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Japan Begins to Design 'Feed-in Premium' System (page 2)

2019/09/27 12:57
Kenji Kaneko, Nikkei BP Intelligence Group, CleanTech Labo
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According to METI's definitions, there are two types of the FIP: "completely variable premium FIP" and "whole-term fixed premium FIP." The former makes it easy to predict the amount of revenue and ensures an investment incentive but is not integrated with the market enough.

The latter makes it difficult to predict the amount of revenue and ensure an investment incentive but is enough integrated with the market. So, METI's plan is aimed at an intermediate system in consideration of the elements of the two types.

Specifically, as an example, METI showed a system that decides an FIP price by (1) setting a "market reference price," which changes in accordance with market prices to some extent, at certain time intervals and (2) adding a premium to the price. According to METI's plan, the market reference price is reviewed at an interval of one month to one year.

Also, in the interim report, METI proposes the employment of a bidding system for competing power sources. In the latest plan, METI said that a bidding system will also be actively used for the new system. Therefore, for large-scale competing power sources such as mega solar plants and offshore wind power plants, a system combining the FIP and bidding system will probably be employed.

There were no major objections to the direction of the FIP showed by METI. So, METI will probably move forward with designing a more detailed system.

Concerns expressed about evaluation elements of 'local power sources'

On the other hand, in regard to the concept of "locally-utilized power sources," which will continue to be the target of the FIT policy, METI proposed to "evaluate benefits to communities while focusing on the input to a power plant and the output from the power plant. As for the input, it proposed to judge whether resources and energy existing in a community are used. As for the output, it proposed to focus on three values for evaluation: "resilience," "self-consumption" and "local consumption."