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Japan Discusses Target Costs for Green Power Generation

2016/10/06 17:00
Kenji Kaneko, Nikkei BP CleanTech Institute
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A discussion about the FIT tariffs for the next fiscal year, etc started at a meeting of the Calculation Committee for Procurement Price, Etc that took place Oct 4, 2016, for the last time in this fiscal year.

The committee meeting was held on the premise of the revision of the FIT (feed-in tariff) policy, which will become effective in April 2017. Therefore, in addition to the tariffs for the next fiscal year, the main issues to be discussed are (1) the medium- to long-term price targets for promoting the effective use of renewable energy, (2) the scale and bid amount of solar power plants that are the targets of the bidding system , (3) the purchasing price setting of each power source, etc.

For the price setting of residential solar power generation systems, a "price reduction schedule" will be set in advance. Also, for wind, medium/small-scale hydroelectric, geothermal and biomass power plants, purchasing prices will be set for multiple fiscal years.

Among them, at the meeting of the Calculation Committee for Procurement Price, Etc that took place Oct 4, 2016, the medium- to long-term price targets were discussed. Thus far, purchasing prices have been set with reference to relatively highly cost-effective facilities that have already been installed. In the next fiscal year and afterwards, "price targets" will also be taken into consideration.

For setting prices aimed at the independence from the FIT scheme, Japan's Ministry of Economy, Trade and Industry (METI) proposed power generation costs of ¥14/kWh in 2020 and ¥7/kWh in 2030 for non-residential systems. For residential systems, METI proposed purchasing prices equivalent to the price of home-use electricity in 2019 and equivalent to the price in the wholesale power market in or after 2020 (as early as possible).

According to an estimate by the committee, the cost of the system that realizes such power generation costs will be ¥200,000 (approx US$1,934)/kW in 2020 and ¥100,000/kW in 2030 for non-residential systems and ¥300,000/kW (equivalent to a purchasing price of ¥24/kWh) in 2019 and ¥200,000/kW (equivalent to a purchasing price of ¥11/kWh) in as early a stage as possible for residential systems.

The cost of the current solar power generation systems in Japan is about ¥300,000/kW, which is twice as high as the system cost in Europe.