Four more utilities stop signing contracts for purchasing renewable energy

Kyodo

Four more regional utilities said Tuesday they will stop signing contracts to buy renewable energy from mega solar power plants and other suppliers, citing transmission network capacity limitations.

The move by the regional utilities serving Shikoku, Hokkaido, Tohoku and Okinawa follows Kyushu Electric Power Co.’s announcement last week that it was suspending acceptance of applications from renewable energy suppliers.

The suspension by Kyushu Electric has already prompted the government to review the incentive scheme introduced in July 2012 for renewable energy, which it has been encouraging since the 2011 Fukushima No. 1 atomic plant disaster heightened safety concerns about nuclear power.

Under the so-called feed-in tariff scheme, power utilities are obliged to purchase electricity generated from renewable sources at fixed prices. The costs are passed on to consumers in their electricity bills.

But the five utilities have said they can no longer sign power-purchasing contracts as blackouts could occur if all output from renewable energy suppliers is transmitted to the utilities’ grids, causing overcapacity.

The Ministry of Economy, Trade and Industry said the same day that annual renewable energy surcharges are projected to reach around ¥2.7 trillion if all renewable energy facilities approved under the feed-in tariff scheme start operating, a four-fold increase from fiscal 2014 that would result in standard households paying ¥935 in monthly surcharges, compared with ¥225 at present.

By reviewing the scheme, the ministry plans to help spread the use of renewable energy but keep the public burden at an appropriate level, according to officials.