IEEJ：March 2020 © IEEJ2020

The 434 th Forum of Research Works

23 December 2019

Renewable Energy Outlook andChallenges for Japan and the WorldThe Institute of Energy Economics, Japan
Yasushi Ninomiya
Senior Researcher, New and Renewable Energy Group,
Electric Power Industry & New and Renewable Energy Unit

Key points
 The world’s total installed capacity for renewable power generation was 2,470 GW (1,300 GW from hydro, 1,170
GW from non-hydro renewables) at the end of 2018. The figure is expected to increase annually by around 8% in
2019-2020 to reach 2,900 GW (1,300 GW from hydro, 1,600 GW from non-hydro renewables) at the end of 2020.
The total electricity production from renewables in 2018 was 6,670 TWh (4,190 TWh from hydro, 2,480 TWhfrom non-hydro renewables). The share of renewables in the full generation mix was 25.2%.
 The installed capacity for renewable power generation grew by 175 GW in 2018, almost equals to the largest
recorded annual growth of 177 GW in 2017. Although the capacity growth in China dropped by about 6% fromthe previous year, the world has achieved annual growth of more than 160 GW consecutively since 2016 thanks
to growth in countries other than China.
 In 2019-2020, the installed capacity for renewable power generation is expected to grow by about 40 GW peryear in China, while the capacity growth will be faster in the rest of the world. As a result, the annual capacity
growth worldwide including China is likely to reach the unprecedented level of nearly 200 GW in 2019-2020. Asidefrom China, there is strong growth in regions such as Europe, the United States, India and the Middle East. In
each region, the growth is driven by solar PV.

IEEJ © 2019 There are three factors that contribute to the growth of the installed capacity for renewable power generation: thefalling cost of renewable power generation, the strengthening of national/sub-national target for renewables, andthe expanded purchasing of renewable power by corporations.
 Although growth in the total installed capacity for renewable power had been slow in recent years in Japan, thegrowth in FY2018 increased greatly to 7 GW thanks to the setting of a deadline for starting operation for solar PV
projects that have not yet started generating power after being certified under the FIT scheme. As the impact
from this measure persists, the capacity growth of about 7 GW per year is expected to continue in 2019-2020. As
a result, the total of the renewable capacity, excluding more than 30 MW of hydro, is expected to reach 83 GW at
the end of FY2020 which would produce 158 TWh of electricity in FY 2020. Combined with outputs from morethan 30 MW of hydro, the contribution of renewables to power generation in 2020 is expected to total 19.0% inwhich 7.9% from hydro and 11.1% from non-hydro renewables.
 The challenges that Japan is facing in 2020 include lowering the cost of renewable power generation which is
exceptionally high compared with the global level, reconfiguring the power grids to be able to integrate theexpanded renewables, and deciding how to share costs, and developing a scheme for shouldering the cost of
disposing of disused solar PV panels, as a large number of disused panels will have to be disposed of from 2030
onward.

1

Global: Share of power sources by output (2018)


Renewable energy accounted for 25.2% of the global power output of 26,461 TWh* in 2018:
Hydropower at 15.8% (down 0.2 point from 2017), non-hydro renewables at 9.4% (up 1.0 point from 2017)
The share of renewables climbed 0.7 percentage point from 24.5% in 2017, surpassing 25% for the first time.
Renewables have increased by 0.7% point/year on average for the past five years and are set to exceed one-third of
total power output in 2025 if the current growth continues.

Solar PV
2.2%
Hydro
15.8%

Wind
4.8%

Biomass & geothermal
2.4%
Naturalgas
23.4%

IEEJ © 2019

Nuclear
10.2%

Oil
3.0%

Coal
38.2%

* Excluding a statistical error of
153.8 TWh

Source: BP Statistical Review of World Energy June 20192

Cumulative global renewable power capacity andgenerated power (2005-2020)


Renewable power capacity has continued growing at about 8% p.a. for the last 10 years
With the same rate in 2019-20, cumulative capacity is expected to reach nearly 2,900 GW at the end of 2020Power generated by renewables has been growing generally at 6% p.a.; From 2010 to 2020, it is expected to grow 1.8-foldfrom 4,160 TWh to 7,500 TWh.
Within the solar PV sector, the capacity of distributed/off-grid systems doubled in four years from 140 GW in 2016 to 300 GW
in 2020. → This suggests a relative decrease in the demand for grid-connected power.

(GW) 3000

2500

2000

1500

1000

Forecast

8000 (TWh)
7000
6000

Geothermal
Geothermal
地熱

5000

Biomass
Biomass
バイオマス

4000
3000
2000

500

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0

太陽光
Solar
SolarPV
PV

Distributed/
off-grid (2016onward)Offshore
Offshorewind
wind
洋上風力
OnshoreOnshorewind
wind
陸上風力

水力
Hydropower
Hydropower
1000
0

Renewables
再エネ発電量generated(Right axis)

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 (FY end)
Source: IRENA Renewable Electricity Capacity and Generation Statistics, IEA Renewables 2019, etc.

3Annual growth of global renewable power capacity and generated power(2006-2020)


Renewable power capacity is expected to grow in 2019-2020 at the unprecedented rate of nearly 200 GW peryear due mainly to increases in the capacity of solar PV and onshore wind power.


Aside from China, growth of solar PV is prominent in regions such as Europe, US, India and M.East, boosting global capacity.
Annual total of power generated by renewables is impacted by large year-to-year fluctuations of hydro, which is directly
affected by the amount of rainfall. Even if the contribution from hydro is excluded, the annual total of the power generated byrenewables has been growing steadily by about 400 TWh/year over the past years.

(GW) 200

Forecast

500 (TWh)
450
400

150

350

100

Biomass
バイオマス
Distributed offgrid (2016onward)

300

Solar
PV
太陽光

250

Offshore
wind
洋上風力

200
150

50

Geothermal
地熱100

Onshore wind
陸上風力Hydropower
水力
Renewables
再エネ発電量generated(Right axis)

50

IEEJ © 201902006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

0

Source: IRENA Renewable Electricity Capacity and Generation Statistics, IEA Renewables 2019, etc.

4Annual growth of installed capacity for renewable power generation ofdifferent resources (2006-2020)
Since 2016, solar PV has exceeded growth of any other renewable power option, and is expected to continue
growing by more than 100 GW/year.






Onshore wind is likely to be limited to about 50 GW/year due to factors such as decrease in suitable area
Hydro has already peaked due to decrease in suitable area, and is expected to grow slowly by about 20 GW/year.
Biomass is expected to remain the same, while offshore wind is gradually increasing the level of biomass (7 GW/year).

(GW) 120

100

Forecast

Solar PV80

60

Onshore wind

40

20

Hydropower
Biomass

IEEJ © 20190Offshore wind
Geothermal

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Source: IRENA Renewable Electricity Capacity and Generation Statistics, IEA Renewables 2019, etc.

5Rate of annual growth of installed capacity for renewable power
generation of different resources (2006-2020)
Other than solar PV, offshore wind is growing the fastest at 20% p.a.; Since 2012, offshore wind market has
been expanding as fast as solar PV, and is expected to continue growing.


Solar PV, after an explosive increase during 2008-11, has gradually entered a period of stable growth of 20% p.a.
Annual growth of other renewables are low: onshore wind 10%; biomass-fired 5%; geothermal 3 to 5%; hydro2% or less.

80%
Forecast

70%

Solar PV60%
50%
Offshore wind

40%
30%
20%
10%

Onshore wind
Biomass
Hydropower

IEEJ © 20190%

Geothermal

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: IRENA Renewable Electricity Capacity and Generation Statistics, IEA Renewables 2019, etc.

6Annual growth of solar PV capacity: prominent growth in countries otherthan China with increasing contribution from distributed systems


China's share of growth in solar PV capacity will drop to about 40% in 2019-2020, but China still leads theworld in the deployment of solar PVShare of distributed/off-grid systems is currently about 50% in China which is expected to increase.
In 2019-20, growth of solar PV will be outstanding in Europe, US, India, where the share of distributed/off-gridsystems is currently about 40% which is expected to increase.
Forecast(GW) 80
70

70%
60%

60

50%

50

40%

40
30%

30

20%

20
10

10%

0

0%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

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Global excluding China
中国を除く世界全体
Distributed off-grid (2019 onward)

中国
China

Share
of China
中国比率

Distributed/off-grid (2019 onward)

Source: IRENA Renewable Electricity Capacity and Generation Statistics, IEA Renewables 2019, etc.

7

What factors are expected to contribute to the growth of renewable
power generation? (1) Continuing decline of cost

The levelized cost of electricity (LCOE) from solar PV in a global weighted average is continuing to fall whichis expected to reach $0.048/kWh in 2020, 44% lower than in 2018.
For countries with good sun conditions, solar PV is becoming one of the cheapest power options
In southern Europe, the generation cost has become lower than the wholesale electricity price in some cases,
triggering an increase in the number of solar PV plant construction projects that have started without subsidies.

IEEJ © 2019

(USD/kWh)

Forecast

Source: IRENA (2019) “Future of Solar Photovoltaic: Deployment, investment, technology, grid integration and socio-economic aspects”

8What factors are expected to contribute to the growth of renewable power
generation? (2) Strengthening of renewable targets by governments

EU: In May 2019, EU finalized its renewable deployment target to be achieved by 2030, letting EU countries
raise their national targets for renewable energy.







US: Although the Federal Government took the decision to withdraw from the Paris Agreement, this is incontrast with state governments which are raising their renewables deployment targets.
The government seeks to raise the 2030 target share of renewables in the generation capacity from 40% to 55%.

Middle East: In countries such as UAE (Dubai and Abu Dhabi), Saudi Arabia, Morocco and Oman, competitive
biddings have been held one after another for massive solar PV projects of several hundred MW class.


IEEJ © 2019

State governments have raised their renewable portfolio standard (RPS) target or established a new target.
•
California: 2030 RPS target raised from 50% to 60%; realization of zero coupon by 2045; solar PV madeobligatory for new residential houses built in 2020 or later.
•
Nevada: RPS target raised from 25% by 2025 to 50% by 2030; decarbonization of all retail electricity by 2050.
•
New York: 2030 RPS target raised from 50% to 70%; 100% decarbonization of electric power by 2040.
•
Massachusetts: RPS target is to be raised 2% p.a. from 2020 to 2030, by 1% p.a. from 2030. Power generation
by offshore wind turbines is to be expanded to 1.6 GW by 2035.
•
New Mexico: 2040 RPS target 80%; decarbonization of all retail electricity by 2045.

India: plans to raise renewable target from 175 GW by 2022 to 500 GW by 2030.
Target is “at least 32% share for renewable energy” in final energy consumption by 2030
Besides expanding renewable power generation, progress is sought in deploying renewable energy in thecooling/heating and transportation sectors, and in the area of sector-coupling
Each EU member countries will raise their renewable targets in line with the EU target for 2030.
Some have proactively raised their targets already; Germany raised from 50% to 65% for renewable share in total power
consumption in 2030 and Spain raised the same from 70% to 74%

Leveraging their superb sunshine conditions, they expect to generate power at very low cost in the order of $0.01 to$0.02/kWh.

9

What factors are expected to contribute to the growth of renewable power
generation? (3) Corporations investing more in ESGWith the growing focus on ESG (Environment, Society and Governance) in investing and making selections,more corporations are trying to use renewable power to meet their electricity demands.
Particularly in the US, there is a prominent trend of corporations preferring to purchase power from wind andsolar PV plants. Combined with cost reduction of renewables, this is driving the deployment of renewable energy

More companies are joining RE100 (an international initiative supporting the declaration of meeting 100%of electricity demand by renewable energy).

Total installed capacity of wind and solar PV power under PPA by corporations(GW)
Asia/Pacific

EuropeUS

IEEJ © 2019

Cumulative
capacity

Source: IEA Renewables 201910

Share of Power Sources by Output in Japan (FY2018)


Renewables had a share of 16.9%* in FY2018 in Japan.
Hydropower accounted for 7.7% and non-hydro for 9.2% in renewables in which solar PV 6.0%, Wind 0.7%, Biomass
2.3%.
Share of solar PV increased in FY2017 from 5.2% to 6.0%. Wind, biomass, and geothermal power increased slightly,
while hydropower decreased.

Biomass 2.3%

Wind 0.7%

Geothermal
0.2%

Solar PV
6.0%
Natural gas
38.4%

Hydropower
7.7%
Nuclear
6.2%
Oil
7.3%

IEEJ © 2019

Coal
31.2%
Source: General Energy Statistics of Japan by METI

11

Cumulative renewable power capacity andgenerated power (FY2008-2020) (excl. >30 MW larger hydro)

Renewables excl. large hydro has increased by around 10% p.a. over the past years which is expected to reach
83 GW by the end of FY2020.


Output from renewables has also increased by about 9% p.a. which is expected to reach 158 TWh by the end of
FY2020.
Renewables as a whole incl. large hydro are expected to capture 19.0% (Hydro 7.9%, Solar PV 7.1%, Wind 0.8%,
Biomass 2.8% and Geothermal 0.3%) of generated electricity in Japan in FY2020
Forecast

160 (TWh)(GW) 80

140

70

120

60

100

50

80

40

60

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30
20

40

10

20

0

0

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Utility/Commercial
事業用太陽光solar
PV >10kW
Residential solar PV
住宅用太陽光
<10kW

Biomass
バイオマス
Geothermal
地熱Wind power
風力Medium- and small中小水力
sized hydropower
Renewables
output
再エネ発電量(Right axis)

2020 (FY end)
Source: Estimation by IEEJ

12

Annual growth of installed capacity and output of renewables in Japan(FY2008-2020) (excl. >30 MW of larger hydro)


Utility/commercial solar PV grew more than 7 GW in FY2018, creating a rebound, which is expected to continue at thehigh rate of 6 to 7 GW/year in FY2019-20*.
For solar PV projects that were FIT-certified but have not yet started operation, the operation start deadline was set
at the end of FY2020  Project owners are expected to rush to start operation to preserve their entitlement toobtain the very generous FIT prices of USD 0.3-0.4/kWh offered in 2012-2014.
* For solar PV, the shown value is on an AC basis(GW) 10

Forecast

914 (TWh)
12

8
10

7
6

8

5
6

4
3

4

2

IEEJ © 2019

Residential
solar PV
住宅用太陽光
<10kW

Biomass
バイオマス
Geothermal
地熱Wind
風力 power

Medium- and small中小水力
sized hydropower
Renewables
output
再エネ発電量(Right axis)

2

1
0

Utility/Commercial
事業用太陽光solar
PV >10kW

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

0
2020 (FY end)
Source: Estimation by IEEJ

13

Renewables deployment against the 2030 energy mix target (as of the endof June 2019) (excl. >30 MW of larger hydro)Solar PV is expected to reach 63 GW by the end of FY2020 and likely to surpass the 2030 target of 64 GW in
FY2021.** For solar PV, the shown value is on an AC basisCapacity for biomass, including uninstalled but FIT-certified capacities, is already well over the 2030 target. Even whencontributions from projects facing difficulties in fuel procurement are ignored, meeting the lower end (6 GW) of the 2030 target
range is deemed feasible.
Since wind and biomass are both expected to increase by around 0.4 GW per year in the coming years, the total power generated
by renewables may reach the lower end of the 2030 target range which is 22% share of the total generated power) as early as
the mid 2020s.

(GW) 8070
64GW**

60
46.85 49.31GW**

50
40

Deficitfrom the target
追加必要分

FIT
certified but nonFIT認定済み未稼働
operating
既に稼働
Operating

30
20
10

10GW**IEEJ © 2019

0
Solar PV
太陽光

Wind
風力

6.02 - **Figures show the 2030
energy mix targets.
7.28GW**

1.40 1.55GW**

Geothermal
地熱Hydropower
水力

Biomass
バイオマス
Source: Estimation by IEEJ

14

Challenge: Lowering cost of renewable power generation Cost

Revision of the current FIT scheme in preparation for a new framework that will be implemented after a major
reform of the FIT in FY2020
Competitive sources such as solar PV >250kW and wind: reducing FIT prices by expanding auction

•
•
•
•
•


Regionally utilized power sources incl. 10 - 50 kW class small commercial solar PV, small-geothermal, small-hydro andregional biomass projects: FIT prices are continued to be pre-determined conditionally for regionally consumed power fed
into local area

•

•
•



10-50kW solar PV: must be installed for self-consumption; pre-determined FIT applies to excess power fed into to grid only after
self-consumption
Solar PV projects on farming land are subject to less stringent criteria for qualifying as in-house power generation projects.
50-250kW solar PV: After 2022, pre-determined FIT applies only to the eligible projects to meet the strict criteria of locallyutilised renewables incl. micro-grid

Reducing renewable generation cost through “a major reform of FIT" to be implemented after FY2020
Competitive renewables such as utility/large scale solar PV projects and onshore/offshore wind projects will be integrated
into the markets and become economically independent.

•

IEEJ © 2019

Solar PV>250kW has been shifted to auction FIT from pre-determine FIT.
Onshore wind, currently under pre-determined fixed FIT will be shifted to auction FIT.
Ground-mounted offshore wind, presently under the pre-determined FIT, will be shifted to auction FIT. For floating offshore windon floating platforms, a decision is pending.
Large-scale biomass and palm oil-fired projects are already put out to auction FIT.
For FIT-certified solar PV projects that have not yet started operation, the deadline for starting operation has been set. If it isexceeded, the FIT price is substantially lowered automatically.

Replacing FIT by an FIP (Feed-in Premium), expecting the renewable producers to directly engage in selling their power in thewholesale electricity market.

For regionally utilised power sources such as residential/small commercial solar PV, small geothermal, regional biomass,
small-to-mid size hydro projects, government plans to maintain coverage by FIT for the time being, encouraging selfconsumption and the pursuit of local production for local consumption in line with regional characteristics.
Measure for the FIT-certified utility/large solar PV projects that have not yet started operation: Setting the specified
deadline for starting operation; When it is not met, the certification expires automatically.

15

The results of auction for Solar PV: Cost reduction is realised

In the auction for solar PV taken place in August 2019, the lowest contract price was 10.50 yen (USD0.095)/kWh,and the average contract price was 12.98 yen (USD0.12) /kWh. These are comparable with LCOE of coal (12.3
yen(=USD0.11)/kWh*) and gas (13.7 yen(=USD0.125)/kWh*).

From the 1st auction in November 2017, the lowest and average contract prices dropped by 39% and 34%,
respectively.
* Cited from the estimation by the government’s 2015 Power Generation Cost Verification Working Group.
(Yen/kWh) 20

15

FIT price: ¥14/kWh
Average bid price: ¥12.98/kWh
Lowest bid price: ¥10.5/kWh

10

5IEEJ © 2019

0

第1回入札
1st bid:November2017
2017年11月

Published max. price¥21/kWh targeting 2MW
and more

The 2nd bid (Aug. 2018)
had no winning bidder,with no price below the
unpublished max. price(¥15.5/kWh)

第3回入札
3rd bid:
December
2018
2018年12月

Unpublished max.
price ¥15.5/kWhtargeting 2MW and
more

第4回入札
4th bid:
August 20192019年8月
Unpublished max. price¥14.0/kWh loweringtarget to below 500kW
Source: Author’s own figure

16

Challenge: reconfiguring power grids to address the expansion of VRE
and approach to the sharing of costsSeeking progress in "Japanese Connect & Manage" with emphasis on full use of existing power systeminfrastructure.






While the conventional power grids are the "pull type" design as they passively respond to demands fromrenewable power generators, they will be reconfigured, starting from 2020, into "push type" grids that canproactively respond to demands considering the distribution of renewable resources.



The government plans to introduce a "nationwide cost sharing scheme" to cover the cost ofenhancing/reinforcing inter-regional connection lines.


IEEJ © 2019

Enabling more rational responses to the anticipated power flow (changing the way available capacities arecalculated): This is implemented from April 2018, contributing to expanding the available capacity by about 5.9 GW.
N-1 power control (conditionally permitting the use of emergency reserve capacity): This is partially implemented
from October 2018, contributing to expanding the interconnection capacity by about 40.4 GW.
Non-firm access (with output control requirement): The scheme is now in the design stage. Trials are being
conducted in TEPCO Power Grid's service area.

Among the benefits of enhanced inter-regional connections (lower wholesale electricity price, reduced CO2 emissions
and improved supply stability), the reduction of price and the reduction of CO2 emissions should be paid according to
the basic principle of nationwide sharing, and payment should be collected through the grid-charge system
nationwide. As to benefits specific to renewables, however, the cost is recovered by the FIT surcharge.
Considering the uneven distribution of renewable resources across regions e.g. wind resources are concentrated in
the Northern Japan and solar PV resources are concentrated in the Southern Japan, the leveling of burden is achievedby spreading from specific areas to the whole nation.

To minimize the need for grid enforcement and output control, attempts are being made to reduce demands on
power grids by promoting the in-house and local consumption of renewable power.



These measures are expected to increase the capacities and flexibility of power grids, enabling the expanded
use of VRE (variable renewable energy).

17

Challenge: bearing the cost of disposing of large numbers of solar PV panelsfrom 2030


Since the life of solar PV panels is limited to 25 to 30 years, a large number will have to be disposed of as
waste starting from 2030. There are concerns that some unscrupulous operators may illegally dump panels or
leave them on site.

In 2022, the new scheme will be introduced that obliges the FIT-licensed operators to deposit with an
external fund the future cost of dismantling and removing their solar PV facilities, and to dispose of solar PV
panels and other waste so that their facilities may be properly decommissioned after ceasing operation.


IEEJ © 2019

Targeting all operators of >10 kW solar PV projects including existing projects, OCCTO (Organization for CrossRegional Coordination of Transmission Operators) will collect at source by deduction from the income they makefrom selling power 0.7-0.8 yen (USD 0.006-0.007)/kW from FIT-covered power sales to cover the cost of
dismantling solar PV facilities, and removing and disposing of the panels, and to deposit the money with an external
fund.
This collection and depositing of money will be uniformly done in the 10-year period before the termination of FITbased power purchasing.
Although the money is collected at source, the depositing of money with the external fund does not apply to selfconsumption of power. As the money accumulated for waste disposal may not be sufficient in the case of selfconsumption oriented projects, some additional rules will be enforced.
Reclaiming the deposited funds will require the submission of documents demonstrating the certainty of waste
disposal operation.

18

Accelerated moves toward the commercialization of offshore wind
power projects in Japan

Under the new law to promote offshore wind, steady progress is being made to establish a scheme for thedevelopment of offshore wind projects.



In July 2019, four areas in Japan were designated as “promising areas” where early development is promoted
under the new act. Preparatory activities such as holding local council meetings and national government
sponsored investigations on wind conditions have begun. → This will be followed by "promoted area"
designation after negotiations with local stakeholders at local council meetings. → A power generation project
operator will be selected through a public call for proposals and auction.


In November 2019: An amendment to the Port and Harbor Law was passed.


IEEJ © 2019

Offshore of Goto City, Nagasaki Prefecture, will be the first designated promotion area (exclusively for floating
platform type projects).

To enable the long-term stable use of piers that are capable of handling large/heavy equipment and components as
key infrastructure for offshore wind power projects (few ports in Japan satisfy this condition in terms of loadbearing capacity and space), the government developed a scheme for long-term renting of such ports to wind
power project operators, helping them to secure a base for wind turbine installation works, etc.
The validity of an approval for a plan for the dedicated use of a port/harbor areais extended from 20 years to 30
years.

Although negotiations with local stakeholders such as fishermen are the greatest challenge, the first tender
for the selection of offshore wind power project operators is expected to be held by the end of FY2020. The
moves of interested private business owners are becoming prominent in respective localities.

19

Eleven districts where preparations for offshore wind power projects areunderway under the new law

Japan Sea Offshore of Aomori Pref. (North side)
Japan Sea Offshore of Aomori Pref. (South side)
Offshore of Happo Town and Noshiro City, Akita Pref.
Offshore of Noshiro City, Mitane Town and Oga City, Akita Pref.
Offshore of Katagami City, Akita Pref.
Offshore of Yurihonjo City, Akita Pref. (North / South)

Mutsu Bay, Aomori Pref.

Offshore of Murakami City and Tainai City, Niigata Pref.

Offshore of Choshi City, Chiba Pref.

Areas selected as
potential locations

IEEJ © 2019

Offshore of Enoshima, Saikai City, Nagasaki Pref.
Offshore of Goto City, Nagasaki Pref.
Source: Cited from the document at the 1st Council at the Offshore of Goto City, Nagasaki Pref.

20

(Reference) Concept of the integration cost accrued by the massive
deployment of VRE Sources
Vertical axis: Total cost in the power sector
縦軸：電力部門総費用(assuming carbon（炭素価格を
price is set)

設定した場合）Lowestcost point（コスト最小点）

統合費用
Total
costs
（CINT）LCOE:
Conventional power sources
LCOE分：従来電源（Cconv)
LCOE: VRELCOE分：VRE（CVRE)IEEJ © 20190%

VRE power
generation rate
VRE発電比率100%- When the levelized cost of electricity (LCOE) from VRE is lower than LCOE from conventional power sources,
the total cost of electricity appears to become less as the share of VRE increases, when considering only the
LCOE-proportional part of the cost (the generation cost according to the conventional model, whichcorresponds to "Cconv + CVRE" in the figure above).
- In reality, however, the massive deployment of VRE generates additional costs because of the need for output
control, power storage systems, grid enhancement, and so on. The total of such costs (irrespective of the needsfrom which they arise (CINT in the chart above), which are additional to LCOE, is called the integration costaccrued by the massive deployment of VRE.
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