New Japanese Feed-In Tariff Rates

This post was first published at Cleantechnica on March 25. I repost it here unchanged, except that I have removed images.

This is also a good occasion to mention this development: Editor of Cleantechnica Zachary Shahan kindly invited me to become a contributor to that site, and I have accepted that. I am honored and pleased to get more readers for my posts.

The Japanese law on feed-in tariffs (partial translation available here) requires that feed-in tariffs are revised for each business year, which starts on April 1 in Japan. That means that the feed-in tariffs for the year from April 1 will be announced by the Minister of Economy and Industry shortly.

The Minister relies on a report of a committee of experts for that decision. I recall having discussed last year’s committee report in quite some detail in May 2012.

This year’s report is found here (in Japanese). It consists of a one-page document pointing out the resulting feed-in tariffs, and a 18-page report explaining the reasons.

The resulting feed-in tariff is lowered by about 10% for solar, and kept at the existing level for everything else. Solar is now down to 38 yen per kWh for systems under 10 kW capacity (rooftop solar), paid for 10 years as until now, and 36 yen per kW for larger systems (excluding tax), or 37.8 yen including the 5% value added tax, paid for 20 years.

I note that larger systems still get about double the feed-in tariff, since they get paid for a period double as long, which still does not make much sense to me.

There was some discussion on this point, but the committee decided on keeping the 10-year period for rooftop solar, with one reason being that the rooftop solar market is recording good installation numbers, so there is no reason to expand the system over 10 years right now (page 4).

The reason for lowering the solar tariffs to the new levels is explained without mentioning the installation record, which has been encouraging for solar. Instead, the committee cites real data on installation costs. They mention on page one of the report that owners of solar installations are required by law to report their costs to the Minister of Economy and Industry, and that they lose their right to get paid feed-in tariffs if they provide false numbers.

For rooftop solar, they also subtract subsidies paid at the national level (20,000 yen per kW) and the local level (34,000 yen per kW) from the cost (page three).

For wind, the report notes that there have only been two wind parks receiving feed-in tariffs under the new law (in force since July last year) in the category of over 20 kW. The reason for that is that wind projects take 4 to 7 years from planning stage, with environmental assessments taking some time. They also note that there are 10 projects that have finished environmental assessment and are in the building stage, and 70 more that are in the stage of environmental assessment, so they expect more wind projects to go online in the future.

Anyway, since there was so little deployment in the initial months, they see no reason to reduce the tariffs for wind, which are at 23.1 yen a kWh more than 2.5 times those of Germany (now at 8.93 cents Euro, and not for a full 20 years).

This clearly shows that solar can be deployed much faster than wind. Even at these very favorable conditions, Japanese wind developers have failed to take advantage of the high feed-in tariffs in place right now.

Small wind at less than 20 kW capacity gets even higher tariffs — they are set at 57.75 yen. But even so, there was zero new capacity deployed under these tariffs until now (page 10). The reason for that is that there needs to be a type approval for safety for these, and makers have not yet made it through the process. At zero deployment, the committee did not see any reason to reduce these rates.

The committee still declines to set up different (higher) tariffs for offshore wind energy, since they say that they still lack the necessary data to understand the cost of that technology correctly (page 11). Therefore, in Japan, offshore still pays the same as onshore wind. That is another point that does not make much sense to me.

Published by kflenz

Professor at Aoyama Gakuin University, Tokyo. Author of Lenz Blog (since 2003, lenzblog.com).

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