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Abalance pushing green energy forward in Japan

Interview - August 25, 2023

Providing comprehensive support for all companies that want to introduce renewable energy, the Abalance Group continues to go from strength to strength.

CEO, ABALANCE GROUP
RYU JUNSEI | CEO, ABALANCE GROUP

I would like to start by asking for your perspective on Japan's energy mix. In recent years, we have seen the Kishida administration promoting a renewable energy mix, particularly in the wake of the Fukushima disaster in 2011, which led to a decline in nuclear energy usage. The interim goal, before reaching neutrality, is to achieve a 46% reduction by 2030. However, many people say that this target is too ambitious, and that nuclear energy could still help Japan. They claim that Japan's current energy mix hampers its international competitiveness, as manufacturing costs here are three times higher than in China and twice as high as in the United States, with a significant portion attributed to energy expenses. What is your opinion on the ideal energy mix for Japan, and do you agree that the current energy mix robs Japan of its international competitiveness?

Before I address your inquiry, allow me to provide some background information about our company and the reason behind my involvement. Our company is in this industry because of what we call the “polar bear rescue activity”. An article on this topic was published in the Nikkei newspaper.

The inspiration for my entry into this industry can be traced back to my university days. Upon graduating, I decided to pursue a career in the solar energy industry after having significant experience.

During a visit to Takashimaya Department Store in Shinjuku, I witnessed a polar bear on a melting glacier, which deeply impacted me. It symbolized the global climate crisis, and I strongly felt the need to make it my future mission to prevent such occurrences.

That marked the beginning of my interest in this industry. Additionally, I chose to include a picture of Mount Fuji on my business card because I have great admiration for it. I take immense pleasure in experiencing the four distinct seasons of Mount Fuji, starting from October when the mountain is covered in white snow.

The snowfall accumulates throughout the winter, reaching its peak in February, and gradually recedes as spring approaches. I hold a genuine desire to continue enjoying these seasons. However, if global warming persists, we risk losing this opportunity. Hence, it is imperative for me to protect the environment.

Regarding your mention of the sudden shift to renewable energy by the government on March 11, 2011, it was driven by the urgent need to address the impending energy shortage rather than solely to reduce CO2 emissions or mitigate global warming.

As a result, 54 nuclear power plants were abruptly shut down, and the government was compelled to pursue alternative energy sources, including solar power, to make up for the shortfall. In 2012, there was an initial solar boom, however, the general public held reservations about the cost and perceived risks associated with solar power. They viewed it as expensive and potentially fraudulent.

Over time, both the government and private sectors have come to recognize the importance of promoting green energy. The severity and immediacy of the threats posed by climate change and global warming have gradually become apparent to the wider population.

When I now introduce others to our business, which encompasses solar power generation, production of solar panels, and involvement in wind power and biomass, people show genuine interest and respect for my endeavors.

Back in 2003, when I first expressed my aim to promote green energy, people considered it a crazy idea. However, now I am respected by them. It is important that all of Japan becomes highly aware of global warming and unites towards a common goal. Fulfilling our objectives is of utmost importance.

Currently, we are hiring new employees, and our workforce has been increasing by 50% each year. Even those who were initially not involved in the green industry become well-versed in green technology within a year or two and take pride in the business they are engaged in.

Allow me to elaborate on recent developments in the industry. When private companies, especially listed companies, actively engage in business with us, such as installing solar panels or participating in wind power generation, it brings about a significant change.

The government and financial service agencies should strongly encourage the private sector to make this transition. Additionally, two years ago, a system called TCFD (Task Force on Climate-related Financial Disclosures) was established, which mandates prime companies to submit reports on their efforts and results in CO2 reduction towards Sustainable Development Goals (SDGs).

This morning, our bank's management visited us, and all banks in Japan are actively promoting and pushing towards SDGs and green energy. What I mean to convey is that the entire society is striving to create a favorable atmosphere and momentum towards achieving SDGs, reducing CO2 emissions, and embracing green energy.

 

You mentioned the feed-in-tariff (FIT) which was set up by the government to incentivize private organizations such as yourselves to build this infrastructure for renewable energy. If we look towards Europe, they're already in a post-FIT system. Power purchase agreements (PPAs) with corporate entities have become the norm. Japan is in the early stages of this transition. Could you tell our readers what role your kind of company will play in this transition as you look to take that responsibility from the government?

It's a very good question. In Japan, we have been involved in green energy and CO2 reduction, primarily through the FIT system, which provides a tariff of around ¥10 per kilowatt-hour. However, in comparison, PPAs with corporate entities offer a higher rate of ¥15 or more per kilowatt-hour. When selling excess power, the price can reach ¥10 per kilowatt-hour. Thus, PPAs are more financially lucrative. Gradually, even in Japan, there is a shift from FIT to PPA.

As you pointed out, when compared to Europe, Japan still lags behind. Last year, I visited five European countries for about ten days in August, and in October, I spent a week visiting seven European countries to observe the situation there. I strongly felt that the awareness of green energy and environmental issues in Europe is significantly higher than in Japan, although the situation could be influenced by factors such as the conflict in Ukraine.

However, if we compare it to the past, when there were strong proponents of atomic energy and nuclear power generation in politics and the power generation sector, there has been a notable change.

Prime sector companies are now mandated to report their progress towards achieving SDGs, and the government is actively instructing financial institutions and banks to support private sectors in pursuing green energy. While Japan is still behind Europe, the overall momentum is increasing.

Actually, many companies have already shifted to PPA because they have been unable to rely on the existing power infrastructure. These companies generate their own power and consume the energy they produce. The traditional FIT system is no longer suitable, although it still exists. The transition to PPA is still progressing.

Our company plays a role in promoting green energy and solar power generation by offering comprehensive one-stop solutions. We have a production facility in Vietnam that manufactures solar modules, generating slightly less than five gigawatts.

We offer a one-stop solution from planning to construction and also include operations and maintenance, and there aren't many companies like that in Japan. As part of our efforts, we have accumulated knowledge and expertise in green energy, and we aim to transfer that knowledge to Japanese corporations interested in adopting such technologies.

To facilitate this, we recently established a decarbonization business division that offers consultation services to Japanese companies seeking to set up solar panels or engage in green energy initiatives. Our mission is to nurture and support Japanese companies so they can achieve their green energy goals independently.

 

I'd like to ask about the focus on solar, which is very interesting to me. Japan has the highest ratio of solar panels per square kilometer of flat area in the world. This is particularly significant considering Japan's mountainous terrain, which covers 75% of the land mass. While Hokkaido offers ideal conditions with its vast flat areas, we also hear about the development of technologies for using solar panels on walls and in smaller spaces will soon become a pressing need. As a manufacturer of solar cell modules, could you explain why you initially chose to focus on solar power? Additionally, looking ahead for Japan, how can new locations and adaptations be utilized for solar panel installations?

Let me first explain about the brand called Maxar®. I joined this project together with our team members and we chose this name. There is no equivalent in the English language. We want to generate power in a maximized way.

In the past, we collaborated on research and development with a renowned professor from Tohoku University, a Nobel Prize candidate. His vision was to cover Japan's entire energy needs by setting up solar panels, covering approximately half of Hokkaido's land area.

Unfortunately, he passed away before realizing this dream, so I have taken up his mission and aim to fulfill his vision. He had hoped I would win the Nobel Peace Prize, as I worked on the project and remained committed to continuing our joint research and not abandoning his entrusted mission.

One significant challenge in realizing this vision is delivering the generated energy from Hokkaido to the mainland. Although Hokkaido has ample flat land, the transportation of energy to other regions poses difficulties using traditional methods.

However, the government has set a goal to reduce CO2 emissions by 46%, compared to 2013 levels, by 2030. Solar panels can be installed not only on land but also on factory rooftops, and we plan to make use of such opportunities.

Additionally, we are confident in the concept of solar sharing. In Japan, the agricultural industry has been declining, leaving a considerable amount of idle or abandoned farmland. We can utilize this land or even install solar panels alongside crops.

For instance, in Tokyo, there are solar panel-installed walls and rooftops where we can implement this technology. We have acquired patents for specific installation techniques and aim to invest more in R&D to further enhance these installation methods. This will enable us to install solar panels not only in rural or mountainous areas but also on urban rooftops and within cities.

In the past, we have even developed a solar tree. It consists of a reinforced steel or concrete core, with branches made of sturdy metal or rebars resembling scaffolding. The solar panels are installed on these branches, creating a solar tree. We have previously developed and worked on creating such solar trees

Additionally, we have flexible solar panels that can be bent, and we are continuously working on refining and developing our products. We aim to make solar panels installable anywhere, and we are constantly thinking about how to improve our products.

Next year in July, I will be visiting France and attending the famous Le Mans 24-hour race. We were invited to go because our company is involved in hydrogen-related technologies. Nissan is using our technology, so our company is involved not only in solar power but also in hydrogen and wind power. We conduct wind power generation in Hokkaido, and we are also working on establishing biomass power generation in Cambodia.

 

Hydrogen is being hailed as a revolutionary energy source of the future. Of course, it's very clean, it's very cheap to make, but transporting and storing it is a huge issue to make a cost-efficient business model with it. Do you have any solutions when it comes to hydrogen that you can share with us?

We are dedicated to reducing CO2 emissions and creating a cleaner world. We are constantly accelerating our efforts, and I started this company alone, but now we have more people joining us who are proud of, and passionate about, what they do.

We don't consider other companies in the industry as rivals but rather as partners because no single company can achieve such lofty goals alone. We welcome the increasing number of companies participating in this business and are happy to share our know-how. We believe in working hand in hand to fulfill our shared goals of promoting renewable energy, including solar power, reducing CO2 emissions, and achieving the SDGs. Then we will be able to realize a 46% reduction in 2030 and also zero emissions in 2050.

 

As for your international operations, you've done the biomass project in Cambodia, you have the solar power business, and other projects in Vietnam. Over the next few years, which other countries or regions would you be interested to grow your business in?

Regarding international operations, there are no borders to achieving our SDGs. We currently operate in five countries, including Vietnam and Malaysia, for solar power. We have a factory only in Vietnam, but if there are potential opportunities in the future, such as in America, Europe, or Africa, we are interested in establishing or expanding production facilities in those regions.

Right now, we are in 2023 and demand for solar power has increased and may fluctuate, but our main goal is for at least the advanced countries to achieve zero emissions in 2050, and for non-advanced countries to realize zero emissions by 2060 or 2070, so it's a mid to long term goal.

We may at some stage be faced with the renovation of obsolete solar panels, and hydrogen technology might be required. We don't know what the future requirements will be, but whatever they may be, we would like to offer products that suit the needs of that time.

 

Let's imagine that we come back in the next two years and have this interview all over again. What would you like to tell us? What are your dreams for this company, and how would you define Abalance for our readers?

I envision growing our sales by 150%. We already have a factory in Asia, but we also plan to explore the possibility of establishing production facilities in the US or Europe. When we have this interview again in two years, I would like to be appraised by you and hope to receive positive feedback from you, acknowledging that we have done a good job in realizing our goals.

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