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Japan Slashes 16% of Its Solar FiT for Next Year

published: 2015-03-20 17:05

Japan’s Ministry of Economy, Trade and Industry (METI) announced the latest feed-in tariffs (FiT) schemes for renewable energy resources on March 19th. It continues the nations’ revision plan, slashed as much as 16% FiT for PV installations. This is a foreseen consequence as the costs of installation, operation and maintenance keep falling.

The latest announced FiT schemes are as following:

For non-residential PV installations (>10kW)
For residential PV installations (<10kW)
Source: METI

A panel in charge of reviewing Japan’s renewable energy incentives had proposed the new rates last month. For non-residential PV installations larger than 10kW, the tariff for applications approved from April 1st to June 30th, 2015 (the first quarter of FY 2015) will drop from 32 yen/kWh to 29 yen/kWh. Furthermore, tariffs for installations approved since July 1st will be again lowered to 27 yen/kWh, representing a 15.6% slash from the tariffs in FY 2014.

Tariffs for residential PV installations smaller than 10kW are also cut from 37 yen/kWh to 33-35 yen/kWh. However, through EnergyTrend’s observation at the PV EXPO 2015, Japan’s residential PV market will further improve due to wider consensus of the importance of renewable energy as well as lower costs. The lower tariffs may impact only a little to the residential market.

Japan introduced the three-year premium period for clean power in July 2012, while the sharp cut represents the end of the favorable incentive programs. During the period, PV installation capacity rapidly increased nationwide and consequently influenced the nation’s power grids. The stress to the grids led to seven Japanese power companies’ grid-connection suspension last September. With sturdier policies, Japanese government and the power companies have achieved certain limitations and new programs. PV installations that are not approved for, or not applied for, grid connection are expected to find solutions of energy storage systems. Those which receive approvals are required to use power conditioning systems (PCS) for futhre power allocation.

BloombergBusiness reported that the reduced rates for solar projects reflect lower operating and maintenance costs for solar projects while the capacity factor, an indicator of how often a power generator runs for a specific time, has improved. The opinion was deduced from a February document by the METI panel.

Aside from solar, METI has introduced FiT schemes for renewables include biomass, wind and geothermal.

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