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Japan Enacts Bill to Review FIT Policy

2016/05/27 19:55
Kenji Kaneko, Nikkei BP CleanTech Institute
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The bill for the review of the FIT policy was passed.

The revised Act on Special Measures for Renewable Energy, which is for revising the feed-in tariff policy for renewable energy, passed through the plenary session of the House of Councilors and was enacted May 25, 2016.

The act will be implemented in April 2017. Among the revised points, the following three items have large impacts on the power producers for renewable energy-based power plants.

(1) Foundation of a new certification system (shift from the certification of facility to the certification of project)

(2) Review of the price-setting process to enable to decide a purchasing price several years ahead

(3) Introduction of a system that enables to decide a purchasing price through a bidding process when it is effective in reducing the burden on utility customers

With (1) the new certification system, Japan's Ministry of Economy, Trade and Industry (METI) evaluates and certifies renewable energy-related projects first. Power producers that have obtained a "project certification" can ask a power company to conclude a contract to sell electricity at a set purchasing price and for a set period of time. Though the requirements for project certification will be specified in an ordinance of METI, the conclusion of a grid connection contract with a power company is considered to be one of the requirements.

The new certification system has a large impact because it will apply not only to new projects to be launched in the next fiscal year but also to power producers that have received the certification of facilities under the current certification system. If a project cannot conclude a grid connection contract with a power company until April 2017, it cannot shift to the new certification system and, thus, cannot keep the purchasing price acquired under the current system (See related article).