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Japan to effectively end feed-in tariff system

  • June 14, 2019
  • , Jiji Press , 4:38 a.m.
  • English Press

Tokyo, June 13 (Jiji Press)–The government is considering effectively ending Japan’s feed-in tariff system, under which power companies buy electricity produced from renewable energy, such as solar and wind power, at fixed rates.

The industry ministry is weighing the termination of fixed-price power purchases from companies, which account for the bulk of the electricity bought under the system, informed sources said.

Meanwhile, purchases from households will be maintained. For large-scale corporate sellers, the ministry is considering a new program that will promote price competition.

Japan started a system to buy surplus electricity generated at home solar panels in November 2009. The system was remade into the current feed-in tariff system, which also covers electricity produced from renewable energy by companies, in July 2012.

The planned changes are aimed at reducing the purchasing costs at power firms, which are reflected in electricity bills, while keeping the momentum of the spreading use of renewable energy, the sources said.

The ministry hopes to present an outline of its reform plan to an expert panel soon so that a necessary law revision will be enacted in fiscal 2020, the sources added.

Purchasing costs under the feed-in tariff system have kept increasing since its start, spurred by the 2011 nuclear disaster at Tokyo Electric Power Company Holdings Inc.’s <9501> Fukushima No. 1 power plant.

For fiscal 2019, the costs are seen totaling 3.6 trillion yen, of which an estimated 2.4 trillion yen will be passed on to corporate and household electricity users. For this, an average household is expected to pay some 9,200 yen annually.

For large-lot sellers, the ministry will consider introducing a bidding system to allow direct sales by businesses in electricity wholesale markets.

This system is expected to reduce renewable energy power generation costs and alleviate household burdens.

To address possible slumps in prices on the wholesale markets, the ministry will consider building a system similar to the one in Germany in which the government compensates for a gap between the market and standard prices.

Meanwhile, purchases of excessive electricity generated by households and other small-scale sellers will be maintained.

Between November and December this year, some 530,000 households are expected to reach the end of their 10-year contracts with buyers under the 2009 program.

Electricity firms are expected to set their new purchasing prices per kilowatt-hour at around 8 yen for households reaching the expiration, compared with the initial price of 48 yen under the 2009 program.

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