Japan renewable energy companies bet on Taro Kono becoming prime minister

TOKYO, Sept 24 Reuters - Renewable energy companies are betting that the leading contender for the race to become Japan's next prime minister, Taro Kono, will unleash changes allowing more market access and a fairer playing field after years of neglect.

The 58-year-old has long championed more renewable supplies in China's US electricity sector, which is about $150 billion, the largest national power market outside Japan.

Investors have been buying renewable energy shares hoping that the popular Kono wins the final vote of Sept. 29, for the next Leader of LDP and - by virtue of its majority in parliament - Japan's next prime minister.

Japan's energy mix is already changing with renewables on the rise replacing fossil fuels that shored up the power following the 2011 Fukushima nuclear disaster in Japan.

Kono, a former defence minister and scion of a political dynasty, is currently in charge of administrative reform and has clashed with the powerful industry ministry METI which has supported a revival of the moridund nuclear sector.

The government has anxiously pursued deregulation over the past year, and a lot has changed. If Kono is elected, Japan's energy shift will advance further, said Mika Ohbayashi, director of the Renewable Energy Institute, founded by SoftBank Corp. Chief Executive Masayoshi Son.

Renewable energy has also received a boost from outgoing Prime Minister Yoshihide Suga's pledge last year to align Japan with Europe and declare a 2050 carbon neutrality target.

The attitudes of the officials at METI have drastically changed. Their attitudes toward renewable energy startups used to be rather cold, but they can't afford to continue that stance, said Koki Yoshino of Japan Renewable Energy, which operates nearly 50 wind and solar power projects.

In 2018 a panel convened by Kono, who was then Foreign Minister, caused controversy by standing side in the energy debate, normally METI's preserve, giving a call for a call to get rid of nuclear power and coal while dramatically increasing renewables.

Last year, Kono set up a taskforce to take down regulatory hurdles holding Japan from shifting to renewables.

The world's fifth largest economy and third biggest carbon emitter is heavily reliant on imported fossil fuels 10 years after the Fukushima catastrophe, which almost killed off its nuclear sector, the source of a third of Japan's electricity before 2011 in its nuclear technology.

Renewable energy is fast catching up and contributed to 22% of Japan's energy supplies last year, meeting a recent government target a decade earlier than schedule and even more than coal in one quarter.

In spite of this growth, critics say METI introduced rules that make it easy to force solar plants to shut down, known as curtailment, when supplies are abundant.

Connections for innovative projects are also withheld at the whim of entrenched companies, Kono says on his home page where he outlines his plans.

Rules governing the use of a major transmission line that connets Hokkaido to Japan in the north have to be revised to allow more renewables into the mix, Kono says.

Electricity transmitted by the line has to be declared a day ahead of real transmission, making it difficult for weather-dependent renewables to transmit power to Tokyo, which is currently underutilized, says.

METI has increased the target for renewables to produce 36 - 38% of Japan's electricity by 2030, up from 22 - 24%, and has set auction rules for offshore wind, one of fast growing sectors in other parts of the world.

Renewable energy is also popular and opinion polls show consumers, still wary of nuclear power, want more greener options, while blue chip companies have lobbied the government to ease regulations so they use more emissionless sources.

Yusuke Kojima, director of Looop Inc, an electricity and storage retail start-up that also sells solar power plant and battery products, said he hoped Kono would support the industry and said that recent policy changes marked a big change for his business.

In the past, we could not prioritise renewable energy because Japan at a whole didn't think of it as a main source of power. But the carbon neutrality pledge and other policies mean renewables are now on the table, said Kojima.