Renewable Energy. Reducing Barriers to Solar Power Deployment through the Ohisama Zero-Yen System

Transcription

1 Renewable Energy Reducing Barriers to Solar Power Deployment through the Ohisama Zero-Yen System

2 Japan Reduces Barriers to Solar Power Social business helps citizens participate in the development of renewable energy For Iida City, located near the Akaishi Mountains in the heart of Japan, sunlight is the main renewable resource. The sun shines over 2,000 hours every year there the most in Japan. Iida City has a goal to become an ecologically sound, culturally dynamic, low-carbon city by using local renewable energy. Consistent with these objectives, the city plans to reduce greenhouse gas emissions in the residential sector by 40 to 50 percent by 2030, and by 70 to 80 percent by 2050 (compared to 2005 levels). Iida City is not alone in its quest for clean energy. In 2010, Japan pledged to trim its greenhouse gas emissions by 25 percent by 2020 and by 80 percent by 2050 (compared to 1990 levels). With energy security a serious concern in Japan (even more so in the aftermath of the 2011 Great Tohoku Earthquake), and energy production and consumption a major source of greenhouse gas emissions, renewable energy technologies are crucial for a clean energy strategy. Despite various initiatives by the national government to promote solar power in homes across Japan, many residents are still unable to buy and install solar generation systems due to their high initial costs. To overcome this barrier, Iida City developed a system to install solar power generators on homes at no initial cost. The program, called the Ohisama Zero-Yen System ( solar power for free ), is a community-based approach to make solar systems affordable and allow citizens participate in the development of sustainable energy at the local level. Financing upfront costs Iida City launched the Ohisama Zero-Yen System in 2009 to promote renewable energy through solar panel installation and distribution and to overcome the inability of many citizens to pay the large upfront cost for installing a solar power system. However, the origins of the program date back to 1996, when Iida City adopted the 21 Iida Environmental Plan (in response to the UN Local Agenda 21 Action Plan ) and put a strong emphasis on the reduction of greenhouse gas emissions and financing of renewable energy. Iida City laid further groundwork for the Ohisama project in 2004 when the city received funding of USD 6.2 million over three years from the Ministry of 1

3 Environment for solar power generation. The city collaborated with a local nonprofit organization to establish a social business called the Ohisama Shinpo Energy Company, Ltd to install and operate solar power generators on public buildings throughout the city. The Iida City council lent the roofs of public buildings to the company free of charge and developed 20-year contracts to purchase the solar power. 1 To finance the cost of solar panel installations, Ohisama Shinpo Energy raised an additional USD 2.5 million from private investors throughout Japan and pooled the capital into a social investment fund called the Ohisama Fund. Investors in the Ohisama Fund received a share of the company s profits (with dividends of percent annually), received newsletters on the status of the projects, and were offered special site visits to help them understand the business. 2 In 2009, Iida City and Ohisama Shinpo Energy expanded their efforts into the residential sector. To offset high initial costs of residential solar power systems, Ohisama offered to install them at no initial fee. Rather, homeowners pay for the solar installations in small fixed amounts over nine years. The cost per household is approximately USD 250 per month or less, with help from a net metering policy that allows clients to sell surplus energy back to the local utility company through its power grid at the price of USD 0.6 per kilowatt hour (kwh). In the tenth year of the agreement, the customer becomes the owner of the solar panels without further costs. 3 Social impact Iida City has a population of approximately 110,000 residents and a total area of 658 square-kilometers. In 1997 fewer than 0.2 percent of households in Iida City had solar power systems, but by 2010 their ratio reached over 3.6 percent, the highest among similarly sized Japanese cities. Between 2004 and 2005, Ohisama Shinpo Energy installed 208 kilowatts of solar panels at 38 locations. By 2010, it owned 162 solar power installations in Iida City and its surroundings (including homes, nursery schools, public facilities and office buildings), reaching a peak capacity of 1,281 kilowatts and resulting in carbon dioxide reductions of 782 tons per year.4,5 Households in Japan with Rooftop Solar Panels 2

4 Solar power generator installations currently show that a household will pay a fixed rate of about USD 2,963 per year for nine years and earn between USD 1,728 and USD 2,222 per year from the sale of surplus electricity. Thus, households end up paying a net cost of USD 741 to USD 1,235 per year. 6 In the Ohisama Fund - the first of its kind in Japan - the capital comes from the citizens, is invested in solar power generation and in energy conservation, and investors receive dividends of the profit. Investors contributed because they wanted to develop deeper ties with their community and fight against global warming. Between February 2005 and September 2009, the Ohisama Fund raised USD 9.2 million for all of its projects, namely solar power generation, energy conservation and green heating. 7 Through the Ohisama Zero-Yen system, Iida City is pursuing its goal of having 80 percent of its households furnished with solar generators by 2050, promoted under the slogan Solar power generation on the roof of every home. The idea has been appealing to the public not only from an economic standpoint, but also from a cultural point of view, as it builds on the mottainai idea that means no waste. Beyond the economic and environmental benefits, the program had significant societal success. Through the bottom-up approach, local citizens became actively involved in the development of the social company, took ownership of the project, and found incentives to increase solar energy utilization to ensure the program was successful. People increased their knowledge of renewable energy; and when using solar power generators, they tried to save energy at home with the purpose of selling larger amounts of electricity to the grid. 8,9 References Iwai, Mitsuko. Returning energy back to the public - The activities of Ohisama Shinpo Energy. Think The Earth, vol 60, May 28, Web. June < thinkdaily/report/2012/05/rpt-60.html#page-1> Joss, S., Tomozeiu, D., & Cowley, R. September Eco-Cities: a global survey University of Westminster International Eco-Cities Initiative. Web. June < ac.uk/?a=119909> 3

5 Endnotes Note: all currency conversions to US dollars were calculated using the exchange rate on July 9, ICLEI - Local Governments for Sustainability Local Sustainability 2012: Showcasing Progress. Case Studies. Bonn, Germany. 2 Hori Masaki. May Market Facilitation Organizations: A Case Study of the Renewable Energy Project by Ohisama- Shinpo-Energy. University of Michigan. Web. December < Master s%20practicum%20masaki%20hori% pdf > 5 ICLEI - Local Governments for Sustainability, op cit. 6 Edahiro, J. January Achieving Independent Local Change - the Ohisama Zero-yen System in Iida City. Japan for Sustainability. Web. July 4, < org/en/mailmagazine/newsletter/pages/ html> 7 Hara, 2011, op cit. 8 Iijima, 2011, op cit. 9 ICLEI - Local Governments for Sustainability, 2012, op cit. 3 Iijima, T. March 14, The Power of the Sun to Empower a Community. An Environmental and cultural City: Iida s Initiatives. 4 Hara, A. Promoting the use of natural energy with funding by environmentally-conscious citizens. Presented at the International conference on Promoting the Low-Carbon Cities, Kyoto, Japan, February 11, Web. November < hisama_en.pdf> 750 First Street, NE, Suite 940 Washington, DC p CCAP CENTER FOR CLEAN AIR POLICY