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Japan enacts bill to review feed-in tariff policy for renewable energy

By Kenji Kaneko, Nikkei BP CleanTech Institute

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 last week and has been enacted.

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 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.

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With the new certification system, Japan’s Ministry of Economy, Trade and Industry (METI) evaluates and certifies >>renewable energy-related projects first. the conclusion of a grid connection contract with a power company is considered to be one of the requirements.

And here we are, the disguised monopoly surfacing back as "METI certification" and the requirement to have the monopoly to agreed to accept first to give you the access to the grid.

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Oh brother. This is so not a big deal. I think other commenters have kind of missed the plot. Remember back when the FIT was approved and a whole lot of solar developers had the FACILITY approved and then never built them, instead banking on ever lowering PROJECT costs and guaranteed PROJECT revenue streams? Yeah. That is a SCAM on the utilities and the taxpayer.

I guess Citizen thinks scamming is a good thing, because he is against the new rules which provide for approval of the FINISHED PROJECT rather than mere approval of a plan. This change in the rules is a GREAT THING for solar because it cuts out the scam meisters and rewards people who are willing to move ahead quickly with projects and actually solve environmental problems instead of talking about them and counting money. The message is clear: get your projects built and soon, or give up and give someone else a chance.

I don't know of a single viable decent project refused by a utility for no reason whatsoever. Certainly that does not happen for rooftop projects. But I am not, in principle, in favor of forcing utilities to assume huge costs to satisfy some developer if the projects are going to harm the interests of rate paying customers. The FIT program has been an enormous success in Japan, and deregulation of the industry actually means that if a "monopoly" won't accept your "cheap power," then you can sell it directly to customers. So.. what is the complaint again? Oh yeah. You want utilities to accept your EXPENSIVE power and pass the costs on to taxpayers and rate payers. Forget it. Go sell your power to customers and see how easy the utilities have it.... not!

The most interesting part of the article to me is the bidding. Anyone who has been paying attention knows that this represents the biggest problem going forward. FIT is giving way to negotiated contracts. Given a deregulated industry, this HAD to happen. I think I know the result. Anyone want to guess what happens next?

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