Japan edges closer to solar auction introduction

Japan’s Ministry of Economy, Trade and Industry (METI) has concluded another round of talks regarding the future of the nation’s solar sector, with the likelihood now growing that auctions for large-scale solar projects will be introduced by fiscal year (FY) 2017.

A subcommittee of METI gathered in October to first discuss changes to Japan’s renewable incentives. This discussion focused on four key issues, most notably a revision of the current feed-in tariff (FIT) and the introduction of an auction tender process.

A key concern for METI is to rein-in expenditure on the Japanese FIT, which has been wildly successful since its introduction in 2012. “The FIT program led to a rapid expansion of commercial solar and there has been a need for balance between different renewable sources,” read a draft proposal outlined by METI.

The new proposal on the table outlines a procedure whereby solar power producers that can operate at the lowest cost will be selected to develop new large-scale solar project in Japan. Effectively, this means an auction tender process will be introduced, replacing the current regressive FIT and cherry-picking those clean energy developers who are able to secure grid connections. Japan’s grid has experienced a series of bottlenecks this year as a result of a sustained PV push in many regions.

This new mechanism could help taper off the huge pipeline of currently approved projects in Japan, but may be unlikely to deliver an initial boost to installation rates, believes Izumi Kaizuka of RTS Corporation.

"If the current pipeline of approved utility-scale projects is not canceled under the new auction approval scheme that METI is planning, then extra bidding would be unlikely to boost installations," Kaizuka told pv magazine.

A scheduled reduction of the FIT for the residential sector is also likely, Kaizuka added, rather than a complete cancellation of the mechanism.

"To introduce a bidding process, METI first has to revise the FIT law," she said. "METI will submit its proposal to the Diet in 2016 in order for the new auction system to begin in FY 2017. The details of the auction volume have not yet been decided, but we assume that the auction will apply only to large-scale projects."