Japan postpones FIT cuts by six months for projects over 2 MW

A reduction of the feed-in tariff to ¥21/kWh (around US$0.19) for projects over 2 MW in size and approved between 2012 and 2014 will be applied starting from September 2019 and not from March, as originally planned. For approved projects with a capacity of less than 2 MW, however, no postponement has been granted.

The FIT reduction will reportedly affect around 23.5 GW of capacity approved between 2012 and 2014, which represents roughly 44% of the total capacity of approved PV projects under the scheme.

Image: Kyocera TCL Solar LLC

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Japan’s Ministry of Economy, Trade and Industry (METI) has extended the deadline for its planned FIT cuts for large-scale solar projects that were approved between 2012 and 2014, from March 31, 2019, to September 30, 2019. The plan to cut FITs in March for projects under 2 MW remains, however.

The deadline for the grid-connection of projects over 2 MW has also been postponed by another six months, to September 30, 2020. As such, the developers that are able to finalize their projects by this date will receive FITs of either ¥40 ($0.35), ¥36 or ¥32/kWh.

METI said in a statement that the FIT reduction will affect around 23.5 GW of capacity approved between 2012 and 2014, which represents roughly 44% of the total capacity of approved PV projects under the scheme. In an earlier statement to pv magazine, the Japan Photovoltaic Energy Association said it estimated the combined capacity of the projects to be around 20 GW.

U.S. research firm Fitch Solutions Macro Research recently said in a report that it expects to see a further 17 GW of solar PV plants connected to the Japanese grid by 2020.

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The decision to provide developers with more time to finalize their projects followed concerns raised by investors and developers about the timeline of the cuts. In a joint statement, the Japanese Chamber of Commerce for America, Australia-New Zealand, Canada and France, and the European Business Council called on the country's government to ease the conditions for the FIT reduction.

They claimed an abrupt cut, which makes no distinction between assets that have achieved development or construction milestones and which have credible sponsors, and projects that lack such attributes, would undermine confidence in the security, stability and predictability of Japanese market rules.

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