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Japan Begins Fundamental Revision of FIT Policy

Integration with market becomes issue

2019/04/26 16:00
Kenji Kaneko, Nikkei BP Intelligence Group, CleanTech Labo
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The Agency for Natural Resources and Energy, the Ministry of Economy, Trade and Industry (METI), had a meeting of the Subcommittee for Introducing Large Amount of Renewable Energy and Next-generation Power Network April 22, 2019.

It was the first meeting of the subcommittee in three months. The agency started to discuss future renewable energy policies including the fundamental revision of the feed-in tariff (FIT) policy.

In the meeting of the subcommittee in January 2019, the agency summarized issues and directions related to renewable energy policies based on the FIT scheme. The latest meeting was held in the aim of restructuring renewable energy policies including "the fundamental revision by March 31, 2021," which is mentioned in FIT laws, from a longer-term point of view.

As frameworks for discussion, METI cited (1) a system that fits in with the characteristics of power sources, (2) appropriate business disciplines and (3) switch to the next-generation power network.

In regard to solar power generation, for a system that fits in with the characteristics of power sources, "post-FIT" policies are the most important issue. METI introduced systems to promote renewable energy based on market transactions such as "FIP (feed-in premium)" and "CfD (contracts for difference)" as main systems related to renewable energy in materials for discussion.

On the other hand, METI described the assistance to renewable energy using the current FIT policy as "being half segregated from the power market" and the "integration of renewable energy with the power market" as a future issue.

In response to METI's awareness of the issues, many members of the subcommittee expressed positive opinions, saying, for example, "The FIP, which purchases renewable energy at a price that changes in accordance with the market price, is one of the future directions."

Also, in regard to the integration with the power market, METI considers the fact that renewable energy-based power producers do not have the risk of imbalance (failure in supply-demand prediction) due to "FIT imbalance exception," as a future issue. If the imbalance exception is abolished for renewable energy power sources in the future and each power producer fails in the prediction of the amount of power generation, it can cause a cost burden, meaning a significant impact.