Japan May Apply Solar Brakes With Rate Overhaul, Yomiuri Reports

Oct. 1 (Bloomberg) — Japan may revise its incentive
program for clean energy to stem the rush of solar power
producers trying to secure higher rates before the end of the
fiscal year, the Yomiuri newspaper reported today.

Under the current program, renewables producers qualify to
sell their power at the fixed rate set at the time they win
approval from the government. The rules may change so that solar
developers will only be able to get the price at the time they
begin producing power, which is typically lower, according to
the newspaper, which didn’t say where it got the information.

Solar power production has boomed since the introduction of
a feed-in tariff program in July 2012 at the expense of other
technologies such as wind and geothermal.

Officials at the trade ministry weren’t immediately
available for comment.

The government reviews the tariffs for solar, wind,
geothermal, small hydro and biomass yearly. Solar tariffs have
been cut annually following the surge in installations while
tariffs for other technologies have remained fixed.

In past years, solar producers have rushed to get project
approvals before any tariff changes take effect in April.

Incentive Program

Japan has approved about 72,000 megawatts of clean energy
projects since the feed-in tariff program’s inception. The bulk
of the approvals, or 96 percent, has been solar. Japan had
31,000 megawatts of renewable energy at the end of 2010,
according to Bloomberg New Energy Finance data.

Not all clean energy projects qualifying for incentives
have been built, signaling various bottlenecks ranging from the
availability of land to the cost of equipment and labor. As of
June, 11,090 megawatts of approved projects have begun
operating, 15 percent of the total, according to the trade
ministry.

Kyushu Electric Power Co. said last week that it will
suspend grid access while it reviews how much more clean energy
it can handle, a move followed by some other utilities such as
Shikoku Electric Power Co.

In March, Kyushu Electric received about 70,000
applications for grid access for solar power generation,
equaling the amount received in the previous 11 months.

Japan’s solar tariff was 40 yen (36 cents) per kilowatt
hour when the incentives started two years ago. The tariff is
now 32 yen per kilowatt hour. Japan’s consumption tax, which is
currently 8 percent, is added to both rates.

From April 1, the trade ministry began requiring solar
projects to secure land and equipment within six months of
getting approvals.

To contact the reporter on this story:
Chisaki Watanabe in Tokyo at
cwatanabe5@bloomberg.net

To contact the editors responsible for this story:
Reed Landberg at
landberg@bloomberg.net
Iain Wilson

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