Largest decrease since start of FIT policy

A meeting of the Calculation Committee for Procurement Price, Etc, which is for discussing the procurement (purchasing) prices of the feed-in tariff policy, took place Jan 9, 2019, and the committee chairman's plan was announced for fiscal 2019.

According to the plan, the FIT tariff for 10kW-500kW commercial solar power plants will be ¥14/kWh, which has been finalized in effect.

As for 10kW and higher-output commercial solar power plants, 500kW and higher-output projects are already planned to be the targets of the bidding system. Because the FIT tariff for projects that are not the targets of the bidding system became ¥14/kWh, the upper price limit of the bidding, which is set in advance and is not disclosed, will certainly be ¥14/kWh or lower.

The FIT tariff for commercial solar power plants that are not the targets of the bidding system (output: lower than 2MW in fiscal 2018) was ¥18/kWh in fiscal 2018. So, it will be lowered by ¥4, the largest decrease since the start of the FIT policy.

At the meeting of the Calculation Committee for Procurement Price, Etc, long-term cost targets were also reviewed. The new goal is to realize "an average power generation cost of ¥7/kWh for projects that will start operation in 2025." This is, based on the current FIT calculation criteria and the mechanism of the three-year limit after start of operation, equivalent to setting a purchasing price of ¥8.5/kWh in 2022.

On the premise of this, the price decrease rate from fiscal 2018 to fiscal 2022 will be ¥2.4 per year. The latest decrease (of ¥4) is much larger than the rate.

In regard to the drastic price decrease of ¥4 from fiscal 2018, the bureau (the Ministry of Economy, Trade and Industry (METI)) said that it mechanically calculated the price based on the fact that (1) expected system cost was lowered from ¥221,000 to 182,000 (2) facility utilization rate was increased from 17.1% to 17.2% and (3) pre-tax IRR (internal rate of return) was lowered from 5% to 4%.