10% cut to Japanese FIT approved

02. April 2013 | Applications & Installations, Markets & Trends | By:  Jonathan Gifford

The Japanese government has approved a 10% cut to photovoltaic FITs. As such, from April 1, tariffs have been reduced to JPY37.8/kWh (US$0.40) down from JPY42/kWh (US$0.45).

The Japanese flag.

A FIT reduction of 10% would not cause photovoltaic development to drop off sharply, analysts predict.

The Japanese Ministry of Economy, Trade and Industry (METI) has approved a cut to the generous photovoltaic tariffs of 10%. The cut took effect on April 1. Bloomberg New Energy Finance (BNEF) and Japan’s Photovoltaic Energy Association said that they both expect the adjustment will not cause the market to collapse.

METI released a statement late last week saying saying that the first change to the solar FIT will take place on April 1, while rates for other renewable energy sources will remain unchanged.

Japan has emerged as one of the photovoltaic powerhouse markets in recent months. It was expected by some that in the wake of the Fukushima Daiichi nuclear disaster that the country would see a major push towards renewables.

"With a ramped up FIT, Japan will blow past the performance that a lot of countries have exhibited," predicted Andrew DeWit, a Professor of the Political Economy of Public Finance, at Toyko’s Rikkyo University in an interview with pv magazine in mid-2011.

These predictions have been confirmed by figures coming from analysts including BNEF, which reports that 580 MW of non-residential solar was added in 2012, with that number set to grow to 1.46 GW in 2013.

Japan has also been achieving cost reductions as its installation and photovoltaic supply industry gears up. The ministry of trade reports that non-residential system costs had also fallen 14% from the amount used by the FIT committee in its initial deliberations. The installed price now stands at JPY280,00/kW (US$3,000).

This too is along the lines of some predictions. Rikkyo’s DeWit had told pv magazine that if the industrial might of Japan can get behind renewable energy, a major cost reductions would occur. "If this country strongly goes into this industry, then we may be able to ramp down costs really fast and we might find ourselves in a better export position than we thought we would be with a strong commitment to nuclear," he said.

Evidence of diverse industries getting involved in photovoltaic development in Japan is emerging with increasing regularity.

Solar manufacturer Solar Frontier has been teaming with local industries, such as building supply company Yano Industry, to develop a number of photovoltaic power plants.

Meanwhile, the diverse ORIX group has plans for 200 MW of projects over three years. JGC has also announced its intention to develop a 26.5 MW project in Oita Prefecture. And, telecommunications giant Softbank has been agitating for renewable development and the ending of electricity supply regional monopolies.

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