Japan’s Ministry of Economy, Trade, and Industry (METI) has recently revealed details about its plan to phase out fixed feed-in tariff scheme.
Japan introduced FIT in 2012 to push for the adoption of renewable energy in the country. Under the FIT program, large power utilities purchase electricity generated by renewable sources with prices set by the METI. Prosumers then pay a surcharge.
However, following the widespread adoption of solar PV, the high solar power consumption tax has become a burden for end users, especially households. That becomes one of the reasons for the METI to adjust the FIT system.
Currently, residential users have to pay a relatively high price for electricity generated by power utilities because rooftop systems are not that popular yet in Japan. According to the METI, the total amount paid for power purchasing under the FIT is estimated at JPY 3.6 trillion (RMB 230.18 billion) this year, and around JPY 2.4 trillion (RMB 153.45 billion) of which will be covered by end users through tax, meaning that the annual consumption tax paid by ordinary families will reach JPY 9,204 (about RMB 588.5), which is 13 times the tax of JPY 686 (about RMB 43.9) in 2012.
It reflects that the poor cost competitiveness for residential users results in higher power bills. To improve the adoption of rooftop solar, some of the FIT regulations will be retained, noted the METI.
Another factor that contributed to the METI’s decision was the rapid growth of commercial and industrial (C&I) PV systems. So far, FIT for C&I solar sector represented 70% of the total FIT for solar PV. The METI believed that FIT is no longer ideal for solar company’s independent development.
Earlier this April, the METI has gathered solar PV professionals to discuss solutions to keep Japan’s solar thrive while relax tax burden for end users.
According to the METI, it’s planning to revise regulations for the FIT scheme in 2020 and enact the new policy in 2021. The new policy may introduce Feed-in premium (FIP), which is being increasingly utilized in Europe, to replace the old policy. The characteristics of FIP model is that the payment level is based on a premium offered above market price. Under the FIP, electricity from renewable energy source (RES) producers can sell RES on the spot market and receive a premium on top of the market price. The government will pay a fixed FIP that is composed of FIP and market price.
Once the new policy takes effect, the new system will apply to the new PV installations.
Source: Mainichi Shimbun/Asahi Shimbun
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