Revision of FIT System

After three years from introduction three years ago, Japanese government is revising feed-in-tariff system for renewable energy. Experts committee in Ministry of Economy, Trade and Industry summarized a draft for revising FIT system, which included suspension of license for company with long history of inaction as power generator or introducing competition for setting price of major solar power. Putting aside arguments over correctness of adding cost for the renewables on utility price, FIT system is reviewed for lowering the price.

Japanese version of FIT system was introduced in 2012, a year after the nation suffered from inexperienced severe accident in First Fukushima Nuclear Power Plant, in want of safe and reliable energy. Power companies were mandated to buy electricity produced by individual solar generator with price of ¥42 for one kilowatt hour. But, the price was initially set on a high level for promoting renewable energy. It actually declined to ¥37 kWh in 2014.

Looking at financial superiority in solar generation, a number of companies filed as renewable power generator. But, seven out of ten have found as not started operation of power generation, waiting for price down of the devices for solar generation. The expert committee recommended not registering a company as power generator until it would make contract with major power company. If they do not start power generation, the government will suspend the license.

Although assets for renewable power generation has grown as much as the capacity of ten or more nuclear power generation, nine out of ten renewable power generators concentrated on solar power. Other power resources including geothermal or wind power have increased their capacity by 4% compared to the level before FIT was introduced.

A systematic problem can be seen in the determination of price. Power companies are allowed adding the cost for buying electricity produced by the renewables, raising retail price of electricity. Negative recognition on expensiveness urges traditional power companies, interested in resumption of nuclear reactors, argue inefficiency of renewable energy.

As said, argument for the need of renewable energy is weak in Japan. The weakness stems from the high stakes on nuclear energy. It is still a mystery why the stakeholders are so enthusiastic on maintaining nuclear power plants, which waste has not found final destination to go.