Japan auctions 197 MW in second PV tender

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The Ministry of Economy, Trade and Industry’s (METI’s) second trial auction, which follows an initial 140 MW tender held last October, opened with an allotment of 250 MW, according to an online statement. The lowest bid in the latest auction, which METI reserved for PV systems above 2 MW in size, was JPY 16.47 (US$0.147)/kWh, while the highest bid came in at JPY 17.2/kWh.

The government set an initial ceiling price of JPY 15.50/kWh before the second auction was held, but it did not reveal the target to participants in the tender until bidding had already started. METI expressed a measure of disappointment over the fact that the lowest winning bid was still JPY 0.97/kWh above its targeted ceiling.

“We can’t ensure competitiveness and there is a risk that (the tender process) will not contribute to cost reductions,” the ministry said, adding that it is now targeting an average installation cost of JPY 15/kWh by the end of the current decade.

Nineteen PV developers submitted business plans for the qualifying review stage of the second auction, representing about 393.1 MW of potential capacity. METI then granted 15 parties the opportunity to bid on 334.4 MW of proposed projects, but in the end, just nine companies submitted actual bids. METI did not identify any of the tender participants by name.

The government plans to hold a third solar auction before the end of this year. However, it has decided to limit the amount of capacity up for grabs, given that it didn’t end up granting the full 250 MW of capacity it had initially allotted for the second auction. METI will therefore auction off just 196.96 MW in the upcoming third round, which will likely take place in early December.

Initially, the government had planned to offer a total of 1 GW to 1.5 GW in the three auctions, according to a statement by the Agency for Natural Resources and Energy, an entity under METI. However, as METI awarded just 140 MW of solar in its first, relatively disappointing, PV auction late last year, it is now likely that the total amount of capacity to be tendered across the three rounds will fall far below that mark.

Japan’s total installed PV capacity stood at roughly 49 GW at the end of December 2017, up from about 41.6 GW at the end of the preceding year, according to statistics from the International Renewable Energy Agency (IRENA). However, more than 30 GW of approved PV capacity has still not been completed, PV research firm, RTS Corp. said in its latest monthly report on the state of the Japanese solar market.

The Tokyo-based consultancy noted that most of those undeveloped projects were granted feed-in tariff (FIT) rates from several years back of JPY 36/kWh and JPY 32/kWh. However, a METI committee is now looking into why those projects haven’t been completed and what can be done about them.