Modest FiT cut no hindrance to plan for Japan’s biggest solar project

April 03, 2013

Approval has been given for the construction of Japan’s largest solar power plant to date on an island off the city of Sasebo in southern Japan, according to a local media report.

Nagasaki’s daily newspaper said German firm Photovolt Development Partners and other partners will establish a venture in May to proceed with the 400-MW project. It will create new income sources for the island community and securing employment for 150 staff.

The new facility will be built on idle land and connected to Kyushu Electric Power’s grid by a new undersea cable. The total project cost is put at 100 billion yen (USD1.1 billion).

Japan last year introduced a generous feed-in tariff (FiT) program paying renewable energy generators above-market rates for their output. Last week the government approved a recommended 10 percent cut in the solar FiT, effective 1 April. The new rate of 37.8 yen (40 US cents) per kilowatt hour will remain in force until the end of March 2014. The FiT for other forms of renewable energy remain unchanged.

Analysts say the modest cut to Japan’s solar FiT will have no impact on the country’s booming solar industry. Bloomberg New Energy Finance reported that 580-MW of non-residential solar was installed in Japan during 2012 and it expects another 1.46-GW to be added in 2013.

The Japanese solar photovoltaic supply industry has also been achieving cost reductions as it has geared up. The Japanese Ministry of Economy, Trade and Industry said non-residential system costs had also fallen 14 percent since its FiT committee made its initial deliberations last year.

The price of new solar PV installations is currently estimated to be JPY280,000 per kW (USD3,000). If they stay within budget the Sasebo project developers will do somewhat better than that.