Wednesday, June 13, 2012

Unlikely Firms Jump Onto Solar Power Bandwagon

When Japan’s government decided last month that big power utilities would have to buy electricity from renewable sources at around double current retail rates, many unlikely companies jumped on the renewable energy bandwagon in the hopes of a quick profit.

The major Osaka-based wool maker Japan Wool Textile Co., for instance, said it would shut its 15-hectare loss-making golf course by the end of September to build a 10-MW solar farm on the land. The company expects the facility to bring in ¥400 million in annual revenue by selling electricity to Kansai Electric Power Co.

Japan Wool Textile’s ambitions don’t end there. It is considering getting into the solar-power business on a much bigger scale, hoping to acquire the skills to install panels and build solar farms for other western Japanese companies.

Other companies have similar ideas. Convenience-store chain Lawson Inc. said it plans to install solar panels at 1,000 outlets across the country by February 2013. And Kansai-area railway company Kintetsu Corp. said it will use land alongside its tracks to build solar farms.

Following a law passed last August, the prices set last month for renewable electricity that utilities must buy from independent suppliers were near the top end of what prospective suppliers wanted. That prompted many companies to quickly announce they were getting into the power supply business. It also meant all sorts of abandoned lots around the country were suddenly potential money farms.

Unused land isn’t hard to find in the countryside, notes Takeshi Wada, chairman of the Association for Environmental Studies. Golf courses developed during the economic bubble of 1980s are just one example. Industrial parks developed by local governments that never found tenants are another.

But large-scale solar projects don’t come cheap, costing several hundred million yen for each megawatt of capacity.

“Most projects are undertaken by deep-pocketed companies from Tokyo or Osaka,” Mr. Wada said.

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