Japan Plans System to Boost Solar Power Capacity

Reuters/February 24, 2009

Japan aims to make utilities pay for surplus solar-power electricity that households produce by amending a law in the current session of parliament, the Ministry of Economy, Trade and Industry said on Tuesday.

It was the first clear sign of government action on the issue, but the details of the amendments have yet to be thrashed out. The issue may be contentious as it will increase the financial burden on consumers as well as utility companies.

Japan aims to boost its solar power capacity to 10 times the 2005 amount by 2020 and 40 times the 2005 amount by 2030 to help it cut greenhouse gas emissions. To meet these high targets, utility firms will have to strengthen their grid networks and install efficient batteries to absorb fluctuating amounts of electricity from solar power.

Japan aims to guarantee prices for surplus electricity from solar power generation for about 10 years to encourage homeowners to feed excess power back in to the electricity grid systems using a so-called "feed-in" tariff, ministry officials said.

Germany is the world's biggest solar power market, helped by a feed-in tariff system covering all electricity from renewable energy sources that it has been operating for several years now.

Japan's system will focus only on solar power and on the surplus electricity after home or factory usage.

"We are setting up a new system for solar power that is unique to Japan," Economy, Trade and Industry Minister Toshihiro Nikai told a regular news conference.

The guaranteed price would start at about twice the 23-24 yen (24-25 cents) per kilowatt hour utility firms now pay for voluntarily supplied surplus electricity from renewable energy sources. The cost of introducing the system would be passed on to consumers evenly, resulting in a rise in electricity fees per family of up to 100 yen a month.

The guaranteed price may come down when mass usage of solar panels reduces related costs, the officials said.

In the year that ended last March, Japan produced 1.92 million kilowatts of solar energy, 80 percent of which came from private homes.

Japan has seen demand for solar power equipment dry up after it pulled the plug on subsidies for such gear in March 2006, hurting solar panel makers' ability to invest in research and expansion abroad.

But the government brought back the subsidies from January. It plans to subsidise 70,000 yen ($740) per kilowatt of solar panel in the fiscal year starting in April to foster use of solar panels in homes. [ID:nT297875] ($1=94.59 Yen)

(Reporting by Osamu Tsukimori and Risa Maeda; Additional reporting by Yoko Kubota; Editing by Hugh Lawson)

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