Japan Makes Corrections to Measures Against Unoperated Solar Projects

2018/12/09 11:46
Kenji Kaneko, Nikkei BP Intelligence Group, CleanTech Labo
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Japan's Ministry of Economy, Trade and Industry (METI) announced corrections to the measures (system change) against long-term, unoperated commercial solar projects in consideration of large-scale projects whose development has been considerably advanced based on public comments and requests from industry groups and the Liberal Democratic Party's Parliamentary Association for the Expansion of the Use of Renewable Energy.

As a result, the impact of the system change on the profitability of large-scale projects that have already started construction will be considerably reduced. However, the reliability of the feed-in tariff (FIT) policy itself was marred, potentially affecting future investments in and loans for renewable energy projects using the FIT policy.

With the latest corrections, in regard to large-scale (2MW and higher-output) solar power plants, which are connected to extra-high-voltage power transmission lines (extra-high-voltage projects), the deadline to meet the requirements for keeping purchasing prices was extended by six months. Also, solar projects that have "fully started construction" will be exempted from the measures if certain requirements are met.

The draft of the measures against unoperated projects was announced Oct 15, 2018. Targeting at unoperated projects that have no deadline for the start of operation and an FIT-based purchasing price of ¥40, 36 or 32/kWh (certified during a period between fiscal 2012 to 2014), they newly set a one-year deadline for the start of operation and decrease the purchasing prices in accordance with the time when the application for the start of grid connection work is received.

Specifically, if the application for the start of grid connection work is submitted to a power company by February 1, 2019, and accepted by March 31, 2019, the purchasing price will not be changed. However, if the deadline is missed, the purchasing price will be lowered to ¥21/kWh.

According to the corrections announced Dec 5, 2018, "large-scale (2MW and higher-output) projects for which the start of development construction can be confirmed by a public procedure" will be exempted from the latest measures. Their purchasing prices will not be changed, and a deadline for the start of operation will not be set for them.