Powering ahead

Hear from the man who’s shaking up the Japanese energy industry.

By Steve Coomber 26 May 2015

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Japan has long been reliant on imports to meet its energy resource needs.  In the 1980s and 1990s, power generation was largely based on imported oil and fossil fuels, with the contribution of domestic nuclear power steadily increasing to make up about 30 per cent of Japan's electricity generation by the 2000s.


There was some early progress on developing a thriving renewables sector, particularly in hydroelectric power and then photovoltaic power in the early years of the new century. However, as the world headed into the 21st century, and many countries were powering up their renewables strategies, Japan showed little interest in following their lead.


Industry transformer


Isono, who had taken a bachelor's degree in environmental information, was studying part-time for a master's degree in environment policies between 2006 and 2008. Although he joined Clean Energy Factory as a project manager in 2006, things did not look that promising and Isono was contemplating other career options. "I was in the Japanese renewable energy sector from 2006, working for a wind energy company," says Isono. "But the market for renewable energy in Japan was very small; there wasn't much growth. So I was planning to apply to do a full-time MBA."


Then, on the afternoon of Friday, 11 March 2011, everything changed. A major earthquake, 43 miles off Japanese shores, caused a tsunami which in turn led to 46 feet high waves breaching the 33 feet high sea walls of the Fukushima Daiichi multi-reactor nuclear power site, one of the largest nuclear power stations in the world. The ensuing nuclear disaster at Fukushima Daiichi, played out under the gaze of the world's media, led to the shutdown of the Japanese nuclear power industry. 


A fierce debate about Japan's energy policy ensued. Against a background of anti-nuclear power sentiment a government white paper in November 2011 abandoned plans for expansion of the nuclear sector, and suggested a reduction on the reliance of nuclear power. By 2013 all of Japan's 54 nuclear reactors had been closed or suspended operations, and remained closed through 2014, with just a few slated to restart in 2015.


For Isono, with his educational background and experience in renewables, the 2011 disaster at Fukushima Daiichi and its aftermath offered a chance for him to contribute to his country's pressing need for new energy solutions.  "After the nuclear accident, I started up Shizen, with three ex-colleagues from the wind energy company. We felt that there would be an opportunity for major growth in renewables in Japan. If that happened, there wouldn't be many people who knew about the renewables industry, because it was such a small market."


It was a defining moment in Isono's career. At the same time as deciding to found Shizen Energy – which means nature in Japanese – with co-founders Kenji Kawado and Masaya Hasegawa, in the summer of 2001, after leaving Clean Energy that April, he also signed up for the Global EMBA at London Business School. Indeed, one reason that he chose the GEMBA was because the format of the programme enabled him to combine his start-up activities with his EMBA studies.


"Basically, since owning assets is very capital-intensive we started by doing the building for third party clients," says Isono. "So the initial business plan was to provide know-how on renewable energy to the people who wanted to start up a renewable energy business. There was huge growth, especially in the solar sector, and nobody had a lot of knowledge or experience about it, so we provided that know-how to potential asset owners, doing the design and build of solar panel farms for clients. But now we build, own and operate these solar panel farms ourselves. So this year we will have about 15 sites with around US$90 million from investors and banks."


By the end of 2015, Isono anticipates Shizen will be producing 650 MW of renewable energy power with a turnover in excess of $100 million. It provides an end-to-end solution, covering everything from land search, engineering, and procurement, to the construction, operation and maintenance of power plants. Shizen also works with communities to develop community-based renewable energy solutions and offers consulting services. 


The business has come a long way in just four years. Isono was on the shortlist for both the 2014 EY Entrepreneur of the Year in Japan and EY job creation award, and runs one of the fastest growing companies in his sector. He has also managed to build a supportive network that he can call on, should he need advice.

"What’s great about our company is that we are one of the youngest energy companies in Japan in terms of the average age in the company. Most of the companies in the energy sector here are large, long-established companies. We are tackling this huge industry in Japan.  And many older people are supporting us. Whether it is management, finance, engineering, I can draw on their experience and knowledge -and their networks. Because to expand our renewable energy we need strong networks at Shizen - political networks, financial networks." 


Challenges and plans


Despite the company's runaway success early on, fast growth does not come without challenges, acknowledges Isono. "I think the first big challenge for us was getting our first contract, because we didn’t have a track record. Our minimum unit is about $3 million. As an entrepreneur that seems big for a first project. We got that initial contract through our network of contacts. Through our determination and how we see the future of the industry - we want to change the Japanese energy industry. Once you get that first contract in place it is much easier to expand. After that it's more about growing pains, organisational issues."


These are issues that Isono has grappled with as his role has shifted from part of a three man team in a small start up to CEO of a fast growth firm with over 100 employees. One challenge has been to creating the company culture and rules, for example. What is that culture like? Global and local, professional and relaxing, says Isono, also stressing the importance of diversity. 


Another challenge has been keeping in touch with the people in the business. "We started with three people, after one year we had about five people, so we could talk to them directly.  But now we have over 100 people, so I make the time to let all the people gather and directly talk to them on that specific day. I think that meeting face-to-face is one of the most influential ways to spread our culture."


There are obstacles ahead, too. In 2012, when the Japanese government announced that the big power companies would be obliged to buy energy from renewables at a fixed price, passing the cost onto consumers eventually, it provided a boost for the renewables sector. The feed-in-tariff scheme began to unravel in 2014, though, as the large energy utilities found reasons to stop buying renewable energy.  The structure of Japan's divided power grid, split into east and west, complicates matters. 


In addition there are noises about restarting the nuclear power plants, with commercial and political interests at work. While development sites for solar plants, the main focus for the renewables sector grab, grow scarcer given technology related power density constraints.


Despite the potential clouds obscuring the way forward for solar power in Japan, Ken Isono has ambitious plans for the company. By 2017 he plans on having developed 1,000 MW of renewable energy power plants. The firm is expanding as well, both into new energy sources, such as wind, hydro energy and biomass, and internationally.


Much of Isono's time is spent travelling, building the business, looking for and talking to potential project investors. "A lot of places that I go to are within Japan, but we are trying to expand outside Japan, so I travel to Hong Kong, the Philippines, and Indonesia – where we have recently started to operate - and other parts of Asia."


Changing the world


His enthusiasm and drive to succeed is evident in the way Isono managed to tie up a joint venture with world leading Germany-headquartered solar PV and wind EPC firm, Juwi AG. One Global EMBA class impressed upon Isono the need to accumulate information as part of the innovation process. Realising there wasn't much solar industry know-how in Japan, but there was in Germany, Isono rounded up his co-founders and embarked on a study tour of the industry in Germany. Along the way he met the founders of Juwi who were so impressed with his plans and vision for Shizen Energy that they agreed to a joint venture.


And it is that desire to share his vision that continues to drive Isono forward. "For me it is not about an IPO and exit. What’s important for me is more of the long-term vision to have a social and financial impact. We do not just work for the money; we want to help shape the future of the energy industry in Japan, to change the world through renewable energy."

Comments 1

RameshKrishnan1 4 years, 3 months and 4 days ago

I was in Japan a couple of years ago and the eBay tire excitement over clean energy was palpable. Historic cities like Kyoto were embarking in a new history of responsible energy.Japanese companies have been constantly innovating in this direction, though it is only recently that they he found the courage to expand their businesses.