Bridging the Gap Between Solar Companies and Utilities

 

16 May 2016
 

Lessons learned from the Japanese solar market

It’s no secret that United States utilities are feeling the growing pains of the breakneck growth of the solar market. As distributed solar floods the grid with power when the sun shines, utilities struggle to address the dual challenge of decreased revenue and greater fluctuation in demand for their conventionally generated power. Utilities have responded in a variety of ways, from adding fees for solar users to slowing solar interconnections.
 
Bridging the gap between utilities and solar, an example on a national scale
In Japan, a “grid-friendly” approach has been pivotal to power solar growth. Enabling utilities to determine how much solar power can flow on and off the grid, and when, helps utilities gain confidence they can add solar and still maintain grid stability, and that utility support is vital to unlock a large-scale solar market. Japan has provided a perfect environment to observe what happens when utilities intelligently adapt to explosive growth. 
 
Looking back at Japan’s energy history
Before the catastrophic earthquake and resulting Fukushima disaster on March 11, 2011, nuclear power generated about 30 percent of the nation’s electricity. Just one year later, every nuclear reactor was shut down. Japan worked to replace this major power deficit, in part, by attracting new solar investors with a lucrative feed-in tariff. In the blink of an eye, Japan became the world’s hottest solar market. 
 
This was terrific news for solar companies. Japanese utilities, however, were initially unable to cope with the rapid changes brought on by the swift transition to solar. The Japanese grid is decentralized and was not designed for a massive influx of solar power. This had a major impact on utility support for solar. Half of Japanese utilities announced programs to curtail and manage solar growth, while a Japan Renewable Energy Foundation survey found 20 percent of solar companies were denied access by local Japanese utilities due to overcapacity. Without management or control, solar proved it could be more of a disruptive factor than a force for good. 
 
Solar companies saw an important new market opportunity. They learned the utilities needed administrative abilities to guide how and when stored power came online to balance out demand surges and maintain resilience and drew on their expertise in the solar and technology industries to resolve these concerns. 
 
To help Japanese utilities manage this solar surge, smart solar inverters were built which enabled the utility to control how solar interacted with the broader grid. This added “grid-friendliness” was critical to give utilities the peace of mind they needed to give solar the green light. Thanks to innovations like these, Japan remains a top solar market and utilities provide a stable grid for one of the most advanced technological societies on the planet.
 
Today’s US market has many parallels. While a nuclear disaster has, fortunately, been avoided, the solar industry is growing quickly thanks to plummeting costs and pressure to go solar before the impending ITC step-down. Solar projects are coming online at an incredible pace; one project is installed every two minutes. As a result of this rapid growth, utilities and solar providers are seeing similar tensions here as were seen in Japan. Just like Japanese utilities hampered solar growth to ensure grid stability, American utilities are implementing surcharges and delays to manage this influx of solar power.
 
In Japan, solar companies and utilities bridged the gap between them, using smart inverters as part of the solution. Currently gaining considerable traction are newer solar-plus-storage solutions, which go even further to level out the grid, and enable greater adoption of solar energy. 
 
This technology has seen a strong market reception, with the solar-plus-storage market projected to expand to $3.1 billion in the next five years. That represents a twelvefold increase over today. As the rise of solar-plus-storage could add additional variability to the grid, it is anticipated, just like with solar, utilities will need confidence they can manage these technologies to ensure a stable grid. As a result, grid-friendly administrative tools are being incorporated into new solar-plus-storage offerings in North America and beyond. As with inverters, this technology promises to pave the way to strong solar market growth.
 
The US market can take lessons back to Japan 
American innovations in no-money-down financing have taken the industry into a whole new gear. New business models and software are playing a pivotal role in further driving costs and spreading solar, and Japanese solar companies would be wise to adopt these new mechanisms.
 
It works both ways. By sharing these valuable lessons between continents, and by bridging the gaps between parties in every grid, solar can continue its explosive growth all around the world. 
 
Harumi McClure is the managing director for Tabuchi Electric. 
 
Tabuchi Electric | http://www.tabuchiamerica.com
 
 
Fairly, P. (2014, December). Can Japan Recapture Its Solar Power?


Volume: 2016 May/June