Page 471 - Sustainable Cities and Communities Design Handbook

Japanese Smart Communities as Industrial Policy Chapter j 21 441

March 2017, the number of subnational governments undertaking these spatial
plans increased from 62 to 348. 14

FISCAL SUPPORT FOR SMART COMMUNITIES
Smartly targeted subsidies for critical infrastructure also help drive the smart
community projects. One example is the METI “Subsidy for the Promotion of
Local Production-Local Consumption Style Renewable Energy Areal Use
Projects.” This subsidy began in fiscal year 2016 with a total value of JPY 4.5
billion and funded 28 separate local projects in the first round for 2016.
METI’s outline of the program’s purposes described it as aimed at fostering
the diffusion of distributed energy. This is because METI portrayed the 3-11
nuclear and natural catastrophes as having led to an increased understanding of
the risks of reliance on centralized generation systems. It stated that in
consequence Japan needed to promote the diffusion of decentralized energy,
particularly systems centered on renewable energy. METI added that the use of
energy management and other technologies, in tandem with the spatial
deployment of energy systems, could help maximize the effective use of local
energy resources. Moreover, the local production/local consumption model
could lead to significant cuts in energy use and costs in normal, nondisaster
circumstances. The system’s disaster resilience role is described as providing
the community with a source of energy in emergencies.
The METI cautions that these systems remain relatively costly. Hence the
subsidy program aims at facilitating the diffusion of these advanced energy
systems, commensurate with local conditions. The goals include reducing the
unit costs of microgrids and other energy management systems through greater
economies of scale, the creation of new business services linked to demand
response and other energy-related services, and the development of energy
systems that can be deployed nationwide.
The METI subsidy program period is 5 years, from 2016 to 2020, and the
primary criterion for assessing the performance of supported projects is
whether overall system efficiencies of 20% or over are achieved. The METI
also points out that the renewable generating capacity eligible for inclusion is
not to be covered by Japan’s feed-in tariff (FIT). As in other countries, such as
Germany, the end of Japan’s FIT is in sight, and the subsidy aims to foster the
nonsubsidized diffusion of distributed renewable energy.
METI’s subsidy is only one of many. From fiscal year (FY) 2015, the MIC
began implementing a similar fund, the “Distributed Energy Infrastructure
Project,” for encouraging the deployment of heat and power grids. This pro-
gram was developed by a special MIC study group, one chaired by Kashiwagi

14. The data and other relevant information concerning Locational Optimization Plans are
available (in Japanese) at the following URL on MLIT’s website: http://www.mlit.go.jp/toshi/
city_plan/toshi_city_plan_fr_000051.html.