Expert calls for competition in renewable energy feed-in tariff system

Kyodo

A member of an advisory panel to the industry ministry is calling on the government to introduce market competition in its feed-in tariff scheme to promote renewable energy by giving preferential treatment to solar power suppliers offering low-priced electricity.

Kenji Yamaji, who heads a subcommittee on new energy under the ministry’s Advisory Committee for Natural Resources and Energy, made the recommendation in an interview ahead of his subcommittee beginning full-fledged discussions Wednesday on revising the feed-in tariff scheme.

Yamaji recommends giving priority to purchasing renewable energy from suppliers offering the best price to lessen the burden that gets passed on to consumers.

Under the current system, utilities are obliged to purchase electricity generated from renewable sources at fixed prices. The costs are passed on to consumers in their electricity bills, raising concerns that consumers will have to shoulder more of this burden as the supply of solar power increases.

“The solar power operators have low investment risks and the principle of market competition is not functioning” under the current scheme that guarantees profits for solar power suppliers, said Yamaji, a University of Tokyo professor emeritus engaged in energy systems engineering.

The use of renewable energy is regarded as vital in Japan’s efforts to reduce reliance on nuclear power generation in light of the Fukushima No. 1 nuclear plant disaster triggered by the March 2011 earthquake and tsunami.

Stressing the urgency of reviewing the feed-in tariff scheme aimed at spurring the use of clean energy, Yamaji said, “We will not be able to regulate the electricity generated and costs (for consumers) if the current scheme continues.”

Last month, Kyushu Electric Power Co. and four other utilities decided to stop signing contracts to buy renewable energy from solar power suppliers in their service regions, citing transmission network capacity limitations amid increases in solar power supply.

Yamaji said the government should consider temporarily halting accreditation of new renewable power sources under the current system, as expansion of transmission capacity will take time.

  • Starviking

    This is a really good idea. There is something unfair about companies and rich people benefiting from solar power, whilst everyone else has to cover their profits through increased power bills.