Japan Mulls Solar Auctions in Overhaul of Renewables Incentives

A Japanese government task force is considering auctioning as a way to manage the awarding of solar projects amid an overhaul of an incentive program to encourage clean energy.

The auction system is one option under consideration by a panel set up by the Ministry of Economy, Trade and Industry to review the country’s incentive program for renewable energy. The program began in July 2012 to diversify the country’s energy sources.

So far, most of the clean energy added under the program has been solar, although the program covers other sources such as wind and geothermal. Some utilities say their transmission lines are being overwhelmed with requests for grid connections from solar developers.

Under the current system, the government sets a tariff every year to reflect a drop in system prices. The ministry panel, which includes several academics, on Tuesday debated several options for solar projects.

One option is to hold auctions, giving approval to developers who offer the lowest price. Another option under consideration is cutting the tariff that developers receive for their output at a set rate or in accordance with installations.

“I am under the impression that a fair number of people support auctioning while there are details we need to look at more closely,” Kenji Yamaji, head of the ministry panel and director-general of the Research Institute of Innovative Technology for the Earth, said at Tuesday’s meeting.

©2015 Bloomberg News

Lead image: Photovoltaic power plant and mountain in Japan. Credit: Shutterstock.

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