Japan clears up uncertainty over its renewable energy FIT

There has been an air of uncertainty surrounding large-scale PV in Japan recently, as much desired revisions to the country’s feed-in tariff (FIT) policy had yet to materialize. However, last week, there was a collective sigh of relief among PV developers in the country, as a key piece of renewable energy legislation, revising the FIT law, passed through Japan’s parliament.

The revised Act on Special Measures for Renewable Energy contained a number of key changes to the FIT policy, including a new certification system and a new tendering program for PV projects.

“The upper house of the Japanese Diet [has passed] the revision of the FIT law,” manager of the Research Division at PV consulting company RTS Corporation, Izumi Kaizuka, told pv magazine during an interview at SNEC. “That revision included how tariffs will be set. Now that the law has passed, the Ministry for Economy, Trade and Industry (METI) can start to design the new tendering program for PV projects.”

The new certification system will change from certifying facilities, to certifying projects. Once a new certification has been obtained, the project will then be able to agree a purchasing price well ahead of the completion of the facility. Interestingly, the new system will apply all new projects, but also those that have received the certification of facilities under the current FIT system.

“[The current FIT system] will not expire, but the process for setting the tariff will change as of April 2017,” explained Kaizuka. “Now the FiT is set according to the market prices. After April 2017, METI can introduce a new way to set a tariff, the tendering program for large scale PV. Developers now have [to acquire an] approved grid connection contract by the end of March 2017, otherwise the project will be cancelled.”

In Japan, there is an approved solar PV pipeline of almost 80 GW. Some 27 GW of this has already been built, which leaves 53 GW left. Kaizuka predicted that around 20 to 30 GW of that pipeline will be cancelled by the April 2017.

PV’s Japan future looking good

While METI has yet to decide how much PV will be tendered using the new policy, there is plenty of optimism about the trajectory of solar PV in Japan over the next 15 years. One possibility for the market is a shift to more rooftops PV systems, as there is not a huge amount of affordable land for ground mounted projects.

“At the end of 2015, Japan had 34 GW of PV,” continued Kaizuka . “The government target for 2030 is 67 GW. So already half of that goal has been reached. I think by 2020, the target will be reached. If effective measures are implemented, curtailment is addressed and an effective use of cross-regional transmission is achieved, then the Japan can potentially install 100 GW of PV by 2030.”

In the shorter term, Kaizuka predicts that there will be a gentler increase in capacity. “Our forecast is for 7 to 8 GW in 2016, dropping to 6 to 7 GW in 2017,” she explained. “So it will be a gradual decline. But this is because we believe many projects will survive after the March 2016 [grid connection contract] deadline.”

The June edition of pv magazine will include the full interview with Izumi Kaizuka. You can subscribe to the magazine here.