Market Insight

Japan proposes strong support for energy storage.

January 13, 2015

Sam Wilkinson Sam Wilkinson Associate Director, Solar & Energy Storage
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Some news has been released of a proposal by Japan’s Ministry of Economy, Trade and Industry (METI) to invest ¥81 billion to help resolve issues with the grid, and allow higher levels of renewable penetration. The proposal is believed to focus on deploying centralised grid-scale energy storage.

Key Points

  • In late 2014, a number of Japanese utilities announced that they would suspend grid access for renewable energy installations due to concerns over the grid’s capacity to handle increasing levels of renewable energy.
  • Following the Fukushima Nuclear Disaster of 2011, Japan introduced attractive incentive schemes for renewables, and has seen explosive growth in solar installations, with a huge pipeline of approved projects planned to be built in the coming years.
  • METI has proposed to invest ¥81 billion (~$684 million) to help improve the grid’s ability to handle high penetration levels of renewable energy, using energy storage in sub-stations and at PV systems.
  • Further details of the proposal are not yet available, and the proposal is yet to receive parliamentary approval.
  • Source: Japan to Support Energy Saving, Storage-Battery Installations

IHS Insight

Japan introduced attractive feed-in tariffs for solar following the Fukushima Nuclear Disaster in 2011. Since then, annual PV installations have grown dramatically. In 2014, Japan was the second largest PV market in the world with 9.4 GW of installations (up from 1.3 GW in 2011), accounting for 21% of the global market. To date, Japan has approved over 70 GW of PV projects, and nearly 40 GW of these are MW-scale systems. The vast majority are planned systems that are yet to be completed. However, concerns have repeatedly been raised over the ability of the grid to cope with the rapid increase in intermittent renewable generators in the power mix, and in late 2014, several Japanese utilities announced that they had suspended grid access for MW-scale PV installations. This has caused great uncertainty over the future size of the PV installation market in Japan.

Energy storage has been proposed as a solution to Japan’s grid capacity issues, and a number of commercial and demonstration systems have already been completed by domestic suppliers such as NGK and Sumitomo. The proposal from METI now appears to suggest that ¥81 billion (~$684 million) of budget will be made available in order to deploy energy storage to help balance the grid. News released about the proposal suggests that the storage would be located both at substations and also co-located with PV systems. It is not clear whether the budget will be used to partially or fully cover the costs of the systems. If the budget is used to fully cover the cost, then IHS predicts that 250 to 350 MW of energy storage could be installed under the programme. This figure is highly dependent on the duration of storage that is installed. Given the requirements of the Japanese grid, IHS assumes that relatively long duration storage systems will be installed, and systems of 2 hours or greater will be most common.

Japan already has a subsidy program in place that promotes behind-the-meter Li-ion energy storage in residential and commercial buildings. IHS predicts that it will be the second largest market worldwide in terms of annual energy storage installations in 2015 (in MW, across all applications), behind the USA.

Japan is home to a number of key energy storage suppliers, notably NGK Insulators Ltd (produces sodium sulphur batteries) and NEC Energy Solutions (Li-ion), both of which are likely to benefit from the large-scale deployment of grid-scale energy storage in the country.

The proposal is yet to be approved by the Japanese parliament, and many details are not yet available. IHS will produce further analysis of the proposal once further details are released.

More analysis from IHS: Grid-Connected Energy Storage Report - 2014

 

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