Japan plans to pump $700 million into energy storage

Greentech Media

Japan’s energy storage market looks set for a boost in 2015 thanks to a planned cash injection of 81 billion yen ($700 million).

The support package is being mulled by the Japanese Ministry of Economy, Trade and Industry (METI) alongside an additional 93 billion yen ($779 million) for energy efficiency measures such as light-emitting diode lamps and efficient boilers, Bloomberg reported.

A METI official said the details of the funding package, including how businesses could apply for energy storage incentives, had yet to be made public.

It is understood the budget will be available to consumers, companies and industry associations, and that METI is working closely with the Energy Conservation Center of Japan on the fine points of the scheme. The funding is being considered to balance the grid in the country.

Solar power adoption has soared in Japan in recent years, with around 8 gigawatts of new capacity coming on-line last year alone. Most of it is in the form of residential installations, with around 900,000 households installing panels since 2011.

By the end of last year, residential solar appeared to have become a problem for utilities because they were not allowed to curtail production from installations of less than 500 kilowatts. Five power companies refused to sign renewable energy purchase agreements because of the law.

The utilities backtracked last month after METI introduced the possibility of unlimited curtailment.

Support for energy storage would clearly be another way of helping utilities to rein in intermittent generation, since it would give solar panel owners the option of storing electricity instead of feeding it into the grid. Furthermore, the latest energy storage package is more focused on residential and commercial installations than previous stimulus schemes have been.

However, Per Christer Lund, an electricity market adviser to the Japan Electric Power Exchange at DNV GL, believes grid problems may not be the main long-term driver for the government’s energy storage spending plans.

“Japan has an ambition of being a world leader in battery technology,” he said. “They want to build their own industry by having a solid home market, exactly the same as with the automotive industry in the ’80s and with the IT or microchip industry in the ’90s.”

Lund says battery storage is “not needed” to balance the grid in Japan because it can probably cope by opening up interconnections between its nine main geographically separated and vertically integrated utilities.

Japan also has significant pumped hydro reserves amounting to 25 gigawatts, plus the option to introduce demand response and smart consumption measures.

“The Japanese government is doing a lot of things now to alleviate the perceived challenges of renewable energy integration,” Lund said. “They are doing it in a typically Japanese way, which is a technology approach, more than a mindset change or adapting people’s behavior.”

“Honestly, I think the big push on batteries that the government is supporting now is partly to make the utilities happy in the short term and partly because they want to build that battery technology industry in Japan,” he added.

Whatever the motivation, the decision is good news for energy storage.

Manufacturers touting traditional battery chemistries such as lithium-ion and nickel-cadmium are likely to be the big winners from the funding plans, although there could be benefits for more exotic technologies, too. Japan is also pushing forward with hydrogen for energy storage applications.

Government support for battery storage could also ease consumer concerns over the newly introduced solar power curtailment rules, which come into effect this month.

Making it easier for consumers to store electricity might offset their worries about not always being able to sell it to the local utility. The Japanese PV giant Solar Frontier, for one, has welcomed the energy storage spending plans.

“Storage is a key component of energy-efficient microgrid systems, and we welcome the support the Japanese government recently announced to give impetus to their adoption,” said Brooks Herring, Solar Frontier’s vice president and corporate executive officer.

“Once grid parity is achieved in the near future, we see microgrid packages expanding, which should also drive a healthy demand environment for years to come. We are working with companies to develop economical solar energy systems, including in the storage space,” said Herring.

Source: Greentech Media. Reproduced with permission.