Arya News - The planned end of the system has raised concerns over a potential exodus of small business operators. The government intends to promote business consolidation by giving preferential treatment to “certified operator” with an aim to expanding solar power generation.
TOKYO – The Economy, Trade and Industry Ministry intends to launch an effort in fiscal 2025 to consolidate small-scale solar power generation projects as the feed-in tariff (FIT) system — in which the government guarantees that utility companies purchase electricity from renewable energy sources at a fixed price — will be phased out from fiscal 2032.
The planned end of the system has raised concerns over a potential exodus of small business operators. The government intends to promote business consolidation by giving preferential treatment to “certified operator” with an aim to expanding solar power generation, named as a pillar of renewable energy sources in the Strategic Energy Plan approved by the Cabinet in February.
The ministry plans to soon amend the relevant ministerial ordinance and seek applications for qualified operators to take over small solar power projects.
In the wake of the accident at the Fukushima No. 1 nuclear power plant following the Great East Japan Earthquake, the government introduced the FIT system in fiscal 2012 in a bid to promote renewable energy. The system is intended to ensure the utility companies purchase electricity at a set price for 20 years in principle and make it easier for solar power generators to project when they will recover the cost of introducing power generation facilities.
The purchase price for solar power was initially set at about ¥40 per kilowatt hour under the FIT program, which was about four times higher than the current FIT price. Such a high price drew a flood of businesses into the market. In the first five years after the introduction of the system, about 460,000 solar power projects were launched, with their total power generation accounting for 3% to 4% of the total output in Japan.
As individuals and small businesses also rushed to enter the market, FIT-certified projects with an output of 50 kilowatts or less — those with a solar panel installation area around the size of a tennis court — have accounted for 34% of the total number of these solar power projects. Projects with an output of 2,000 kilowatts or more have accounted for only 25%, which is significantly lower than the figures in countries such as Germany, where it is about 70%. With the FIT system scheduled to phase out from fiscal 2032, there is a risk that a large number of small businesses, finding it difficult to renew or maintain their facilities, will withdraw from the market.
From fiscal 2025, the ministry plans to provide preferential treatment to government-certified business operators with a solar power generation capacity of 50,000 kilowatts or more. The ministry intends to provide these operators with information on entities that are considering selling their business, several months earlier than other companies would be given such information. The certified operators are also envisaged to be exempted from holding the briefing sessions for local governments that are ordinarily required when taking over solar power projects. The ministry also plans to relax a requirement for them regarding the arrival of technicians within two hours when problems with power generation facilities occur.
On the other hand, there have been cases in which business operators experience trouble with local governments over the installation of solar panels. In light of this, the ministry plans to require qualified operators to disclose information on their websites or through other means about their targets and progress on continuation and consolidation of their businesses.
The Strategic Energy Plan has set a target of boosting renewable energy to account for 40% to 50% of the power source mix in fiscal 2040. Solar power’s share would need to be increased from 9.8% in fiscal 2023 to within a range of 23% to 29%.