1 INTRODUCTION
7
curtailment of renewable energy producers’ access to the grid (Watanabe
2014; Publicover 2016). Japan’s new grid regulator, the Organization
for Cross-regional Coordination of Transmission Operators (OCCTO), 6
and financial unbundling of the EPCOs’ transmission operations from
their generation business were supposed to help ameliorate grid capacity
limits and ensure parity access to the grid for all producers. Yet, grid
capacity, grid parity, along with storage and electricity market liberalization continue to pose challenges, but also opportunities, for renewable
energy producers in Japan, as the chapters in the Japan section of this
book demonstrate. These new stage-two challenges and opportunities are
well illustrated by Japan, but are in fact common across many countries
with growing renewable energy generation as this book makes clear.
The new challenges facing renewable energy as it transitions from a
niche power source to replacing fossil fuels is not one of inadequate technology. Rather, these challenges stem from a lack of adequate policy,
planning and investment, and ultimately from political, economic, and
even social challenges. Japan, for example, possesses the world’s largest
pump-hydro storage capacity. However, most of this capacity is owned by
EPCOs and dedicated to backing up inflexible nuclear power plants, and
renewable energy producers have only limited access to this capacity. Grid
battery storage technology has become not only a viable technology, but
also one that can be very profitable as battery costs have fallen and its
speed and efficiency in offering balancing services as well as storage has
been demonstrated, as grid battery storage investments such as Tesla’s
100-megawatt grid battery facility in Australia, have proven (Deign 2018;
Gerdes 2018; O’Kane 2019). The hydrogen economy, on the other hand,
is not as far along as battery storage (as is the case with electric vehicles
where hydrogen fuel-cell powered cars continue to lag well behind battery
powered cars), but even in the case of hydrogen, fundamental technological breakthroughs are no longer needed. Rather, what is needed are
continued steady incremental improvements that keep the costs of this
technology falling (see Uriu’s Chapter 7 on Japan’s hydrogen strategy).
After Japan we examine several countries in Japan’s neighborhood of
East Asia. In Northeast Asia, we analyze South Korea, like Japan a
fossil-fuel poor highly developed economy with significant strengths in
renewable energy technology and industry. South Korea boasts a far
better developed national grid than what Japan possesses. Yet, South
Korea is an economy that has made far less progress on renewable
energy diffusion or market liberalization than has Japan. We analyze why
7
curtailment of renewable energy producers’ access to the grid (Watanabe
2014; Publicover 2016). Japan’s new grid regulator, the Organization
for Cross-regional Coordination of Transmission Operators (OCCTO), 6
and financial unbundling of the EPCOs’ transmission operations from
their generation business were supposed to help ameliorate grid capacity
limits and ensure parity access to the grid for all producers. Yet, grid
capacity, grid parity, along with storage and electricity market liberalization continue to pose challenges, but also opportunities, for renewable
energy producers in Japan, as the chapters in the Japan section of this
book demonstrate. These new stage-two challenges and opportunities are
well illustrated by Japan, but are in fact common across many countries
with growing renewable energy generation as this book makes clear.
The new challenges facing renewable energy as it transitions from a
niche power source to replacing fossil fuels is not one of inadequate technology. Rather, these challenges stem from a lack of adequate policy,
planning and investment, and ultimately from political, economic, and
even social challenges. Japan, for example, possesses the world’s largest
pump-hydro storage capacity. However, most of this capacity is owned by
EPCOs and dedicated to backing up inflexible nuclear power plants, and
renewable energy producers have only limited access to this capacity. Grid
battery storage technology has become not only a viable technology, but
also one that can be very profitable as battery costs have fallen and its
speed and efficiency in offering balancing services as well as storage has
been demonstrated, as grid battery storage investments such as Tesla’s
100-megawatt grid battery facility in Australia, have proven (Deign 2018;
Gerdes 2018; O’Kane 2019). The hydrogen economy, on the other hand,
is not as far along as battery storage (as is the case with electric vehicles
where hydrogen fuel-cell powered cars continue to lag well behind battery
powered cars), but even in the case of hydrogen, fundamental technological breakthroughs are no longer needed. Rather, what is needed are
continued steady incremental improvements that keep the costs of this
technology falling (see Uriu’s Chapter 7 on Japan’s hydrogen strategy).
After Japan we examine several countries in Japan’s neighborhood of
East Asia. In Northeast Asia, we analyze South Korea, like Japan a
fossil-fuel poor highly developed economy with significant strengths in
renewable energy technology and industry. South Korea boasts a far
better developed national grid than what Japan possesses. Yet, South
Korea is an economy that has made far less progress on renewable
energy diffusion or market liberalization than has Japan. We analyze why