FIT Tariffs for Commercial Solar Plants Expected to Further Drop in Japan

2019/11/11 19:32
Kenji Kaneko, Nikkei BP Intelligence Group, CleanTech Labo

Japan's Ministry of Economy, Trade and Industry (METI) announced its plan on the conditions for calculating purchasing prices for solar and wind electricity for fiscal 2020 at a meeting of the Calculation Committee for Procurement Price, Etc Nov 5, 2019.

The committee is for discussing purchasing prices based on the feed-in tariff (FIT) policy.

Based on discussions at experts' meetings, etc, commercial solar power plants with a grid capacity of 10kW or higher are scheduled to be separated into three segments and operated based on the FIT policy. First, low-voltage commercial solar power plants with a grid capacity less than 50kW will be shifted to sale of surplus electricity by setting "requirements for locally using self-consumption-type plants."

Second, a predetermined FIT tariff will be applied to high-voltage plants with a capacity of 50kW or higher, which were excluded from the bidding system (applied to plants with a grid capacity of 500kW or higher in fiscal 2019). Third, purchasing prices for high-voltage and extra-high-voltage plants, which are the targets of the bidding system, will be decided through bidding.

In the past discussions, it was decided to expand the application of the bidding system in fiscal 2020. In METI's plan announced Nov 5, 2019, the validity of expansion from "500kW or higher" in fiscal 2019 to "100kW or higher" was showed, and a schedule to decide the expansion based on the results of the fifth bidding (to be disclosed Dec 17, 2019) was announced. As a result, the bidding system will be considered based on the standard of "100kW or higher."

On the other hand, less-than-50kW low-voltage commercial solar power plants that meet the requirements for local use will sell surplus electricity (less-than-50kW plants that do not meet the requirements for local use will be excluded from the FIT-based purchasing). Also, if the target of the bidding system becomes "100kW or higher," electricity generated at 50-100kW high-voltage plants will continue to be purchased at a predetermined FIT-based tariff.

METI announced three plans Nov 5, 2019, on the expected values of "system cost per kilowatt" (which is used to calculate the purchasing price of solar electricity), which were made by using "top runner analysis." They are ¥135,000 (top 9%), ¥142,000 (top 13%) and ¥154,000 (top 17.5%). It said that one of the three plans will be selected based on the results of the fifth bidding.

The expected system cost used to calculate the purchasing price in fiscal 2019 (¥14/kWh) was ¥182,100. So, all of the three plans will lower expected system cost by several tens of thousands of yen. As a result, the purchasing price for high-voltage solar power plants that are excluded from the bidding system in fiscal 2020 is now more likely to become lower than ¥14/kWh.

Disposal fee fixed at 10,000 yen/kW

As for the price of surplus electricity generated at low-voltage commercial solar power plants that meet the requirements for local use, METI did not show its plan at the meeting Nov 5, 2019. It will be discussed in the next or later meeting of the Calculation Committee for Procurement Price, Etc together with the details of the requirements.

Moreover, in the meeting that took place Nov 5, 2019, committee members agreed to change the expected disposal cost of solar power generation (PV) facilities from "5% of capital cost" to "¥10,000/kW regardless of expected capital cost." This change was made by responding to an opinion that, if expected disposal cost is set at the ratio (5%), it decreases as expected capital cost is lowered but actual disposal cost is not lowered in accordance with capital cost.

Furthermore, METI proposed introducing a bidding system for onshore wind power plants in fiscal 2021 and employing a bidding system for all offshore wind power plants anchored to the seabed including plants that are excluded from the application of "Renewable Energy Marine Area Usage Law" in fiscal 2020, and the proposal was approved by committee members. As a result, it became clear that wind power plants will be shifted to the bidding system except for floating wind power plants.