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Japan May Cut Solar Tariff Due to Lower O&M Costs

published: 2014-02-24 15:49

Due to operation and maintenance costs decline, Japan is rumored to cut its tariff on purchases of solar power by 14%.

An estimation conducted by Bloomberg New Energy Finance pointed that the Japan’s Ministry of Economy, trade and Industry may cut the country’s solar tariff by 14% from 36 yen to 31.1 yen (approximately US $30 cents) per kW/h as a committee is now reviewing the tariff for renewable energy for fiscal year 2014. Meanwhile, the domestic sales tax will soon be raised from 5% to 8% starting from April 1st.

The tariff review includes solar, wind and geothermal power, and the first one is the most important item to be discussed. The costs of solar projects have reduced because of the declination of O&M costs. According to BNEF’s report, the O&M costs are estimated to reduce by 1 million yen per MW from last year’s 9 million yen, down to 8 million yen.

Bloomberg also reported that the ministry has raised its capacity factor, an index that indicates how often an electric generator runs for a certain period of time, to 13% from 12%.

Related report: Japan FIT Changes Reflect End of Residential PV Program and Delay in Non-residential Projects (Renewable Energy World)

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