**1. Introduction**

In the present scenario, increasing world energy demand and climate change imperatives drive the dependency of energy sources towards available renewable energy resources. Climate change is one of the major factors that has a strong impetus on the

**Citation:** Alam, Z.; Watanabe, Y.; Hanif, S.; Sato, T.; Fujimoto, T. Community-Based Business on Small Hydropower (SHP) in Rural Japan: A Case Study on a Community Owned SHP Model of Ohito Agricultural Cooperative. *Energies* **2021**, *14*, 3349. https://doi.org/10.3390/en14113349

Academic Editors: John M. Cimbala and Bryan J. Lewis

Received: 14 May 2021 Accepted: 4 June 2021 Published: 7 June 2021

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**Copyright:** © 2021 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https:// creativecommons.org/licenses/by/ 4.0/).

way of thinking about world energy dependency. It urges the world to achieve alternative renewable resources other than its reliance on fossil fuels. In this regard, it is not only requisite to use all the possible renewable resources, but also to shift the established fossil fuel-based energy system toward renewable energy. Therefore, it is necessary to exploit domestic energy sources, especially renewable energy sources, as their potential is high.

Moreover, for UN- Sustainable Development Goals (SDGs), it is required for a country to devise policies and form strategies to increase the share of renewable energy in the total energy mix, and ensure the provision of electricity to the rural and remote areas. In rural areas, there are a variety of renewable energy options available, e.g., hydropower, solar, wind and biomass. Many mathematical models have been used to make decisions among all available renewable energy resources. Geological position and terrain are characterized as strong impact for the assessment of most suitable renewable energy resources, e.g., in Brazil, wind energy is considered the most favorable renewable energy source [1]. In addition, environmental and human health impacts are also very important consideration for the selection [2].

Being a target part of SDGs, sustainable supply chain management is prerequisite for the modern world in order to conserve the available resources, reduce the waste as well as generate revenue. It not only helps the natural environment, but it can also give enterprises financial benefits [3]. In addition, their efforts can be more effective if integrated approach and regional networking are involved [4]. Many researches highlight the constraints and barriers related to the implementation of SDGs in supply chains. For sustainable development, organizational management is responsible for dealing with social, economic as well as ecological performance at the same time. However, sometimes implementation of the goals is associated with enormous problems, which deject the continuity of work and ultimately discourage business managers [5]. The purpose of renewable energy is not only to raise the rural economy, but also to save the ecological environment [6]. The main objective of sustainable development is to provide better life to human beings by wise utilization of the natural resources and considering its limitations on the one Earth [7].

Small hydropower (SHP) is considered a reliable and sustainable source for making electricity. As a potential future source of energy, it has become an increasingly attractive choice, which plays an important role for its adoption and development all over the world. It is considered environmentally friendly, as its construction has small effects on water bodies. SHP gain more preference because of its available potential, small scale construction requires less investment, speedy construction, low cost generate quick revenue as well as environmentally friendly clean energy [8,9]. The other benefits are to reduce the safety risks associated with small dams, and lesser population displacement or land usage issues [10]. Small hydropower does not require a large storage structure like dam construction as compared to large scale hydropower, thus reducing the technology's environmental impacts [11]. For SHP, potential power available, head, and flow considerations are very important constraints regarding the selection of site-specific parameters [12]. Sites with a reliable water supply year-round and a large vertical drop in a short distance are considered as the best locations for the installation of SHP.

In Japan, hydroelectricity is considered the second most important renewable energy source after solar energy. There are several reports regarding the economic benefits of implementing SHP, considering ecological sustainability and environmental ecosystem, and their impacts [13–16]. Overall, Japan has an abundance of small streams particularly in mountainous regions and in the past many small channels have been created for irrigation purposes. Some of these irrigation channels continue to be used today. Others, though in good condition, remain unused. Increasingly, these channels are being utilized to produce SHP electricity to promote local development. This is particularly important for rural Japan, which has suffered from rapid depopulation due to a combined effect of aging population and urban migration [17].

Small hydropower has regained attention in Japan since the 2000s, when climate change and climate crisis were highlighted. In 2003, the "Act on Measures Concerning the

Use of New Energy by Electric Power Companies" (RPS Act) targeted small hydropower of 1000 kW or less, so that about 10 new construction works will be carried out annually. The RPS Law was taken over by the "Act on Special Measures Concerning the Procurement of Renewable Energy Electricity by Electricity Companies" (commonly known as the FIT Law) in 2012, and under the feed-in tariff (FIT); in recent years, the small hydropower market has been gradually revitalizing. The Japanese government has started to support the SHP project in order to support a renewable policy in Japan as well as to prevent migration and to protect the old rich culture of the respective communities [18].

To promote the SHP, the Japanese government is giving a high FIT of 34 yen per kWh (0.32 US\$/kWh) under the capacity of 200 kW, which enables a faster payback [18,19]. In spite of FITs and other benefits, planning a new SHP plant, searching for the initial investment, consensus building among the community people and various stakeholders, convincing local people is not an easy task and so, and despite having hydro potential in a number of communities, it has not been harnessed yet. This paper will discuss an ongoing business model idea to develop community-based SHP in rural areas, which is based on:


In Japan, the concept of community development by SHP installation is not new. A number of SHP were installed in 1940–1970. In Japanese remote areas, many SHP run by local agricultural cooperatives (hereinafter referred to as agricultural cooperatives) exist in the Chugoku region in the west part of the main island in Japan. By the end of March 1955, about 90 SHP operated by agricultural cooperatives and others were built in the Chugoku region, while 181 were constructed nationwide. To this day, some facilities were abolished or suspended due to disaster, aging, poor management, submergence and other reasons. By 1980, 74 remained, and currently 54 are still generating. All 54 facilities currently in operation are less than 1000 kW, with a maximum of 660 kW, a minimum of 24 kW, and an average of 189.1 kW. The total installed capacity of the 54 facilities is 10,209 kW [20,21].

The purpose of this study is to provide a SHP development business model in which local communities come forward for organizing and development of SHP and become the business owner. This paper consists of three sections: the very first section explains a community owned SHP development model. It gives an idea of community ownership to develop an SHP. This section also discusses the project financing, multi-stoke holder, crowd funding, etc., with regard to SHP development. It provides an example of community development that will work collaboratively for common goals. It is expected that community level SHP development will lead to many more SHP. The second section of this paper is analyzing a case study of a community owned SHP installed in rural Japan. This section explains techno-economic details of installed SHP and its social and economic impact on community and environmental impact on climate change. The third section discusses its effects, followed by the conclusion and limitations.
