committee, is pulling out the stops to slow exports. He began worrying about the impact of liquefied natural gas (LNG) exports on U.S. prices, when he saw permit applications piling up at the Department of Energy. So, Markey and Sen. Ron Wyden, D-Ore., another key voice on U.S. energy policy, introduced bills requesting a timeout on LNG permit approvals until 2025....As a result, only one U.S. terminal has been given the go-ahead. A dozen-plus others are on hold, any regulatory action delayed until an Energy Department study on the economic impact is completed later this the year.
...Massachusetts Rep. Edward Markey, a top Democrat on the House Natural Resources Committee, is pulling out the stops to slow exports.
He began worrying about the impact of liquefied natural gas (LNG) exports on U.S. prices, when he saw permit applications piling up at the Department of Energy.
So, Markey and Sen. Ron Wyden, D-Ore., another key voice on U.S. energy policy, introduced bills requesting a timeout on LNG permit approvals until 2025.
...As a result, only one U.S. terminal has been given the go-ahead. A dozen-plus others are on hold, any regulatory action delayed until an Energy Department study on the economic impact is completed later this the year.
Shale Gas Reality Begins to Dawn SUNDAY, JUNE 24, 2012 The Automatic Earth It has long been our position at The Automatic Earth that North America is collectively dreaming with regard to unconventional natural gas. While gas is undeniably there, the Energy Returned On Energy Invested (EROEI) is dramatically lower than for conventional supplies. The critical nature of EROEI has been widely ignored, but will ultimately determine what is and is not an energy source, and shale gas is going to fail the test.
It has long been our position at The Automatic Earth that North America is collectively dreaming with regard to unconventional natural gas. While gas is undeniably there, the Energy Returned On Energy Invested (EROEI) is dramatically lower than for conventional supplies. The critical nature of EROEI has been widely ignored, but will ultimately determine what is and is not an energy source, and shale gas is going to fail the test.
By the way, the New York Times article with the internal memos is here (the article at The Automatic Earth only links to the document viewer itself). *Lunatic*, n. One whose delusions are out of fashion.
Prices for gas in the US have been exceptionally low lately, due to a combination of really weak demand from the recession and a burst of production from fields where investment took place during the high price years and which are selling gas at marginal cost today (which are largely unsustainable in the medium term). The volumes from shale gas are not so big as to allow for a lot of exports before you run into serious price hikes.
So the early LNG export projects will make a killing, but not many will be built in the end. The people really making money are those that had contracts to export LNG to the US and have the physical capacity to turn these cargo to Europe or Asia (i.e. the contractual right to send the gas elsewhere on a spot basis and share the profits with the US importer, and the availability of LNG tankers to do so). Wind power
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