Japan Toughens Rules for Renewable Energy Incentive Payments

(Bloomberg) — Japan’s trade ministry is setting stricter
rules for production and sales of renewable energy in what it
says is a drive to speed up development of projects and ensure
stable power supply.

Japan introduced a renewable energy incentive program in
July 2012 after the Fukushima nuclear disaster, offering some of
the highest rates for solar-produced electricity in the world.

The rates attracted floods of solar applications, so much
so that utilities who are required to buy the power for their
transmission grids say they are being overwhelmed. Plus, the
supply is unstable.

As many renewable energy projects haven’t started even
years after winning approval, the new rules allow utilities to
strip a renewable energy provider of grid access if they miss
the start date.

The same can happen if they fail to pay for access within a
month of signing a contract, according to a document released by
the ministry today.

As wind and solar power is intermittent based on the
weather, the ministry will also expand a rule that allows
utilities to reduce or stop intake of renewable energy for up to
30 days a year without compensating the suppliers.

That rule, applicable for when supply exceeds demand, was
for producers with capacity of 500 kilowatts or more.

Renewable Rules

Under new rules, it will apply to solar and wind projects
of any size — including residential rooftops — according to a
separate ministry document. In addition, the maximum period for
no compensation will be calculated by hour not daily to better
reflect demand and supply.

The measures come after at least five of the country’s
utilities began restricting the access of new solar farms to
their grids earlier this year and examined how much more clean
energy their grids can add.

Another measure will formalize what is already happening in
the industry; namely, a renewable energy provider will receive
grid access from a utility when it agrees not to be compensated
for reducing output.

Grid capacity is tight especially in regions covered by
Tohoku Electric Power Co. and Kyushu Electric Power Co.

The utilities, Hokkaido Electric Power Co., Tohoku Electric
Power Co., Shikoku Electric Power Co., Kyushu Electric Power
Co., and Okinawa Electric Power Co., will restart grid access to
renewable projects after the rule changes in January, according
to the ministry.

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
Peter Langan, Abhay Singh

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