FIT Tariff for Commercial Solar Plants Expected to Be Further Lowered in Japan

2020/01/27 11:34
Kenji Kaneko, Nikkei BP Intelligence Group, CleanTech Labo
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Japan's Ministry of Economy, Trade and Industry (METI) announced its proposals on prerequisites for calculating an FIT-based purchasing price for commercial solar power plants for fiscal 2020 Jan 22, 2020.

The proposals were announced at a meeting of the Calculation Committee for Procurement Price, Etc, which discusses purchasing prices based on the feed-in tariff (FIT) policy.

Purchasing prices for solar power plants have been continually lowered by considering (1) lowering system cost, (2) increasing facility utilization rate and (3) lowering expected IRR (internal rate of return). A proposal to lower expected system cost, which is used for calculating a purchasing price for fiscal 2020, from ¥182,000 in fiscal 2019 to ¥142,000 in fiscal 2020 was approved. For this calculation, the top 13% of the solar power plants installed in fiscal 2019 were used.

At the time of calculating the purchasing price for fiscal 2019, purchasing price was lowered by as much as ¥4 from ¥18 in fiscal 2018 to ¥14 by (1) lowering expected system cost by ¥39,000 from ¥221,000 in fiscal 2018 to ¥182,000, (2) increasing facility utilization rate from 17.1% in fiscal 2018 to 17.2% and (3) lowering expected IRR from 5% to 4%.

For fiscal 2020, expected system cost was lowered by ¥40,000 from ¥182,000 in fiscal 2019 to ¥142,000. However, facility utilization rate and IRR will be the same as those in fiscal 2019 because there was no discussion for changing them. Therefore, the FIT-based purchasing price for commercial solar power plants for fiscal 2020 will probably be about ¥12-13/kWh, which is only ¥1-2 lower than that for fiscal 2019.