A fist in the air. Fukushima prefecture can be forgiven for using that symbol of protest after the nuclear disaster a decade ago. In the case of renewable energy firm Aizu Electric Power, however, its fingers are rainbow-colored.

Started in 2013 by Yauemon Sato, the head of an over 200-year-old, family-run sake brewery, Aizu Electric is a reaction to the unprecedented triple reactor meltdown March 11, 2011, that displaced over 160,000 people and created radioactive no-go zones that may last for generations. Aizu, a wholesale renewable energy company, aimed to wean the western region of Fukushima off of nuclear and fossil fuel-generated electricity, and juice the local economy by keeping the $100 million a year in electricity revenues from flowing out of the region.

Today the company, whose local investors include banks, municipalities and individuals,  powers about 1,800 households, mainly from photovoltaic generation, making it the largest renewable energy firm in a prefecture known for its sake, rice, traditional arts and history. But its entire generating capacity, spread out over nearly 90 locations, is equal to less than 1 percent of that at a large nuclear- or fossil-fueled power plant of one gigawatt, in large part because of obstacles to accessing the transmission grid owned and operated by the incumbent utilities.

The Fukushima accident, unfortunately, didn’t turn into the wakeup call it might have to diversify its energy sources with renewables. Japan is one of the most natural resource starved countries in the world, and relies on imports for about 90 percent of its energy needs. Before the disaster, the country had planned to increase nuclear generation by two-thirds, develop technologies that slashed emissions to zero from burning coal and increase energy efficiency to cut greenhouse gases. But the prospect of a new Democratic administration in Washington and its expected push of green policies, along with other nations’ setting of net-zero goals for 2050 forced Tokyo’s hand. It announced more aggressive climate and energy plans, including for expanding renewables, late last year.

Sato, 70, sitting on a tatami mat at his brewery while puffing on a cigarette a day before the 10th anniversary of the disaster, noted the grid access problems and acknowledged that Aizu Electric’s fist symbol was a one-finger salute to nuclear power. (Though he said the colors of the fingers in the fist were affable: Red, blues and amber stood for various renewables and green meant they were environmentally friendly.)

“Yup, that was a ‘You son of a bitch,’” he said with a cherubic grin. “The electric companies don’t want to let go of de facto control of transmission lines. It’s still a monopoly, even though generation, transmission and retail sales have been split up legally into different companies.”

Over the past two decades, the government slowly has enabled new companies to enter the wholesale and retail electricity business and allowed consumers to choose their suppliers, such as those with renewables-only generation. It also legally split the vertically-integrated regional utility monopolies into generation and retail sales divisions separate from their transmission and distribution operations to improve grid access, foster competition and bring prices down.

“We don’t need to depend on the big electric corporations,” Sato said. “We, here, can make our own power, send it out and sell it directly to retail customers.”

But the difficulties faced by Sato in developing more and larger power facilities were echoed across Japan, even after it made a major push in 2012 to support renewables with the introduction of a very high feed-in-tariff system that rewards producers of renewable energy for the electricity they add to the grid. The tariff’s payments are largely paid for with surcharges on electricity users to promote solar, wind, small-scale hydroelectric, geothermal and biomass plants. 

Despite that financial incentive and a requirement that utilities purchase renewables at a certain rate over a fixed term, the country still only generates about 17 percent of its electricity from renewables, mainly solar and hydro, and is currently only aiming to increase that to about one-quarter by 2030—the same proportion that nuclear provides. Most of Western Europe generates more than twice as much of its electricity with renewables as Japan does today. Fukushima, however, plans to go 100 percent green by 2040.

Grid(Locked Out)

Many of those difficulties connecting to the grid stemmed from the government’s refusal to acknowledge that atomic power wouldn’t play the prominent role it had—and was expected to play—before the Fukushima Daiichi Nuclear Power Plant accident. Or even that it might not play any role.

Bureaucratic and political inertia, protections for farmland and environmental impact regulations, along with Washington’s insistence that Tokyo not abandon the atomic partnership they’ve had since the 1950s, all conspired to mark a lost decade for renewables in Japan. An archaic mindset that doubted a higher proportion of renewables could smoothly integrate into the grid and a clinical obsession with the stability of the gold-plated electric system—partly based on that belief—also played key roles.

Those problems, simply put, meant that new solar and wind operators couldn’t connect easily and at a reasonable cost, if they could connect at all, to the grid of the entrenched utilities.

“Utilities protecting their turf and protecting their generation assets, when they were starting to lose market share on the retail side, in some cases up to 15 percent” were major reasons that there weren’t more renewables, said Tom O’Sullivan, a director at Tokyo-based energy intelligence firm NRG.

That’s partly because the established utilities are losing business to new electricity providers, meaning that their generation assets are becoming redundant, and demand is actually flat or shrinking in line with improvements in efficiency and a shrinking population.

“You’ve got a flat electricity market,” he said. “It’s not growing. It’s a zero-sum game.”

Transmission line access was determined on a first-come-first-serve basis, favoring the utilities’ large-scale power plants, including nuclear and coal. The portion of the grid reserved for those plants was based on their maximum potential output, rather than how much they historically used, and the system had very generous reserve capacity for emergencies. That’s unlike many countries in Europe, where factors like low marginal cost— defined as the cheapest way to generate an additional kilowatt of electricity—or being renewable are used to determine which electricity source gets onto the grid first.

Indeed, dealing with Japan’s grid operators can entail multiple headaches.

In one case presented in February by Toru Suzuki, the president of Community Wind Power, to a government panel looking at increasing renewables, a utility asked for well over a half a billion dollars to hook up a 1 megawatt wind plant. For approximately 300 Japanese homes, based on average usage, that would translate into a cost of $2 million apiece just to pay for the wind energy to connect to the grid. In much of Europe, only “shallow” costs are paid by the renewable firms when connecting, meaning that the cost of major grid upgrades are primarily borne by transmission operators rather than the newcomers.

In Japan, grid access could be suspended, without compensation, when utilities thought that transmission lines were reaching their capacity. In other countries with higher proportions of renewable energy, like Germany, policies favor its access and offer varying amounts of compensation to generators when their power is taken off line.

In Fukushima, Aizu Power’s new generation development manager, Masakata Imagawa, said that the firm gave up on two solar plants with about 2MW capacity apiece in 2016 and 2017 because of the constraints on grid access, but hasn’t had to curtail service to customers because of such obstacles yet. Recently, the company submitted plans to connect about 10MW of small-scale hydro and biomass to grid operator Tohoku Electric Power in 10 locations, he added.

Nuclear-Industrial Complex

One clear path for overcoming the grid constraints would have been to open up some or all of what was reserved for nuclear, as the entire fleet of 54 reactors eventually went offline after the accident. Only nine have restarted today, partly as a result of public opinion flipping from a majority in favor of the atom to a majority against it.

A concern in the industry was that reducing output would indicate that nuclear plants and fuel worth billions of dollars had become “stranded assets” and that electric companies would have to write down their value, damaging the financial viability of the utilities. Investors would also raise questions over whether plant operators had enough financial reserves set aside for the costly and decades-long process of decommissioning reactors. In Germany’s case, after the Fukushima accident prompted the decision in 2011 to phase out nuclear power by the end of 2022, the government agreed to compensate the utilities. That option would have been difficult for Japan, given the heavy nuclear investment and stated commitment, but a slower, planned reduction to zero would have been possible. It was considered by the government then in power but never implemented.

Before “3/11,” as the devastating earthquake, tsunami and nuclear disaster are known, the government had set a target of generating half of the nation’s electricity atomically by 2030. It was producing about 30 percent at the time of the disaster. Over the past decade, however, that’s dropped to 6 percent because of few restarts, stricter oversight by the newly independent nuclear regulator, seismic retrofit and safety costs totaling nearly $50 billion (and counting), lawsuits and continuing scandals at utilities like Tokyo Electric Power, the operator of the Fukushima plant.

Japan faced two major energy crises that triggered economic crashes in the 1970s because of the two Middle East oil supply shocks. As a result, Tokyo vowed to increase its energy independence and put many of its eggs in the nuclear basket. Renewables were an afterthought. Its dependence on fossil fuels from the Persian Gulf was a concern and continues to be one today.

Still, some nuclear proponents say that getting large numbers of plants restarted is difficult and that even with 20-year operating life extensions, the number of reactors will drop to only a handful in the coming decades. Japan’s Nuclear Regulation Authority says that life extensions, beyond the set 40 years, are only occurring in exceptional cases, but that hasn’t been the reality. Extensions would keep 23 reactors operating in 2050 and eight running in 2060. Without the extensions, only three would be operating, according to Japan’s energy agency. 

“As a resource-poor country, Japan shouldn’t easily throw nuclear power out,” said Dr. Takeo Kikkawa, an academic and member of the energy agency’s agenda-setting energy policy subcommittee. “But its future here is very dark because the government is maintaining its position to not replace old plants or build new ones. That means that Japan is going down the path of seeing nuclear gradually decline and eventually disappear.”

Pushed by Overseas Zero-Carbon Moves, Tokyo Looks To Radically Up Renewables

Despite currently lagging in renewables, Japan could be turning a new and more aggressive page, as signaled in an October speech by Yoshihide Suga, the nation’s new prime minister. A monotone political veteran known more for his penchant for pancakes than as a progressive reformer, the ruling party lawmaker said that Japan would implement policies to enable net-zero carbon emissions by 2050. Although it’s a late start, that would enable Japan to fall in line with most other industrial nations.

How serious Tokyo is about cutting carbon and boosting renewables will become clear in June, when the government formally announces its long-term energy plan through 2030, as the electricity sector accounts for some 40 percent of the nation’s carbon emissions. (That plan will be key, as U.S. climate envoy John Kerry has said that the next decade is critical for hitting the 2050 net-zero carbon goal.) 

In December, Japan’s industry and economy ministry, which oversees the energy agency, said in its “Green Growth Strategy” that the 2050 target for renewables in the nation’s electricity portfolio ought to be between 50 percent and 60 percent—and no more. At least 30GW of new offshore wind is already targeted to come online by 2040. The remainder would come from fossil fuels, including ultra-high efficiency coal, with carbon capture, usage and storage (CCUS), nuclear, green hydrogen and ammonia, which would be mixed with fossil fuels like coal or burned by itself.

One major player in Japan’s renewables market, Tokyo-based leasing giant Orix Corporation, which supplies about a 1GW of power as the nation’s largest solar generator with another 2.3GW of renewables overseas, said that Suga’s declaration is a good sign for green energy.

“The most important thing, such as the recent carbon-neutral declaration, is that the government says that it is going to introduce renewables to the max. So carbon-neutral policies suddenly have started moving,” said Yuichi Kori, an Orix public relations manager.

He noted that one grid reform that had been under consideration, “connect and manage,” was adopted nationwide in January. That program enables renewables to connect using the idle space of existing plants and some of the grid’s reserve capacity, which can happen before any transmission upgrades that might be made. “Before there were aspects where change was slow, like with the grid, but it looks as though changes suddenly have started moving forward,” he added. “Now, the question is how aggressive the target for renewable energy will be.”