Off-grid or grid divorce is becoming rather big in Japan and the main driver for this trend is the nation’s distrust of its utilities after the Fukushima nuclear disaster.
Tens of thousands of Japanese homeowners have made the move to self-generation from hydrogen fuel cells and solar panels. This shift is quickly overturning the traditional grid and the century-old business model behind it.
Today, alternative energy technologies come standard in newly constructed homes. Japan’s biggest builder of single-family homes, Sekisui House Ltd, says that over 80% of the homes it builds come with alternative energy technology such as solar panels and fuel cells. Fuel cells are a crucial addition, since they power the home at night when the solar cells don't operate.
Reflecting the nation’s mood, Sekisui executive Kenichi Ishida says, “If you’re going to use electricity, you might as well make it yourself.”
Utilities’ nightmare is real
The move away from the power grid is certainly unsettling for Japan’s utilities as they lose some of their best customers. Utilities are in danger of being caught up in a vicious circle as tariffs have to be increased to make up for a decreasing demand. This will of course see an even greater exodus of customers.
Their problems have been compounded by the fact that Japan has had to import expensive fossil fuels to replace nuclear power generation. Within 14 months after the Fukushima disaster, 50 of the country’s nuclear power plants faced closure. Rising import costs have left the customer with high tariffs which is why many are leaving the utility.
These escalating rates (and a dislike of nuclear power) have spurred interest in alternative energy sources. Polls show that the nation is against nuclear power and does not want to see them return to service.
Another thorn in utilities’ sides is the Japanese law which requires utilities to pay around 35 cents per kilowatt hour for solar power generates from homes. This is three times the generating cost with natural gas. While this law was put in place to develop renewable energy, skeptics say that the subsidies are economically unsustainable as it is driven by subsidies instead of market economics.
Homeowners are seeing a 10 year return in investment in self-generated power. The subsidies are expected to continue for at least a few more years, by which time supporters say do-it-yourself energy could be priced low enough to be competitive on its own.
At Osaka-based Kansai Electric Power Co., a spokesperson said the utility, Japan’s second-largest, is itself investing in a large solar facility and believes there is “enough room in a changing energy market for many different businesses to grow.”
We asked utilities Tokyo Electric Power Corporation and JPower for comment on their future plans but they have yet to respond.