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Changes ahead on feed-in tariff system

November 3, 2014

METI to overhaul rules on feed-in tariff program



The Ministry of Economy, Trade and Industry intends to eliminate companies from the feed-in tariff system that have promised to sell electricity but have no plans to generate renewable energy themselves, sources say.

At an experts’ meeting to be held Wednesday, METI will suggest proceeding with detailed discussions on the matter, the sources said Sunday.

Under the feed-in tariff program, power suppliers that use renewable energy sign contracts with major power companies after being certified by the central government.

The program allows smaller power suppliers to obtain informal agreements from purchasers before signing contracts, providing them with a degree of security so they can begin raising funds and building facilities.

But some companies obtain government certification under the program with the intention of selling facility sites for profit, instead of carrying through with building power generation facilities themselves.

Canceling informal electricity purchase agreements will cause trouble, a senior METI official said. The ministry will thus aim to set clear criteria for the cancellation of electricity purchases that major power companies have already agreed to, the sources said.

Since electricity purchase prices are set when would-be suppliers apply to major power companies for contracts, they tend not to begin power generation immediately, choosing to instead wait until technological advances help lower equipment costs such as for solar panels, boosting their profit margin.

To fix that problem, METI is considering having purchase prices set when would-be power suppliers conclude contracts with major power utilities as well as lowering rates under the program, the sources said.

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