A government panel has recommended Japan lift the amount utilities must pay for electricity from offshore wind farms while cutting prices for power fed in from solar projects, as the country looks to diversify its use of renewable energy.
Japan, hoping to boost alternative energy in the wake of the Fukushima nuclear disaster, introduced a feed-in tariff scheme in 2012, under which utilities must buy all power generated from renewable sources such as wind, solar or geothermal. But wind projects accounted for only 3 percent of development approvals under the programme as of November, with solar making up 94 percent.
The panel's recommendation, which will need approval from Japan's trade minister to take effect, should boost business for companies connected to the wind sector both domestically and overseas such as Hitachi Ltd and Mitsubishi Heavy Industries. "As you look at Japan, and how we see the energy mix in Japan ... we see an opportunity, and that opportunity is in renewables," Anne McEntee, head of renewable energy at GE, said at an industry conference last month, when the company announced it would begin selling a wind turbine made
specifically for the country.
The offshore wind tariff for major projects should be lifted by nearly two-thirds to 36 yen a kilowatt-hour from the year that starts from April, while the solar tariff should be cut by 11 percent to 32 yen a kilowatt-hour for corporate projects, the panel suggested in a report issued late on Friday. While generous subsidies have sparked a rush of solar energy
projects, the trade ministry is now considering revoking authorization for some unbuilt installations.
Industry sources have said the promise of a quick profit encouraged speculative developers lacking the experience and expertise needed to deliver, and would cause many projects to fall through. As of November, less than a quarter of the 26,226 megawatts of solar capacity approved since subsidies were introduced in July 2012 is selling power to the grid, according to data issued late last month by Japan's Ministry of Economy, Trade and Industry (METI).
Below is a table of the prices proposed by the committee for the fiscal year that begins from April and the actual prices for the current fiscal year that ends in March. The prices are in yen per kilowatt-hour (kwh) and exclude tax.