Japan confirms FIT cut of 16% by July

Japan’s Ministry of Economy, Trade and Industry (METI) has confirmed that it is to cut the country’s solar feed-in tariff (FIT) by as much as 16% by July.

The rate will fall from from ¥32 ($0.27) per kWh to ¥27 per kWh over the coming months, with the first cut arriving in April, dropping the FIT rate down to ¥29 per kWh ($0.24). On July 1, the final cut will be triggered, putting in place a FIT rate of ¥27 per kWh that will remain for 20 years for all approved projects.

Introduced in July 2012, Japan’s FIT was famously generous and triggered a surge in solar investment in the country. This year’s cut marks the end of those premium rates, and have been triggered by a maturing market that has seen solar costs for operation and maintenance fall. The lower FIT rates reflect these cost reductions, as well as improvements in the country’s capacity factor.

The FIT for other forms of renewable energy has been maintained at current rates for another fiscal year, largely due to the fact that subsidies in industries such as wind and biomass did not trigger the mass adoption of uptake seen in the solar sector.

METI also confirmed that it will more than double the renewable power surcharge added to consumer bills, increasing from ¥0.75 per kWh currently to ¥1.58 per kWh from April 1.

Such has been the pace of Japan’s solar PV growth over the past three years, around 17.5 GW of FIT-approved PV projects are likely to be cancelled due to insufficient grid capacity, RTS Corporation said late last year, although the FIT is still likely to drive the expansion of more than 50 GW of solar projects during its lifetime, the corporation said.