How Japan can refuel its renewable energy pledge

The country faces challenges in terms of its system and regulations.

Japan can achieve its goal of tripling its renewable energy capacity by 2030 by addressing its structural and institutional bottlenecks, according to a new report by the Institute for Energy Economics and Financial Analysis (IEEFA).

In a new report, IEEFA noted that ten major Japanese electric utilities control nearly 75% of installed power capacity but own less than 0.3% renewable capacity. Moreover, 52 renewable energy project developers exited the market in 2024, including eight bankruptcies.

IEEFA energy finance specialist for Japan Michiyo Miyamoto said the country’s renewable energy growth challenges are not technological or economic but systemic and regulatory.

“Contributing factors include political and corporate reluctance to transition to renewables and limited use of relevant policies. Technical and infrastructure constraints causing curtailment, and geographic discrepancies between renewable development costs and benefits create additional obstacles,” said Miyamoto.

However, several prefectures, such as Fukushima, Saga, Akita, and Hokkaido, have shown progress. They have set local renewable energy targets, engaged communities, and mobilised regional finance to support clean energy expansion.

Miyamoto said Tokyo should focus on scaling this instead of relying on fossil fuels for backup.

“Priorities should include reforming grid access rules, modernising market design, strengthening enforcement of the existing Non-Fossil Certificate (NFC) obligations for major utilities, and enabling deployment paths such as power purchase agreements (PPAs),” she added.

The report also noted that Japan lacks a comprehensive framework for transmission development. There are also gaps between renewable energy supply and demand in urban and rural regions.

“In prefectures like Fukushima, Akita, Saga, and Hokkaido, proactive local leadership, early zoning, transmission investment, and engagement with local finance have enabled tangible renewable energy growth. These regions are models for what can be accomplished through localised strategies,” Miyamoto said.

The IEEFA report urges Japan to accelerate renewable energy deployment by establishing a specific target to triple renewable energy capacity through auctions and procurement mandates, and promoting the expansion of corporate and community PPAs through regulatory and financial support.

“Japan’s recent auctions have proven the viability of offshore wind projects and established a replicable framework for rapid scaling. The country can attract domestic and global capital into a previously dormant sector, utilising clear regulation, robust competition, and designated infrastructure,” said Miyamoto.

“If grid connection and supply chain constraints are addressed, Japan could become Asia’s leading offshore wind hub,” she added.