Promoting Green Power in Canada - Centre for Human Settlements

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Promoting Green Power in Canada Pollution ProbeBox 3.2 — Japan: A New Player inPhotovoltaicsJapan’s Photovoltaics program strategyis principally focused on lowering themanufacturing costs for massproduction of PV modules anddeveloping the associatedtechnologies needed to deploy suchsystems. A key element of theJapanese photovoltaic deploymentstrategy is their rooftop program. Theprogram is a promotional instrumentwith the goal of removing the costbarriers by stimulating the demand forphotovoltaics, promoting thepopularization of residential PVsystems and developing bettermanufacturing and systemtechnologies and infrastructure. Todate,some 17,500 households haveinstalled 65 MW of grid-connectedphotovoltaic rooftop systems. Japanset an ambitious target of 5,000 MWof installed modules as part of itsplans to achieve compliance with theKyoto protocol by supplying 3.1% ofthe primary energy demand based onnon-carbon fuels by the year 2010[CETC 2001].Japan’s renewable energy efforts arefocused most specifically on solarphotovoltaics for one obvious reason:on Japan’s densely populated Island,there is room for PVs on rooftops, butlittle or only very costly room on theground for wind turbines, biomassfacilities and most other forms ofrenewable energy. The Japanesegovernment’s budget for renewableswas 87.5 billion yen (C$1.2 billion) in1999 [REPP 1999, pp. 18,22] —Canada’s budget for renewables was$20 million that year (see chapter4.7.1).only starting after three years, and aguaranteed price of 50 cents per kWh ofelectricity sold back to the grid over a tenyearperiod. The program, begun in 1998,proved so popular, adding 45 MW in 2000,that the government had to place limits onfunding for budgetary reasons [Moomaw2002, p. 9]. The German government expectsto see 500 MW of new PV capacity installedunder this program between 1999 and 2005(see Figure 3.15) [JLS 2002, p.17]. Awarenessof potential world markets and exportopportunities was a significant driver forgovernment support for renewabletechnologies, both at federal and regionallevels. The extent of support also creates apositive environment for inward investment,and Germany has become the country ofchoice for renewable power companies, suchas Shell Solar [HCEAC 2002, p. 16].The main reason for Germany’s success liesin its feed-in tariffs for renewable power.Renewable power generators can sell theirelectricity to utilities at a guaranteed price farabove wholesale prices (a percentage of thepre-tax retail price). The cost above thewholesale price is then evenly shared amongall electricity consumers, similar to systembenefits charges in the United States. In2000, the German government significantlyincreased the feed-in tariffs, particularly forPV, which now receives about 51 €cents/kWh(CDN¢71/kWh), while wind generators getabout 9 €cents/kWh (CDN¢12.6/kWh)[NREL 2002, p. 60]. Large hydro hadoriginally been supported by the scheme, butis no longer included under the new 2002feed-in tariffs. Table 3.6 provides an overviewof German feed-in tariffs and other supportmechanisms for renewable power.In 1997, the Feed-in Law of 1991 wasamended to include a clause that up to 5%of renewable power would have to beaccommodated by all utilities. Due to rapidgrowth of wind power generation capacitiesin Germany this threshold was soon going tobe reached for some utilities, placing an40
Promoting Green Power in Canada Pollution ProbeCumulated Capacity [MW] ..400350300250200150100500199219931994199519961997Figure 3.15 — Installed Grid-Connected PV Capacity inGermany [FJ 2002]19981999Actual2000unequal burden on Northern utilities, wherewind deployment was highest. Germanutilities tried to crush the Law in the courts,claiming it was unconstitutional, a subsidyto renewable power producers, and that ittreated utilities unfairly by putting theburden to pay for the extra cost of renewablepower generation on them. However, allcourt cases brought forth against it weredefeated, even up to the European Court ofJustice [ENER 2001a, p. 14]. Due to theuncertainty of the incentive when legalaction was first brought forth against it, therapid growth of wind energy deploymentwas halted in 1996 (see Figure 3.14). Itrebounded quickly over the following years,as the constitutionality of the legislation wasconfirmed [REPP 1999]. In 2000, the newRenewable Energy Sources Act removed thecap and distributed the burden among allGerman transmission network operators,thereby creating an equal share ofrenewables for all distributors and suppliers[EEA 2001, p. 41]. This development is ofimportance for Canada as our coastal areashave the best renewable resource potential(see chapter 4.8.3.2) and could be subjectedto similar burdens if a comparable system isintroduced here.Forecast200120022003Before introducing the feed-intariffs, Germany’s renewablepower support started out withthe “100 MW Wind Program” inJune 1989. As the program wasvery successful, it was extendedto the “250 MW Wind Program”in February 1991. The program,which ran out in 1996, providedgrants for the installation andoperation of wind turbines atsuitable sites. From thebeginning, a “ScientificMeasurement and EvaluationProgram” was part of the supportscheme. All turbines installedunder the program arescientifically examined for tenyears. The wind farms receivedboth subsidies — up to 25% ofthe total investment, to a maximum of150,000 DM [REPP 1999] (about $110,000CDN) — and a production incentive of upto 6 Pfennig (4.4¢ CDN) per kWh inaddition to the guaranteed feed-in prices[ENER 2001a, p. 15]. By the end of 1996,more than 1,500 MW of wind capacity hadbeen installed in Germany.Apart from the feed-in tariffs, which assureinvestors of long-term secure returns of windpower projects, Germany’s DeutscheAusgleichsbank (DtA) played an importantrole in wind power deployment: nearly allwind power plants were financed to up to30% with cheap loans provided through theDtA, which are 2–3% below the usualinterest rates [FIRE 1998, pp. 54,22]. Forwind, as for most renewable power projectswith high capital and small operating costs,The Electricity Feed-in Law has beenvery unpopular with German utilities,to the extent that some refused to paythe feed-in tariff and went to court,trying to crush the Law.FIRE 1998, p. 2341
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