Japan Could Cut Solar Tariffs as Much as 18% Following Cost Drop

(Bloomberg) — Japan could cut its tariff to buy solar
power by as much as 18 percent next fiscal year following a drop
in project operating and maintenance costs, according to
estimates by Bloomberg New Energy Finance.

The tariff would be reduced in two stages at the beginning
of Japan’s new fiscal year in April and again in July on the
third anniversary of the debut of an incentive program to
attract investment in clean energy, according to a Jan. 19
report published by the London-based researcher.

The tariff, currently 32 yen per kilowatt hour, may drop to
28.6 yen in April for approved projects, BNEF said. The rate may
be reduced again in July to 26.3 yen or lower under the
incentive program for clean energy, according to BNEF.

The program, introduced in July 2012, was designed to
assure higher tariffs for three years to boost the sector. The
tariff for solar has been reduced every year since the program’s
debut to reflect falling costs.

A committee advising the ministry of economy and trade last
week began an annual review of the incentives. Besides solar,
the program covers geothermal, wind, biomass and small hydro
power. In addition to resetting rates, the committee is
discussing how to end the three-year premium period.

Tariffs for other technologies are expected to remain
unchanged since the data to detect trends in the other areas of
clean energy development is scarce, according to BNEF. Solar
accounts for the majority of projects approved by the ministry
under the program so far.

To contact the reporter on this story:
Chisaki Watanabe in Tokyo at

To contact the editors responsible for this story:
Reed Landberg at
Iain Wilson, Jason Rogers

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