Asia report: Revisiting Japan's solar demand and nuclear comeback

New Hampshire, USA -- Japan's solar market continues to race ahead: domestic solar demand is surging, to the point where it's bottlenecked behind expectations. And what's that sound of tiny footsteps approaching?

Japan's domestic solar cell shipments more than tripled from July to September from the same period a year ago, while exports fell by two-thirds, according to the Japan Photovoltaic Energy Association. Domestic shipments in the first half of the fiscal year alone (April-September) nearly equal those from the entire previous fiscal year, 3.7 GW to 3.8 GW. Meanwhile, the Okinawa Prefecture is reaching its upper limit in how much solar PV generation it can take on. They're turning to energy storage to help address the problem.

At the other end of the scale, though, mega-solar power plants are producing just a fraction of their authorized output, according to the Ministry of Economy, Trade and Industry (METI), which is mulling the causes of the delays (lack of funding, developers holding out for more attractive profits, grid interconnection complexities, even failure to secure land rights) and may cancel approvals for some developers who aren't progressing quickly enough.

But there's another reemerging energy interest in Japan these days. Japan quickly shuttered its nuclear fleet following the Fukushima disaster (inspiring other nations to quickly followed their example), leading in part to a renewed embrace of renewable energy options. Even the person who came up with Fukushima's nuclear-supportive tagline turned to solar power. But the recently elected Abe government and METI are reemphasizing nuclear as an important baseload power source with additional safety and cost measures, reversing the previous administration's pledge to get rid of nuclear power by 2040. The problem is that replacing nuclear is leading to bringing more fossil fuels and pollution, or choosing non-baseload renewables with higher costs. "You can't fill the void left by nuclear with renewable energy," said one analyst quoted by Bloomberg. The Japan Renewable Energy Foundation points out, though, that factoring in those safety measures and decommissioning costs hikes the cost of nuclear power, erasing any savings vs. today's pricing.

IN THE NEWS

China Doubling its Renewables Pace: China has installed roughly 36 GW of renewable energy capacity this year through October, roughly two-thirds of that from hydro but also with increases in wind and solar power (and nuclear power which is included in their definition of renewable). That's a bit off the hopes set in January of 49 GW of renewable energy capacity in 2013, though China still expects 10 GW of grid-connected solar power capacity by the end of this year.

Toshiba Eyeing German Residential Rooftops: Toshiba and Gagfah, Germany’s largest real-estate company, are launching a joint venture to add rooftop solar to family apartment buildings in Germany, a move that would square up the Japanese company as an independent power producer (IPP) against local and regional utilities. During nonproductive periods (night and cloudy days) the company says it will purchase power from the wholesale markets for customers at the same rate as power generated by the systems. The Japanese company initially plans to install 3 MW of solar power on 750 apartments, and more than 100 MW by 2016, eventually including batteries and Toshiba's smart grid tech.

Biomass and Cold Storage in India: A biomass energy project inaugurated in the Uttar Pradesh village of Sitapur is said to be the first of its kind, powering not only 140 households but also a cold storage unit for harvested fruits and vegetables. It's an interesting and important application for a nation where 22 percent of agricultural produce is spoiled and wasted, valued at Rs 330 billion. The Energy and Resources Institute (TERI) and two Australian aid and research agencies developed and oversee the project, which will be transferred to community ownership after two years.

Slashing Costs for Fukushima Offshore Wind: The Marubeni-led group behind the 2-MW pilot offshore wind project at Fukushima, which started operations about one month ago, describe their goals to reduce the technology's costs in half for the second phase of their project.

CSP in India: Areva says it has commissioned initial steam operation at its 100-MW concentrated solar power (CSP) plant in Dhursar, Rajasthan state. The project, to be operated by Reliance Power, is expected to ramp to commercial operation in March 2014.

Hydro Tasmania Wants Wind Farm Support: Hydro Tasmania reportedly wants the federal government to help with its proposed $2 billion 600-MW King Island wind farm project, which would be the nation's largest. The project would require an underwater high-voltage cable to connect to the national electricity market in Victoria; a second cable link also is being mulled among politicians.

Tata's $400M Cleantech Investment: Tata Capital and the International Finance Corporation are pledging to jointly invest 25 billion INR (U.S. $401 million) in renewable energy and energy efficiency projects in India. Tata Cleantech has participated in group loans for 350 MW of mostly wind projects, and wants to back 2 GW of renewable projects over the next five years.

India REC Demand Doubles: Demand for renewable energy credits in India doubled in November to exceed 300,000 bids, according to data from REConnect Energy Solutions. Demand has been particularly brisk since August when regulators in several states tightened their rules on local distributors who haven't been meeting their targets.

Chinese Hybrid Solar/Hydro Plant Ramps: The 320-MW hydro-solar project near the Longyangxia Dam in Qinghai Province, said to be the largest of its kind in China, has been connected to the grid and commenced trial operations after about nine months of construction, according to media reports. Annual output is projected to be 498 GWh.

CPV Project in China Gets Funding: Focusic New Energy Holding has secured a CNY 200 million (U.S. $32.7 million) loan from the China Development Bank to finance a 20-MW CPV project in Hami, at the edge of the Gobi desert in Xinjiang province. Focusic and Soitec have been working on a 3-MW pilot project since 2011, which is planned to start delivering power to the grid by the end of this year with another phase completed next year.

ON THE HORIZON

Malaysia's 2015 Renewable Energy Target: Malaysia's Energy, Green Technology and Water Ministry says it is confident that it can achieve its goal of 5.5 percent of renewable energy in its energy mix by 2015, encompassing solar, small hydro, geothermal, and biogas. Those goals increase to 11 percent by 2020. At the same time, the government separately announced a 15 percent hike in electricity prices for users who consume more than 300 kWh/month, which should spur more energy-saving practices from LEDs to appliances.

Singapore's 10-2020 Renewable Energy Goal: Singapore could meet 10 percent of its power demand by 2020 with renewable energy sources, up from barely 1 percent today, without any government subsidies, according to the Sustainable Energy Association of Singapore (SEAS). The catch: it'll cost S$4 billion from the private sector.

A DEEPER LOOK

Kiribati, The Climate-Change Poster Child: Business Week has an excellent firsthand account of climate change's potential impact, and one its first dramatic victims: the Republic of Kiribati, a far-flung collection of atolls near the equator in the central Pacific Ocean, which is rapidly in danger of being erased from the earth. The Asia Development Bank (ADB) also has a nice infographic tracking the impact of future climate change on vulnerable island nations in the Pacific.

Australia hits 3 GW of Solar Installations: Australia achieved 3 GW of installed solar power capacity earlier this month, spanning about 1.2 million individual systems. That also makes up nearly 10 percent of the National Electricity Market's (NEM) demand, according to market tracker Sunwiz, which takes a closer look at solar's contributions to -- and reshaping of -- Australia's electricity market.

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Grid-scale Energy Storage: Lux Predicts $113.5 Billion in Global Demand by 2017

In the grid-scale sector alone, Lux predicts an average year-on-year demand growth of 231 percent from 2012 through 2015 when the growth rate moderates to 43 percent per year for 2016 and 2017. The forecast is tempered, however, by a cautionary note that demand of that magnitude can't be satisfied because "Believe it or not, the grid storage market will be supply-constrained in 2017."

Technologies and players 

The eight energy storage technologies Lux evaluated for their new report are summarized in the following table, along with the price and performance metrics highlighted in beige. Comparable price and performance metrics from a recent Sandia National Laboratories "Energy Storage Systems Cost Update" are also presented and highlighted in green. While there's room to quibble over the details and users of Lux's Smart Grid Storage Tracker and Demand Forecaster can fine tune the price and performance variables to suit their analytical needs, the parallels between the two sets of system cost estimates are close enough to lend substantial credence to Lux's basic assumptions. 

Based on a comprehensive evaluation of various local factors including "utility market structure, generation technology compositions, peak power demand, demand growth rate, infrastructure growth rate, penetration and growth rate of intermittent renewable energy sources, grid reliability, [time of use] electricity rates, commercial demand charges, and outage costs," Lux concluded that Japan, China, the United Kingdom, Germany, and the State of Arizona will be the top five regions for grid storage and collectively account for about 58 percent of global demand in 2017. Japan and China will each account for about 18 percent; United Kingdom and Germany, will each account for about 9 percent; and the US will account for about 23 percent, with Arizona alone accounting for 4 percent of global demand.

Some of the more surprising conclusions in the Lux report related to the relative importance of the various grid-scale applications by 2017. For me the biggest surprise was the conclusion that the current killer apps, ancillary services and renewable energy integration, will only account for 1.4 percent of global demand in 2017 while renewable energy time shifting will account for an impressive 54 percent of demand, or $61 billion in annual revenue potential. I was also surprised by the conclusion that high spreads between peak and off-peak electricity prices would create a major market opportunity in the residential and commercial sectors, which account for 28 percent and 17 percent, respectively, of the 2017 demand forecast. 

Based on their in depth evaluation of application requirements and the price and performance of the eight energy storage technologies they evaluated, Lux reported that: 

Li-ion takes the early lead, but fades to cheaper alternatives. Li-ion batteries for [power] applications capture nearly 80% of the market in 2012, but quickly fade as cheaper molten-salt and flow batteries become available in the ensuing years. By 2017, Li-ion batteries capture only 13% of the market, yielding 33% to vanadium redox batteries and a nearly even split of the rest of the market between sodium sulfur, sodium nickel chloride, and zinc bromine flow batteries at 19%, 15%, and 19%, respectively. This indicates the short timeframe Li-ion battery developers have to reduce their costs. In the long run, systems with discharge durations between two hours and four hours are the “sweet spot” size for most grid applications. Currently, Li-ion batteries are sought-after due to their availability and proven performance. Flow batteries and molten salt batteries, both of which perform well for longer discharge applications, have shown comparable performance to Li-ion batteries at a fraction of the cost and are currently limited by their availability and proven reliability. Flywheels retain 2% of the market in 2017 and find their niche in relatively small frequency regulation market and other niche applications that require rapid discharge capabilities, short durations, and an extremely long cycle life.

Many participants in the lithium-ion battery sector are developing and demonstrating grid-scale energy storage products. To date, the highest profile player has been A123 Systems (AONE), which has shipped over 90 MW of storage systems for ancillary services and renewables integration. While Johnson Controls (JCI) has been quiet about its plans to package and sell lithium-ion batteries for stationary applications, I have to believe the global footprint and sterling reputation of its building efficiency unit will make it a formidable competitor in the commercial markets. 

Sodium Nickel Chloride, or Zebra, batteries have been a relatively low profile chemistry for years. They were originally developed by Daimler for use in electric vehicles but failed to gain much traction in that market despite a decade of solid performance in a 3,000 vehicle fleet that's logged over 150 million kilometers. In 2009 General Electric (GE) announced plans to build a NaNiCl factory in New York. In 2010, Italy's Fiamm bought a controlling interest in Swizerland's MES-DEA, the sole European manufacturer of NaNiCl batteries, and is now doing business as FZ Sonick. Both firms are rapidly ramping their marketing efforts on grid-scale systems.

The largest manufacturer of sodium sulfur batteries is Japan's NGK Insulators (NGKIF.PK), which was the global leader in grid-scale storage for the over a decade with an installed base of over 300 MW. NGK had a spotless safety record until late last year when they suspended NaS battery sales and asked customers to refrain from using installed systems pending completion of an investigation into the cause of a battery fire in Japan. Last year, NGK accounted for roughly 54 percent of the grid-scale energy storage market. While NGK's market share will fall as other technologies gain traction in the grid-scale markets, its revenues should continue to ramp because of rapid overall growth rates in the sector. 

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Saudi's have reduced production, but do not believe that it is due to the lower demand

You will reduce Saudis production with Brent crude to $120 / barrel.

Saudis adapt oil production such as world demand varies - NYTimes.com.

Why? The International Energy Agency says that it is due to weak demand. Does this make sense? Now, shows why this weak demand in the price be? There is no question that the Saudis learned the lesson from the 1980's, at low prices cause the high prices, and thus have an incentive enough, these prices cut produce. So why they reduce production if prices still high??

For me, is the only reasonable explanation that they can no longer produce. She might be the doubt by opening their oil fields, investigate inspection, but they do not have. And why? Because if we know the truth, it would be that it not as much oil as they say, do, and they want to know that not.

You had and have an incentive to lie, to support a higher OPEC quota. I predict that Saudi oil production to under 5 million barrels per day will fall in the next 5 years. This is still a lot of oil production, but much less than that the IEA says 8.88 barrels a day, they now produce.

Saudi consumption is increasing at the same time, with a growing population. If they were smart, they import the conversion of its vehicle fleet to natural gas and from nearby Qatar. Then again, if we were smart would we change produced here, to natural gas, in the United States.

This announcement from the IEA is much better on when someone is renting for long-term oil prices. I do not know what tomorrow will bring, but I think that if we do not change traffic on natural gas very soon, the price of oil high will increase. So or so, the energy companies and the oil service providers benefit. Example: Schlumberger (SLB), Apache (APA), Anadarko petroleum (APC), Exxon Mobile (XOM), Chevron (CVX) and Conoco Phillips (COP) benefit bound are (I own shares of SLB, APA, APC and COP)

Also the energy of ETFs, UNG for natural gas and oil, USO can rise in the long term are expected.

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