Japan Introduces Energy Storage Subsidy

Japan’s energy storage incentive is key to attaining energy independence and expanding renewable power.
Published: Mon 28 Apr 2014

Japan’s Ministry of Economy, Trade and Industry (METI) has introduced a generous incentive for lithium-ion energy storage. The incentive is expected to reduce energy storage system installation costs by up to 66%.

This latest move makes Japan the second country in the world, after Germany, to offer strong subsidies for energy storage.

Scheme to support renewables growth

To start with, energy storage systems with a storage capacity of 1 kilowatt-hour will be included under the incentive. Those who install a system can expect to receive up to US$10,000 for each system installed. Businesses can expect to receive up to US$100,000.

The storage systems have to meet certain criteria to be eligible. This includes undergoing an assessment and accreditation through the country’s Sustainable Open Innovation Initiative.

The introduction of the scheme is aimed at addressing the country’s energy problems which began shortly after the Fukushima nuclear disaster 3 years ago. In response to the disaster, the Japanese government was forced to shut down the majority of its nuclear power stations, the country’s main source of power. In order to make up for the loss in energy, the country has been importing its power.

Without reopening its nuclear power stations, the country has begun to increase its renewable sources. [Read: Engerati’s Japan’s Energy Makeover and Japan’s Energy Gridlock].

Energy independence

With the energy storage subsidy in place, Japan’s Ministry aims to harvest its rapidly expanding solar PV system fleet. Not only will the subsidy help to develop renewable energy sources, it will also help the country to regain energy independence by reducing the amount of fuel needed to import from abroad.

With the greater uptake of energy storage systems, the energy industry expects a downward pressure on lithium-ion battery technology prices. Lithium-ion batteries prices have already dropped significantly in recent years.

Energy storage also promises a number of other benefits to the development of a robust electricity infrastructure. With regards to the integration of renewable energy sources, energy storage is able to stabilise power fluctuations, manage and store surplus power, and enhance transmission capacity. Among the other more general benefits are frequency regulation, plus management of distribution power quality and reduction of peak electricity demand.

Japan’s government has already backed two large-scale energy storage demonstration projects: One in Hokkaido, with a capacity of 15MW-60MWh and another in north eastern Japan with a capacity of 40MW-20MWh. The Hokkaido project, once completed, will be the largest of its kind in the world.

Japan’s government is certainly not hiding its head in the sand. It has recognised that there is an energy crisis and a number of solutions are being implemented: fuel cells for distributed generation [Engerati: Fuel Cells To Power Japan], the development of wind and solar power generation and its storage, and the implementation of demand response programmes [Engerati:Demand Response-Big In Japan]. While it is plain to see that the government is serious about fixing its energy access, it is also building a cleaner, safer and more sustainable electric system.