Japan plans new renewable tariffs

Japan Feed-in Tariff Reform expands renewable procurement to IPPs, supports low-carbon electricity, and sets 15-year contracts for wind, biomass, small hydro, and geothermal, with nationwide surcharges and revised solar rates for households and small businesses.

Japan plans to make the power sector buy electricity from a wider range of renewable energy sources than it does currently in a feed-in tariff incentive scheme from the year starting April 2012.

The government is expected to submit related bills for the new scheme during the current parliament session, aiming to make electricity low-carbon and to support a clean-energy market.

Currently, Japan's 10 power companies are required to pay 48 yen 60 cents US per kilowatt hour for surplus solar electricity from house owners and 24 yen per kwh for the surplus from small businesses and are allowed to add on the extra costs to users evenly.

Below are some of the main points that differentiate the existing scheme effective in the business year starting in April, from the new scheme based on a set of proposals a government advisory panel approved recently.

For 2011/2012:

• 10 power companies only buy surplus solar from small-lot suppliers.

• Prices for house owners will be cut to 42 yen per kwh as solar panel prices are on the decline.

• Prices for small businesses will be raised to 40 yen per kwh to lessen the impact of the government's ending subsidies for installation.

For 2012/2013 and onwards:

• Not only 10 power companies but also independent power producers IPP will buy electricity from renewable sources.

• Their buying will last for 15 years.

• It will apply to electricity from solar, wind, biomass, small-scale hydro and geothermal power — except for surplus electricity only from household solar suppliers.

• Prices for wind, small-sized hydro, biomass, geothermal will be either 15 yen or 20 yen per kwh.

• Prices for solar are to be decided later.

• There will be no difference in surcharges from one company to another as power producers will pass their total payments to users evenly nationwide.

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