4. Tamaden installs solar panels on the borrowed roof and connects them to public grid.
5. Tamaden earns revenue from selling solar power to the grid (hereby the use of nation's feed-in tariff system)
6. From that revenue, Tamaden pays rent to the roof owner, dividends to investors who bought the bonds, and pays back the loan.
That's it. In theory, everything works perfectly. In reality, it works moderately well. In its short year-and-a-half history, Tamaden has launched two solar powerplants: one on the roof of Keisen University (恵泉女学園大学, 30 kW) and the other at Yuimaru Hijirigaoka (ゆいま～る聖ヶ丘, 67 kW), both in Tama, Western Tokyo.
This model does work, but whether it works as a for-profit enterprise is another question. When I visited Tamaden's solar plant on the roof of Keisen University and heard Mr. Sadatsugu Ohki, Tamaden's vicepresident, explaining their journey, my impression was that Tamaden is a bit struggling. The single biggest headache seems to be financing - How to slice the pie?
The pie - revenue from solar power sales - is too small for so many eaters, and its size is pretty much fixed. Installed panels can only generate so much electricity.
Revenue from electricity sales (売電収入) is economically viable if an individual or a company can keep all or most of the profit from electricity sales. Then the income is substantial. (Whether this model is socially responsible or desirable is another question. → Consider mega solar power plants that are wonderful moneymaking machines for corporate investors, but bring little or no benefit to local economy.)
But if revenue from electricity sales is to be divided between the company that installed the panels (salaries and company running costs), the financial institution (loan repayment), the roof owner (rent), the investors (dividends) and whoever else comes in between, inevitably someone will end up hungry. After a due share is paid to the roof owner, the investors and the bank, Tamaden is left with specks that can hardly cover employees' salaries.
There are also other issues, for instance finding the right roof. In a city full of buildings and roofs, finding the right roof is surprisingly difficult. Few roofs fulfill all requirements necessary for solar power generation. The roof must be big enough (installation area of more than 100m2), suitable for solar panels (the roof must be sunny and able to bear heavy load of several tons, the building can't be too high, etc). Roof owner should also have the prospect of staying in the same place for next two decades (few private companies can promise this).
Another issue is that the fixed price per kilowatt hour of electricity sold to the grid (売電単価) is getting lower every year - last year it was 42 yen/kWh, this year 38 yen and next year even less. This means that profit per kWh from future plants will be lower, but the costs of paying roof rent, dividends, loan, and salaries, will be the same.
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However, these are universal problems that everyone trying to build community power plant has to consider. Here I want to focus on the question of slicing the pie, because this question specifically applies to Tamaden and to the question in the title - can a community power plant be a successful for-profit-enterprise?
My visit to Tamaden prompted me to believe that for-profit probably won't work. So is Tamaden doing it wrong and should it quit? No! Tamaden is trying to build sustainable community power plants and that's definitely a right thing to do. Renewable energy build by the people for the people is a new field where everyone is beginner, and trial-and-error is the only possible approach. Tamaden is doing us a favor by accumulating know-how from their own trials and errors, and so smoothing the way for those who come next.
From the outsider point of view, there are two different ways how to solve Tamaden's problem with financing:
1. Find another pie to slice - additional source of income.
Organizing on-site excursions, such as the one I participated, is a source of income, but obviously too small. At the moment, though, I can't think of any other realistic source of income.
2. Go non-profit.
If the initiative is socially desirable but not profitable, settle for a non-profit approach with volunteers instead of employees. The obvious challenge is how to sustain high motivation of volunteers who have other full-time jobs. Keeping volunteers' morale using solely the psychological reward of doing the right thing has its limits. But people in Tamaden must know the pros and cons of profit versus non-profit better than anyone else.
In fact the second option – going
non-profit - is what Tamaden is doing right now. As Mr. Ohki, who showed us around the
Keisen solar plant site, said:
“We have to constantly remind ourselves that
our goal is not moneymaking.”
Tamaden, a limited liability company, works closely with non-profit Tama Energy Association (多摩エネ協 = 一般社団法人 多摩循環型エネルギー協会). Indeed, Mr. Ohki's business card featured his position as a Tamaden vicepresident on one side, and as a member of the board of directors of Tama Energy Association on the other.
Other Tamaden employees also overlap with Tama Energy Association members.
So what is this article about if the problem is already solved? Well, I can't help feeling slightly betrayed - something is shown as a successful business model, but in fact it is a successful non-profit model.
Other than that, I'm keeping my fingers crossed for Tamaden in finding their next roof and spreading citizen-driven renewable energy projects in Tama and elsewhere.
Ganbare Tamaden!
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