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Japan May Again Revise Down the Incentives for Solar Projects

published: 2014-10-21 17:36

Japan’s Ministry of Economy, Trade and Industry (METI) held Energy Efficiency and Conservation Subcommittee to review its feed-in tariff (FiT) schemes implemented in July, 2011. The Subcommittee preliminarily evaluated the possibility of cut FiT for solar power and increase FiT for other energies include wind and geothermal power.

Japanese government established electricity purchase programs especially for renewable energies after the Fukujima crisis. The programs ask power companies to offer favorable incentives for alternative energies like solar, wind and geothermal. Solar projects has been an lucrative option under the FiT schemes because it is not required to applied for complicated processes such as environmental impact assessment. As long as installers ensure a wide land, solar projects can be started constructed and the installers can apply for incentive subsidies. Currently, about 92% of non-residential alternative energies are generated from solar installations in Japan.

Nonetheless, some installers speculate in solar power by postponing construction. As both the costs of solar systems and subsidies become lower and lower, some project owners apply for FiT subsidies but hold on installing construction until the prices of solar panels are low enough to be more lucrative. The speculations are unveiled by large amount of solar project delays reviewed in the previous Subcommittee.

METI plans to revise the FiT schemes to stop the speculation in solar power yet no detail determined so far. Part of the committee members proposed to slash subsidies for solar power because they are higher than subsidies for wind, geothermal and hydro power. Experiences from Germany and Spain are also taken into consideration. METI will rewrite certain parts of the schemes by the end of this year, and balancing development of all kinds of alternative energies is believed to be the main purpose.

Meanwhile, Japanese government may restart some nuclear power plants after experiencing impacts from soaring fossil prices and other problems. A Reuters report says that this may be a new sign of crisis of the nation’s renewables development. Solar and wind energy are not reliable enough for uninterrupted power flows and some monopolies have cut their grid accesses for alternative energies. METI’s plan to cut FiT subsidy could further diminish investment into renewables, especially solar.

Reuters cited Seth Sulkin, President and CEO of Pacifica Capital KK, a Tokyo-based solar power and commercial real estate developer, "A combination of METI and the nuclear lobby is trying to kill the solar power industry." But METI denies. The Prime Minister Abe also addressed in a policy speech last month that Japan’s goal remains to use more renewable energy resources.

Shutting down nuclear power plants translates into stronger reliance on oil, gas and coal imports for Japan. Several power companies start to face challenges from unreliable energy resources. How to figure out ways out is the new national struggle for Japan.

(Photo: Aikawa solar power plant in Japan. Photo Credit: Commons Wikimedia)

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