No. 73: Spread of renewable energy depends on the purchase price paid by electric power companies (August 9, 2011)

A city of Akita Prefecture in the Tohoku district built a woody biomass power plant with a maximum capacity of 3,000 kW eight years ago. A company affiliated with a leading plywood producer and a lumber sawing cooperative association jointly built this plant with an investment of about 1,500 million yen. The plant tried to sell generated power to Tohoku Electric Power, but the price offered by Tohoku Electric Power was 3.5 yen per kW. This price was totally out of the question. The plant is currently selling power to a neighboring plywood producer for 10 yen per kW in the red.

The Japanese government eventually started to discuss the special measures law for renewable energy in the House of Representatives. It is supposed to set the purchase price of renewable energy (except photovoltaic generation) at 15-20 yen per kW. The president of a company that builds hydraulic power units told that the purchase price should be more than 20 yen per kW to spread renewable energy. His company has installed more than 10 small hydraulic generators, which use agricultural water and spring water, across the country. However, the purchase price paid by electric power companies is generally less than 10 yen per kW. Not a few municipalities are reluctant to introduce the small hydraulic generator because the purchase price of 10 yen per kW is too low to introduce a unit that needs about several tens of million yen including installation and maintenance.

A small town in the Tohoku district has 16 wind generators and generates 1.6 times more power than needed by this town. It has the potential capacity to generate 190 times more power than town’s requirements. This town is abundant in energy resources including wind and sunlight. The leaders of this town are making efforts to make Japanese understand the reality that rural areas can supply renewable energy. Despite the energetic activities by rural areas, the central government is rather slow to respond.

In Japan, 10 electric power companies monopolize the electric business, and each of them enjoys the regional monopoly. In the early 20th century, Monzaemon Matsunaga dubbed the King of Electricity laid the foundation of Japan’s current power business. The power business was monopolized by only one company until he took the initiative in the power business. He divided the one-company monopoly into nine companies (Okinawa joined later to make the total 10). It is true that his strong initiative helped Japan achieve such tremendous economic success.

He was truly a great leader. His secretary purchases a first-class train ticket (most expensive ticket) for him. When he received the ticket, he said to the secretary, “Take it back to the window and purchase a third-class train ticket (Cheapest ticket).” Can you believe this? He was 75 years old. This alone is good enough to show how great he was.