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ECONOMY > Energy

Itochu to build 5,000 mini solar plants to fill renewables void

  • December 10, 2021
  • , Nikkei Asia , 6:49 p.m.
  • English Press

TOKYO — Japanese trading house Itochu Corp. will build 5,000 small solar power plants on idle land across the country by 2025, then supply the electricity to companies as it steps in to fill a worsening renewable energy void.

 

With the solar plants, Itochu expects to be able to generate a total of 500,000 kW of power, equivalent to the output of one thermal power plant.

 

The move, which will make Itochu Japan’s largest provider of renewable energy to businesses in Japan, comes amid growing demand for renewable energy and supply bottlenecks.

 

Companies are buying electricity from major utilities as well as new suppliers under a feed-in-tariff system, which allows unused renewable power to be sold back to the grid at fixed prices. They receive certificates showing the electricity comes from renewable sources.

 

But the government is now lowering the tariff rates, and the pace of new renewable energy developments based on the system has been sluggish.

 

Partly as a result, meeting corporate demand for renewable energy has become an issue.

 

Itochu will sell the energy via long-term corporate power purchase agreements. These allow companies to ensure stable supplies of electricity from renewable sources. They also help the supplier, Itochu in this case, to reduce its investment risk.

 

PPAs might also encourage the development of renewable power plants in Japan.

 

In November, Itochu invested in Tokyo-based Clean Energy Connect, a solar power generator. The companies will acquire idle land across Japan to develop small solar plants. The electricity generated will be bundled and supplied to companies on 20-year contracts.

 

The electricity will cost more than the mostly thermal power that Japan currently generates but the same as renewable energy provided through feed-in tariffs.

 

In Japan, renewable energy producers have taken numerous steps to supply electricity to companies under long-term contracts. NTT Group has set up a solar power plant in Chiba City exclusively for Seven & i Holdings.

Mitsubishi Corp. by 2023 will set up a network to procure solar power for Amazon.

 

The procurement of renewable energy through corporate PPAs is also expanding overseas. According to the International Renewable Energy Agency, new renewable energy generation capacity in 2020 was over 260 million kW, about 10% of which was provided via corporate PPAs. The procurement of renewable energy under this system is expected to spread as it lends itself to good Environmental, Social and Corporate Governance ratings.

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