Japan’s about to become the next major economy to implement a solar feed-in tariff, and from the looks of it, it’s going to be a generous one. (I can see a herd of solar companies migrating over to Japan now.) Wind and geothermal feed-in tariffs are also on their way to implementation.
Japan’s Solar Feed-in Tariff to Be Big
For solar, Reuters is quoting 42 yen (or about $0.52, €0.39, or £0.32) over the course of 20 years. That’s “roughly twice what is currently paid in Europe,” Craig Morris of Renewables International notes before asking: “Will Japan be the next boom and bust market?” (Note: it’s still less than the $0.55 Ontario is planning to pay.)
Japan has been a solar power leader before, but sitting on its previously large capacity of low-carbon nuclear, it held its horses as Europe steamed ahead with strong feed-in tariff programs. For anyone critical of such feed-in tariffs (i.e. the folks who stop by our site from time to time to try to spread the lie that it’s a failure), take notice of Japan’s decision now to follow suit after careful consideration and observation. It’s clear that it wants to boost solar on its citizens’ rooftops, and wind and geothermal power as well, at a blistering pace, and it knows that a feed-in tariff is a great way to do so (and also a great way to bring renewable energy costs down).
Japan Clean Energy Feed-in Tariffs: More Details
The 42 yen is in line with what the solar sector in Japan was pushing for, Reuters notes, and payments are likely to start on July 1.
In addition to presenting this solar feed-in tariff proposal, once finalized, to Trade Minister Yukio Edano, a 23.1 yen per kwh rate for wind power and 27.3 yen per kwh for geothermal power are also looking likely. The final rates, which are expected to be determined as early as Friday, would then need to be approved by Edano, “who is likely to make a final decision as early as end-May by also taking into account public opinion.”
More details from Reuters on rates of return for the three industries: “Ueta’s calculation based the pre-tax internal rate of return for solar power suppliers at 6 percent, for wind power suppliers with capacities of 20 kw or higher at 8 percent, and geothermal suppliers at 13 percent, the draft showed.” This offers a nice boost to companies in these industries.
Notably, it is clear that the policymakers don’t want to chip into utility company profits and intend to have the costs to be passed on to customers. “The law (mandating the tariff scheme) clearly states that for the first three years, we should pay special attention to profit (of the suppliers),” Kazuhiro Ueta, the head of the panel studying appropriate rates, told reporters.
“When you look at it from the viewpoint of households, this may be a burden through electricity costs. But to put it in other words, this is an investment to promote renewable energy. It is necessary to understand that this is a framework for promoting such energy.”
The feed-in tariff rates will be reviewed annually once implemented.
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