What will happen to upper price limit of bidding system?
However, the committee increased expected system cost from ¥221,000 to 182,000 by employing the standard of top 18% companies in fiscal 2019 instead of the standard of top 25% companies in fiscal 2018. This is probably because, from the beginning, "¥14/kWh" was the target for projects that are not the targets of the bidding system, considering the balance with the projects that are the targets of the bidding system.
Because the lowest successful bid price has already been lowered to ¥14.25/kWh in fiscal 2018. So, it is possible that the upper price limit for fiscal 2018 (¥15.50/kWh) will be further lowered to ¥14-15/kWh in fiscal 2019. In that case, if the FIT tariff for projects that are not the targets of the bidding system is ¥15/kWh, those projects will seem to be economically advantageous, potentially increasing the number of projects that avoid a bidding.
In past meetings of the Calculation Committee for Procurement Price, Etc, it repeatedly said, "It is important that, at the time of setting a procurement price for commercial solar power plants that are not the targets of the bidding system, they do not become more economically advantageous than projects that are the targets.
In view of such a trend, the upper price limit for the bidding system for fiscal 2019 is unlikely to become drastically lower than "¥14/kWh."
However, it is possible that, when the amount of bids will be drastically larger than the capacity to be bid and the principle of competition of the bidding system functions, only bids drastically lower than ¥14/kWh will be successful. In that case, the FIT tariff for projects that are not the targets of the bidding system will be greatly lowered in consideration of that.
On the other hand, unless biddings in fiscal 2019 will be sluggish and successful bids will be much lower than ¥14/kWh, the decrease of FIT tariff in and after fiscal 2020 can be about ¥2 per year, targeting at ¥8.5/kWh in 2022. In that case, the latest decrease of ¥4 is a decrease rate higher than the long-term target of decrease rate, meaning that the decrease will become slower in the future.
In other words, this year is a crucial test for the Japanese solar power generation industry, which is required to catch up with the price decrease of ¥4 in fiscal 2019 (See related article: Japan to Expand Target Range of Bidding System for Solar Projects).