Japanese FIT set to fall

With the working group convened to consider next year’s Japanese renewable energy tariff having had its first meeting on Tuesday, there has been speculation the world’s most generous FIT payment could be cut by 14% from April.

With observers having long predicted the Japanese gravy train initiated by prime minister Shinzo Abe – and which has acted as a magnet to solar developers worldwide – would not last forever, analyst Bloomberg estimates the solar FIT will start to fall in the new financial year.

Bloomberg New Energy Finance predicted on Thursday, the solar FIT will fall from JPY36/kWh (US$0.35/kWh) plus tax, to JPY31.1/kWh because of falling operation and maintenance (O&M) costs.

Bloomberg says the experts assembled to evaluate the FIT have revised down their cost estimate for solar from JPY9 million/MW to JPY8 million/MW with the FIT payment set to fall accordingly at the same time as the sales tax applied to payments rises from 5% to 8%.

Working group formed

The Japanese Ministry for the Economy, Trade and Industry (METI) last week announced the formation of a working group of energy experts to examine how the FIT functions.

The working group of academics, plus a sustainable energy journalist and lawyer, will specifically consider how the ‘avoidable cost’ calculated by utilities – the difference in price between more expensive renewable energy they are obliged to supply and the cost of energy from conventional sources – is worked out.

The working group, which includes industry bodies for PV and wind power as well as electricity utility Ennet Corp and the federation of Japanese energy providers, as observers, will sit four levels below the METI .

The working group will report to the new and renewable energy subcommittee of the committee on energy efficiency and renewable energy which forms part of METI’s advisory committee for natural resources and energy.