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Japan Begins to Design 'Feed-in Premium' System

2019/09/27 12:57
Kenji Kaneko, Nikkei BP Intelligence Group, CleanTech Labo
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Japan's Ministry of Economy, Trade and Industry (METI) set up the "Subcommittee to Reform System for Using Renewable Energy as Main Power Source" as a panel of experts for fundamental review of the feed-in tariff (FIT) policy, etc and had the first meeting of the subcommittee Sept 19, 2019.

In the meeting, METI announced its plan to shift to a market-based system again. Thus far, METI has been considering the drastic review of the FIT policy at meetings of the Subcommittee for Introducing Large Amount of Renewable Energy and Next-generation Power Network and announced an interim report in August 2019.

In the report, METI mentioned (1) "competing power sources," which it promotes while encouraging further cost cuts, including mega (large-scale) solar power plants and wind power plants and (2) "locally-utilized power sources," which are utilized in local communities. As future measures to promote the use of renewable energy, METI will make the former shift to the new market-based system and keep the basic frame of the FIT policy for the latter.

In view of the report, the Subcommittee to Reform System for Using Renewable Energy as Main Power Source, which has been established this time, started to design a specific system. In METI's plan announced this time, in regard to the new market-based system, "FIP (feed-in premium)," which has been introduced as a "reference" in materials at experts' meetings, was officially defined as the base of the new system.

The FIP is a system that does not set a long-term purchasing price unlike the current FIT scheme and adds a premium to spot prices in the power wholesale market. It has already been employed in Europe, etc. However, there are various patterns depending on the method to decide a premium, and the design of a system is important.