On 11 March 2020, Japan marks the ninth anniversary of the Tohoku earthquake and tsunami, which caused a nuclear meltdown at the Fukushima Daiichi Nuclear Power Plant. The meltdown of the plant owned by the Tokyo Electric Power Company forced Japanese authorities to introduce many changes to Japan’s energy policy.
Japan FIT
It has long been planned that this next financial year will be the last in which FiTs are offered, meaning that Japan is seeking new ways to support the deployment of solar PV, with the government targeting more than 130GW by 2030.
Japan has awarded just 39.8MW of PV capacity in its fifth solar auction, despite there being more than 416MW initially on offer.
The Japanese government has adapted the feed-in-tariff (FIT) system for renewable energy technologies, introducing a wholesale/ tender system for solar and wind, while geothermal, biomass and small-scale generation keep the FIT.
The ministry plans to establish the subsidy system by the end of fiscal 2020 in line with the scheduled review of the “feed-in tariff” system that set prices for purchasing electricity generated by solar and other renewable sources.
According to the plan, the FIT tariff for 10kW-500kW commercial solar power plants will be ¥14/kWh, which has been finalized in effect.
A meeting of the Calculation Committee for Procurement Price, Etc was organized Nov 8, 2018, for discussing the FIT-based purchasing prices for fiscal 2019. As for solar power generation, the purchasing price will be lowered by several yen, compared with the price for fiscal 2018.
If you want conclusive proof that a shift to auction models will delay and brake renewable energy development, one could not ask for much more. Meanwhile, China invested $126.6 billion with most of that ($86.5 billion and up 58%) going to solar projects.
Another catalyst for this slowdown is the September announcement from the Japanese Government which sees the country’s feed-in tariffs (FiT) for solar installations reduced at the household- and company-levels by half by the mid-2020s.
I am not sure if this will help reduce costs. But judging from the German experience, it will be a great way to slow down the speed of increasing the renewable percentage. That’s because any auction system is not market based. You can win only auctions that are held in the first place, so the state gets to decide on how much new capacity is introduced, not the market.
