Japan’s Inaction Towards Soaring Electricity Prices Around the World
Electricity prices will continue to rise for the next 1-2 years?
Due to economic sanctions against Russia for its invasion of Ukraine, energy prices such as LNG (liquefied natural gas) and crude oil have risen, and electricity prices in Japan are also slowly rising. When will the price of electricity in Japan stabilize?
“The current rise in electricity prices is partly due to the problems in Ukraine, but it also coincides with a period of increased consumption and demand as the behavior that had been regulated by the corona is gradually eased. This rise in energy prices could last for a year or two, and we don’t know what will happen with the Ukrainian problem. I don’t think we can be optimistic.”
says Yoh Yasuda, a specially-appointed professor of renewable energy economics at Kyoto University’s Graduate School of Economics and Management.
As long as we rely on fossil fuels such as LNG and petroleum, we must be prepared to pay higher prices in the future. If that is the case, is nuclear power still the way to go?
“I am aware that there are voices like that,” he said. But we have to consider from various angles whether that is the solution.
For example, there are reports that the International Energy Agency (IEA), in response to the Ukraine crisis, is saying that nuclear power should be operated as much as possible, but the IEA is also saying that biomass should be utilized more than that.
In Japan, many are vocal about nuclear power alone, which is the second-largest source of energy, without mentioning biomass, which has a higher value.
But France says it is going to build 14 more nuclear power plants.
Macron has pledged to do so. But at the same time, the previous administration’s plan to reduce nuclear power from 66% of electricity generated in 2020 to 50% by 2035 has not been changed so far, and we will have to wait and see how feasible this plan is.
France is currently one of the countries in Europe where wholesale electricity prices are rising the most, due to a series of nuclear power plant failures in addition to the Corona and Ukraine problems. When a large power plant has trouble, the entire country suffers power shortages. That is one of the risks of being dependent on nuclear power plants.
Electricity Potential Lying Within Japan
So what should Japan do?
The IEA has set a goal of increasing the share of renewable energy in the power supply to 90% by 2050. Nuclear power is not zero, but renewable energy is the priority.
Renewable energy is not affected by the situation overseas, as in the case of the recent Ukraine issue. They can be produced almost entirely domestically. There is an international agreement to promote the introduction of renewable energy. But for some reason, there is little discussion about it in Japan. They can only count up the reasons why we can’t do it.
One of the reasons for not doing so is that it might cost too much.
The cost of renewable energy is falling rapidly, and in some parts of the world, it has already reached the same level as fossil fuels. Moreover, fossil fuels are likely to increase in price in the future. It would be more natural to assume that continuing to use fossil fuels risks driving up electricity prices.
Another is that they are unstable because they depend on the weather. The government seems to have decided to increase the production of storage batteries by 20 times by 2030.
He said, “At Japan’s current projected level of renewable energy deployment, there is little need for storage batteries. There are many other ways to deal with fluctuations in renewable energy.
And storage batteries are not the only form of energy storage. One of them is hot water storage. Cold and hot water are produced together in one place and then supplied to buildings and communities through pipes. Hot water can be made from surplus electricity generated by wind power generation when the wind blows too much, and then stored for use when there is little wind. In Germany and Scandinavia, this system is already practically used. It is an ultra-low-tech system for storing hot water that is many times cheaper than storage batteries.
The March 16 earthquake caused thermal power plants to shut down, and then a cold wave hit, resulting in a supply-demand crunch on March 22 in the service area of Tokyo Electric Power Company (TEPCO). At that time, pumped storage power generation came into play. When there is a shortage of electricity, water is pumped up from the downstream dam to the upstream dam, and the water is dropped from the top to generate electricity.
This is another form of renewable energy. It is wonderful that it worked. There are also many low-tech, well-established technologies, such as hot water storage and pumped storage power generation. If we combine them appropriately, it is possible to provide a stable supply of electricity from renewable energy sources.”
But is it possible to meet the power needs with renewable energy alone?
The Ministry of the Environment estimates that if wind turbines were to be set up on any available offshore location, excluding various limiting factors such as shipping routes and fishing grounds, approximately 3,200 TWh of electricity could be generated in one year. Japan uses about 1,000 TWh of electricity per year, and offshore wind power alone could provide more than three times that amount, which means that Japan has a tremendous amount of resources lying idle.
If we include solar power, geothermal power, and small- and medium-sized hydroelectric power using small rivers, we have a potential of about 7,300 TWh,” he says. The IEA’s goal of 90% renewable energy by 2050 is not a pipe dream if they are willing to do it.
While France has said that it will build more nuclear power plants, Germany has announced that it will reduce its nuclear power plants to zero by the end of the year.
In Germany, there was a debate about whether the previous policy was wrong. One is that we relied on Russia for natural gas, and another is that we should have promoted renewable energy more.
If we become an advanced renewable energy country, we can sell our technology to other countries. At a time when the world is moving toward renewable energy, Japan will be left behind technologically if it continues to do so.
Instead of building more power plants, think about not using them. That is the 21st century.
What Japan needs to do is not only to develop renewable energy, says Yasuda.
“The idea of building power plants because there is not enough electricity is a Showa-era concept. Maybe we are using too much. Or perhaps the more we use, the more we are harming the environment.
If that is the case, it would be less expensive and faster to reduce the amount of electricity we use, rather than just building power plants. We need to change our thinking that way.”
One way to reduce the amount of energy used is through insulation.
The level of insulation in Japanese houses is so poor that it is unacceptable for a developed country, and buildings that are harmful to life and health, such as those with condensation, are even accused of human rights violations overseas. If the insulation is good, less energy is used for heating and cooling. If you build a shoddy house, you are wasting energy for 20 or 30 years.
In Japan, the term energy conservation implies reducing consumption and sales, but the original purpose is to invest in new energy-efficient products and services and to promote innovation. The era of mass consumption is over. The idea of the 21st century is to give a gift to the future through new technologies with high added value.
While many things need to be done, it seems that raising electricity rates is inevitable. According to the Ministry of Economy, Trade, and Industry (METI), about 20 new electric power companies, which have marketed themselves as being cheaper than the major power companies, have already ceased operations. I wonder if there isn’t some way to keep prices from going up.
If raw materials go up, it is only natural that the selling price will go up. If you force yourself to sell at a lower price, the more you sell, the more you lose money and you will end up going bankrupt.
Some say that tax breaks or subsidies should be offered to lighten the burden on users in response to higher gasoline prices, but this will only make the price look cheaper and postpone the problem to the future. If gasoline prices are high, we should hasten the shift from our current dependence on fossil fuels to renewable energy more and more, for example by hastening the introduction of electric vehicles and using renewable energy sources to produce electricity.
If prices are going to be higher due to the high cost of resources, then raising wages is in order.
But aren’t there some vulnerable people who would suffer if electricity prices were to rise?
I once asked the same question to a European policymaker, and he replied, ‘That’s a welfare policy problem. We should not put the inaction of welfare policy on the energy problem.
That is certainly true. If there are people whose lives and health are affected because they cannot pay their electricity bills, there are things that can be done even with the current legal system, such as increasing the percentage of people receiving welfare benefits. Without doing so, the government can only make a pretense of lowering energy prices because the economically weak are suffering, which is a complete reversal of the original plan. After all, it only postpones the fundamental problem to the future.
We can only hope that the system will be enhanced to compensate for rising prices.
Dr. Yo Yasuda is a specially-appointed professor in the Department of Renewable Energy Economics, Graduate School of Economics, Kyoto University. D. (Engineering). Specializes in lightning-resistant design of wind power generation and grid interconnection issues. His work is to bridge the gap between technology, economics, and policy.
He is also the author of numerous energy-related books. His publications include “The Complete Collection of Renewable Energy and Power Systems in the World” (Impress R&D). He supervised the three-volume “Let’s Learn More About Renewable Energy” series for elementary and junior high school students (Iwasaki Shoten).
Interview and text by： Izumi Nakagawa
