Local Energy Governance about Japanese Case:
RE in Japan at Community Level
International workshop on “Local Energy Governance in an Aging Society: Toward a
Sustainable Community using Renewable Energy”
25-26 June 2016, Hanoi
Takuo Nakayama, Ph.D.
Assistant Professor
Graduate School of Economics, KYOTO UNIVERSITY
0The Era of Renewable Energy (RE)
• Japanese Situation
• After FUKUSHIMA DISESTER
• Issue of Widespread use of RE
• Quantitative expansion is not only the purpose
• In the first place REs are decentralized (distributed) energy sources
• REs can contribute to local sustainable development
• It is necessary to raise to make it so
• Case study of ”Ohisama Shinpo Energy CO., LTD”
Increasing Renewable Energy Capacity in Japan
PV Wind Biomass Geothermal Small Hydro
Annual rate of growth
Annual rate of growth
Annual rate of growth (10MW)
2
Source:
Except Large Hydro RPS System Surplus power buyback system METI
FIT system
Japanese Feed-in Tariff (FIT) System
• Japanese FIT system has Introduced in July 2012
•
Remarkable growth of REs Capacity (33% from 2012 to 2014)
•
Promoted investment especially in PV
• Some problem has occurred
•
Grid Capacity (PV or Wind are Variable Power)
•
Necessity of transformation from ”Centralized Power System”(20 century style) to ”Decentralized Power System”(21 century style)
• By the way, Japanese FIT system is one of the most successful public policy
•
Compared to “Environmental Taxes” or “Emission Trading
Scheme”
From Centralized System to De-Centralized System
1. Trend of De-Centralized power supply
• In the first place, REs (Solar, Wind, Small Hydro and Biomasses) are De-Centralized power sources
2. Another purpose of Feed-in Tariff System in Japan
• Revitalization of local economy
• In addition to quantitative expansion of REs
• By ensure the profitability
4
Japanese Challenge toward Local Revitalization by De-Centralized REs
• Attracting external companies does not contribute revitalization of local economy
• This business model bring few land rent or property tax
• RE profit should be attributed to local subject
• Local residents or local company have to launch RE business by themselves
• Without rely on external large company
• It is quite hard way but local subject cannot make new
income or employment
How to Implement “Local Energy Governance” ?
• To make local fund flow
• Local funding collaborate with “Local Banks” or “Local Credit Associations”
• For sustainable local development
• Re-Investing REs profit in local subject
• It is not easy but impossible
• This challenge is worth a try
• De-Centralized REs could be a core of local economy revitalization
• Construction of local unite tackle in relationship
• How to develop human resources?
• How to success the RE business? 6
Technical and Social Issues of RE
• Technical issue of RE
• Focused on mainly up to now
• Social issue of RE
• Developing human resources
• Company organization or Corporate form
• Constructing the business model
• Structure of the governance
• Finance
• Based of Technical dimension, Social dimension is
more important to success RE business.
What is “Local Energy Governance”?
1. Local residents and local companies create business entity in cooperation each other
2. Start electric power sales business by converting local resources to energy
3. Make local economic circulation
4. Go toward sustainable local development
• “Local Autonomy Force” is inevitable for “Local Energy Governance”
• Local residents have to discuss and make decision each other
• Implement the decision by themselves
8
Purpose of “Local Energy Governance” in Japan
• Transition from Centralized power system to De- Centralized power system
• Revolutionary change of energy supply system
• Centralized system : 20 century style
• De-Centralized system : 21century style
• What does “De-Centralization of Energy Supply”
mean?
• Democratization of energy production and consumption
• Democratization and Independence of local economy
“Ohisama Shinpo Energy Co., Ltd.” as a model of
Japanese “Local Energy Governance”
• “Ohisama Shinpo Energy Co., Ltd.” in Iida City,
Nagano Prefecture
• Population of Iida City:
•
101,618 (as of Feb. 2016)
•
4th largest
• Area:
•
658.66
㎢• Industry
•
Agriculture
•
Manufacturing
10
Establishment “Ohisama Shinpo”
• “Ohisama” Symposium
• Sep. 2001
• Citizen of Iida City agreed to promote PV toward global warming
• Establishment of “Minami Shinsyu Ohisama
Shinpo” as a Non Profitable Organization (NPO)
• Feb. 16, 2004
• “Local Energy Production for Local Consumption”
principle
First activity of “Ohisama Shinpo”
• 3kW PV on Nursery roof top
• Donation type
• Enhanced consciousness to local children, nursery staff, parents and residents for
importance of environmental preservation
• ”Sanpo-Chan”, trade mark of “Ohisama Shinpo” worked well for children education about Environmental Energy issue
12
“Mahoroba” project (2004)
• ”Mahoroba (まほろば) ” means Nice Place or Livable Place in Japanese old letter
• Partnership with local government, private sector and Non Profitable Organization in this area
• Introduction of PV, Pellet boiler and stove, ESCO, Natural energy college management
• Establishment of “Ohisama Shinpo” Limited company
• Dec. 2004
Citizen’s Joint Power Station System
• How to fund?
• Citizen’s co Investment (Joint Investment)
• Danish wind power model
• Farmers invest together wind power generation
• Profit can be allocated based on the investment ratio
• Japanese pioneer is “Hokkaido Green Fund”
• “Hamakaze-chan” (2001)
• Hamatonnbetsu town in Hokkaido
• Apply Citizen’s Joint Power Station System
• Started citizens investment from Feb.2005
• Wanted amount (201,500,000JPY) had expired only 2 month
• This system became universal in Japan
14
Citizens co Investment
• Not Charity but Profitable
• Investor can get allotment
• Change the “culture” about Environmental Energy issue
• In many cases, Environmental Energy Issue projects don’t have profitability
• To solve the issue, grant of fund (taxes and donation) are usually casted
• RE power generation can not only profitable but also contribute to solve Environmental Energy issue
(if FIT system exist as of now in Japan)
• Relationship with Environmental issue and Economic issue are
Making Local Money Flow
• Large share of Citizen Investors are living in Metropolis (e.g. Tokyo or Osaka)
• Local profit from REs are back to Metropolis
• As form of principle or allotoment
• Necessity of Local funding
1. Invest local money to RE project 2. Re-invest RE profit to local industry
3. Sustainable local development will be available
• It is important to make Local Fund Flow based on RE
16
“Ohisama 0 Yen” System
“Ohisama Shinpo”
Local Banking Facility Iida City government
Citizen Investor
Housing Owner
Electric Utility Support
Low interest loan
Pay 19,800 Yen per month 9 3.3 kW PV install
with 0 Yen
・Pay electricity bill from Electric Utility
・Sell surplus electricity
Revenue from electricity sales Invest
81,000,000 Yen
・Return in 10 years
・2% yield
”Ohisama 0 Yen” System
• No initial Investment for household PV (3.3kW)
• “Ohisama Shinpo” set PV system on housing roof top
• Housing owner pay 19,800 Yen per month for 9 years
• Housing owner can sell their surplus electricity generated by PV
• If housing owner reduce power consumption, selling surplus power increase (Incentive for energy saving)
• After 9 years, PV system is transferred to the housing owner
• Lowering the hurdle to introduce PV to housing owner
18
Role of Local Banking Facilities
• In this system, “Ohisama Shinpo” bears initial PV system and installation cost
• Financing of “Ohisama Shinpo” becomes severe
• Local banking facilities (Iida Credit Union) play important role
•
Japanese Credit Union works mainly from local company or residents
•
Low-interest loan to “Ohisama Shinpo”
•
Iida City government also support this scheme
• RE power generation project is good investment project in Japan
•
In terms of Bank Finance
•
Expected return of investment as long as RPS or FIT scheme
Example : Roof top PV system
installed by “Ohisama 0 Yen” system
20
Iida City as Birth Place of Japanese Feed-in Tarrif (FIT)
• Aachen in Germany : Birth Place of FIT
• Introduced FIT system ahead of the Federal government in 1995
• At Municipality level
• Iida in Japan
• Introduced FIT system ahead of the National government for “Ohisama Shinpo” (2005 〜 )
• Iida City beard the risk of variable electricity selling price
• Under the Renewables Portfolio Standard (RPS) scheme in National level
Local Value Added Analysis
• Developed by Institute of Ecological Economics (Institut für ökologische Wirtschaftsforschung:
IÖW) in Berlin
• Value Chain approach
• Based on Porter M. E. (1985) Competitive Advantage:
Creating and Sustaining Superior Performance
• Aim to measure RE economic effect precisely at municipal level
• Applying Japanese RE power sources
22
Components of Local Value Added
23
revenues, on the other hand, flow directly into the muni- cipal treasury.
Profits
To determine profits at each step of the value chain, the op- erating profit margin is utilized, which compares the annual profit (before taxes) of an enterprise to the turnover achieved in the same period. In this case, before-tax results were used for the calculation. The profit-turnover ratio is drawn from statistics compiled by Germany's central bank, the Deutsche Bundesbank [9], which extrapolates figures based on data from the annual financial statements of German companies for the years 1997 to 2009. These pooled data include results from approximately 140,000 fi- nancial statements per year of non-financial enterprises, including both incorporated and non-incorporated com- panies. The classification of enterprises according to busi- ness activity in the Deutsche Bundesbank study is based on the German Classification of Economic Activities (WZ- 2003) from the Federal Statistical Office. Because the various REs are not specifically itemized here, comparable branches for each value chain step were consulted. The average profit-turnover ratios of the various branches were used to establish a mean value for the years 2000 to 2009. In two cases, a different method had to be applied. For the assess- ment of the profits in the system operator stage, before-tax earnings were calculated with the help of average return on equity for each of the corresponding RE technologies; this information was drawn from the Renewable Energy Sources Act (EEG) Progress Report [10]. The profits earned in con- nection with the provision of wood fuels were calculated from turnover minus cost of provision.
on income, this method also provides results on employ- ment effects. Initially, the employment effect is calcu- lated as the number of persons employed. The Federal Statistical Office publishes figures on employment num- bers and turnover according to business branches fol- lowing its own German Classification of Economic Activities (WZ-2008); these figures, broken down by branch, are allocated to the corresponding steps of the value chain. Thus, an indication of jobs per euro of turn- over can be determined, which, when multiplied by turnover per kilowatt (kW) of installed capacity, yields a figure for the number of employees per kW. Wages and salaries in euros per kW are determined on the basis of average gross annual income in the business branch of the corresponding value chain step, as determined from Federal Statistical Office sources.
An exception is the calculation of management salaries for the system operator stage. Here, typical specific man- agement compensation figures on a per kW basis were drawn from an analysis performed as part of the IÖW project EXPEED [11]. The number of employees per kW is then determined as the quotient of the specific income and a typical gross monthly income for the correspond- ing Federal Statistical Office occupational category. In the case of the provision of wood fuels, the employment and income effects are determined on the basis of the specific working-time requirement for each of the value chain steps.
Taxes
Calculation of the tax load of an enterprise is dependent on its corporate structure. The enterprises generating value added are therefore subdivided into incorporated
municipal value added
after-tax profits of the participating
enterprises
taxes paid to the municipality
trade tax
(almost entirely paid to the municipality)
municipal share of income tax
net incomes of the employees
involved
Figure 1 Components of municipal value added.
Heinbach et al. Energy, Sustainability and Society 2014, 4:1 Page 4 of 10
http://www.energsustainsoc.com/content/4/1/1
Source: Heinbach et al. (2014) p.4
Local Value Added from
“Ohisama Shinpo” Projects
税
所
投資 投資 投資
投資 地域経済 地域経済 地域経済 地域経済
O&M 事業運営・ファンド管理 融 地方税収
税
22 所
22 22 22 22 22
2222 22222222 111111110303030303030303 22222222 66666666 9797979797979797
売上 売上 売上 売上 685 685 685 685
地域経済 地域経済 地域経済 地域経済 付加価値 付加価値 付加価値 付加価値
333 333 333 333
98 9898 9898 9898
98 33333333
土地
投資 投資 投資
投資の の の段階 の 段階 段階( 段階 (( (一時的効果 一時的効果 一時的効果 一時的効果 投資
投資 投資
投資の の の段階 の 段階 段階( 段階 (( (一時的効果 一時的効果 一時的効果 一時的効果/ / / / / / / /¥
¥¥¥¥¥¥¥百万百万 百万) 百万 百万) 百万 百万 百万 )) ) )) ) 事業運営 事業運営 事業運営
事業運営の 事業運営 の の段階 の 段階 段階( 段階 (( (継続的効果 継続的効果 継続的効果 継続的効果 事業運営 事業運営
事業運営の の の段階 の 段階 段階( 段階 (( (継続的効果 継続的効果 継続的効果 継続的効果/2004~2013 /2004~2013 /2004~2013 /2004~2013 /2004~2013 /2004~2013 /2004~2013 /2004~2013年累計 年累計 年累計 年累計 年累計 年累計 年累計 年累計/ / / / /¥ / / /
¥¥¥¥¥¥¥百万百万 百万 百万) 百万 百万 百万 百万) )) ) )) )
おひさま おひさま おひさま
おひさま進歩 おひさま 進歩 進歩 進歩エネルギー エネルギー エネルギー エネルギー( (( (株 株 株 株) )) )事業 事業 事業 事業による による による による地域経済付加価値 地域経済付加価値 地域経済付加価値 地域経済付加価値 おひさま おひさま
おひさま進歩 進歩 進歩 進歩エネルギー エネルギー エネルギー エネルギー( (( (株 株 株 株) )) )事業 事業 事業 事業による による による による地域経済付加価値 地域経済付加価値 地域経済付加価値 地域経済付加価値 の の の
の累計 の 累計 累計 累計ポテンシャル ポテンシャル ポテンシャル ポテンシャル の の
の累計 累計 累計 累計ポテンシャル ポテンシャル ポテンシャル ポテンシャル ( (( (( (( (2004~2013 2004~2013 2004~2013 2004~2013 2004~2013年度 2004~2013 2004~2013 2004~2013 年度 年度) 年度 年度) 年度 年度 年度 )) ) )) )
21 Sep-15
太陽光発電事業 太陽光発電事業 太陽光発電事業
太陽光発電事業 省省エネ省省エネエネエネ((((エスコエスコエスコエスコ))))事業事業事業事業 グリーングリーングリーングリーン熱供給事業熱供給事業熱供給事業熱供給事業
#1 #1
#1 #1
信州 信州 信州 信州おひさまおひさまおひさまおひさま
ファンド ファンド ファンド ファンド
(
((
(2004)2004)2004)2004)
#2
#2
#2
#2
温暖化防止 温暖化防止温暖化防止 温暖化防止 おひさまファンド おひさまファンド おひさまファンド おひさまファンド
(2007) (2007) (2007) (2007)
#3 #3
#3 #3
おひさま おひさま おひさま おひさま ファンド ファンド ファンド ファンド (2009) (2009)(2009) (2009)
#4 #4
#4 #4
信州 信州 信州 信州・・・・結結結結いのいのいのいの
国 国 国 国おひさまおひさまおひさまおひさま
ファンド ファンド ファンド ファンド (2010) (2010) (2010) (2010)
#5 #5 #5
#5
信州 信州 信州 信州・・・・結結結いの結いのいのいの
国 国 国 国おひさまおひさまおひさまおひさま
ファンド ファンド ファンドファンドIIIIIIII
(2011) (2011) (2011) (2011)
#6 #6
#6 #6
地域 地域 地域 地域MEGAMEGAMEGAMEGA
おひさま おひさま おひさま おひさま ファンド ファンド ファンド ファンド (2012) (2012)(2012) (2012)
#7 #7
#7 #7
おひさま おひさまおひさま おひさま ファンド ファンド ファンド ファンド7777
(2013) (2013) (2013) (2013) 投資・資 運用
投資・資 運用
営業・企画 据付け・建設 電気工事 地方税収
所 5151515151515151 1111111111111111 7070707070707070 66666666 2929292929292929 44444444 1717171717171717
投資 投資 投資 投資 額 額 額 額 1,813 1,813 1,813 1,813
付加価値 付加価値 付加価値 付加価値
188 188 188 188
Operation Stage (continuously/ cumulative)(million JPY)Sales Net
Income
Project Management
After TaxProfit
Finance Rent Local Ta
Local Value Added
Local Value Added Local Value Added After TaxProfit
Investment Stage (one time)(million JPY)
Sales , Planning Installation Electrical
Construction Local Ta
PV Projects ESCO Projects Thermal Supply Projects
Investment/ Fund Management Investment/ Fund Management
Fund Fund Fund Fund Fund Fund Fund
Invest ment
Source: Nakayama et al. (2016) p.110 24
1,000 1,500 2,000
おひさま おひさま おひさま
おひさま進歩 進歩 進歩エネルギー 進歩 エネルギー エネルギー エネルギー( (( (株 株 株 株) )) )事業 事業 事業による 事業 による による による地域経済付加価値 地域経済付加価値 地域経済付加価値 地域経済付加価値 おひさま
おひさま おひさま
おひさま進歩 進歩 進歩エネルギー 進歩 エネルギー エネルギー エネルギー( (( (株 株 株 株) )) )事業 事業 事業による 事業 による による による地域経済付加価値 地域経済付加価値 地域経済付加価値 地域経済付加価値の の の の の の の の 累計
累計 累計
累計ポテンシャ ポテンシャ ポテンシャ ポテンシャ 累計
累計 累計
累計ポテンシャ ポテンシャ ポテンシャ ポテンシャルの ルの ルの予測 ルの ルの予測 ルの ルの ルの 予測 予測 予測 予測 予測 予測 ( (( (( (( (2030 2030 2030 2030 2030年 2030 2030 2030 年 年まで 年 年まで 年 年 年 まで まで) まで まで) まで まで )) ) )) )
地域経済付加価 地域経済付加価 地域経済付加価
地域経済付加価値 値 値 値( ( ( (累計 累計 累計 累計) ) ) )
事業者収 事業者収 事業者収
事業者収益 益 益 益 ( ( ( (累計 累計 累計 累計) ) ) )
1,778
715 100
万 万 万 万
¥9
人 人 人 人 雇用創出 雇用創出 雇用創出 雇用創出
(
((
(
2013年まで) 年まで) 年まで) 年まで)
0 500 1,000
補助 補助 補助
補助金 金 金 金( ( ( (累計 累計 累計 累計) ) ) )
事業者収 事業者収 事業者収
事業者収益 益 益 益 ( ( ( (累計 累計 累計 累計) ) ) ) 従業員可処分所得
従業員可処分所得 従業員可処分所得
従業員可処分所得( ( (累計 ( 累計 累計) 累計 ) ) )
市町村 税収 市町村 税収 市町村 税収
市町村 税収 (累計) (累計) (累計) (累計)
688 715
634 373 Million JPY
9 Person Employment Until 2015
Local Value Added (cumulative)
After Tax Profit (cumulative) Net Income (cumulative) Subsidy (cumulative)
Local Tax (cumulative)
Simulation of Local Value Added
by “Ohisama Shinpo” Operation
おひさま おひさま おひさま
おひさま進歩 進歩 進歩 進歩エネルギー エネルギー エネルギー エネルギー( (( (株 株 株) 株 )) )事業 事業 事業 事業に に に に おひさま
おひさま おひさま
おひさま進歩 進歩 進歩 進歩エネルギー エネルギー エネルギー エネルギー( (( (株 株 株) 株 )) )事業 事業 事業 事業に に に による よる よる よる南信州 よる よる よる よる南信州 南信州 南信州 南信州の 南信州 南信州 南信州の の の の の の の 地域 地域
地域 地域 地域 地域
地域 地域経済付加 経済付加 経済付加 経済付加 経済付加 経済付加 経済付加 経済付加価値 価値 価値 価値 価値 価値 価値 価値( (( (( (( (累計 累計 累計 累計 累計 累計 累計 累計) )) )) )) )
689
1,500 373
2,000
100
万 万 万 万
¥1,778
971
全国 全国 全国 全国 全国 全国 全国 全国
南信州 南信州 南信州 南信州 南信州 南信州 南信州 南信州
85.7%8.7%
おひさまファンドへ 出資者比率 おひさまファンドへ おひさまファンドへ 出資者比率 出資者比率 おひさまファンドへ おひさまファンドへ 出資者比率 出資者比率 おひさまファンドへ おひさまファンドへ 出資者比率 出資者比率 おひさまファンドへ 出資者比率
(出資額)
(出資額) (出資額)
(出資額) (出資額)
(出資額) (出資額)
(出資額)
それ以外 それ以外 それ以外 それ以外 それ以外 それ以外 それ以外 それ以外 長野県
長野県 長野県
長野県 南信州 南信州 南信州 南信州
5.6%25 Sep-15
103 8
716
43
133 133
689
97 689
75
239
0 500 1,000
333 216
971
事業者収益 事業者収益 事業者収益 事業者収益
従業員可処分所得 従業員可処分所得 従業員可処分所得 従業員可処分所得
市町村 税収 市町村 税収 市町村 税収 市町村 税収 全国 全国 全国
全国 全国 全国 全国
全国 南信州 南信州 南信州 南信州 南信州 南信州 南信州 南信州
85.7%2013
まで まで まで まで
2030まで まで まで まで
Million JPY
Investment Ratio to
“Ohisama Shinpo”
Iida Area
Nagano Pref.
Other Area
Until 2013 Until 2030
Japan Iida
Area
Japan
Iida Area
Local Tax
Net Income After Tax Profit
Simulation of Local Value Added of Iida Area: Investment Ratio
Source: Nakayama et al. (2016) p.112 26