METI · meter 42 yen/kWh, redundancy ratio is 60%, electricity usage per month is 3,000 kW and costs 7,000 yen, and the electricity usage o Power generation with solar PV panel All

October 2011

Agency for

Natural Resources and Energy

1

Renewable Energy Fostered by All

Understand the feed-in tariff scheme and cooperate with us

METI Agency for Natural Resources and Energy

2

Summary of the Feed-in Tariff Scheme for Renewable Energy

Electric utility etc.

Electricity customers (Costs to purchase the electricity generated from renewable energy shall be shared

by all electricity customers in the form of a surcharge.)

Electricity generated from

renewable energy sources

shall be connected to and sent

via the power transmission line

of the electric utility.

The electric utility shall pay a

fixed price corresponding to

the amount of electricity sent.

This is a scheme to foster renewable energy in Japan with the help of all electricity customers. Electric utilities will be obliged to purchase electricity generated from renewable energy sources such as solar PV

and wind power on a fixed-period contract at a fixed price. This will promote the introduction of renewable energy. Costs of purchased electricity generated from renewable energy shall be transferred to electricity customers all over

Japan in the form of a nationwide equal surcharge. They shall pay the surcharge for renewable energy proportional to electricity usage.

Surcharge


Electricity usage: 300 kWh Electricity charge: 7,000 yen

3

Household with a solar PV panel installed (example)

Home appliances etc.

Inverter Distribution

panel

Conventional

meter

Electricity

purchase

meter

Power

generation

with solar

PV panel

All electricity customers

shall bear the surcharge

proportional to electricity

usage whether or not they

have solar panels installed

at their houses.

Electricity usage and

electricity charge will be

reduced for the amount of

electricity generated

privately.

In case of typical household with a 4-kw solar PV panel (that costs about ¥2 million at present) installed, the monthly electricity charge will be reduced from about ¥7,000 to ¥3,660 by using the electricity generated by the solar PV panel for the household.

In addition, by selling the excess electricity generated by the panel, the household will be able to earn about ¥9,000.

If more electricity than the

power used in the house is

generated, the excess can

be sold under the feed-in

tariff scheme.

Electricity usage: 157 kWh Electricity charge: 3,660 yen

(including surcharge of 80 yen) Income obtained by selling electricity:

9,000 yen

(Note) The above calculation is based on the assumption that the use ratio of solar PV power generation facilities is 12%, the price/kWh of the electricity sold is

42 yen/kWh, redundancy ratio is 60%, electricity usage per month is 3,000 kW and costs 7,000 yen, and the electricity usage of 300 kWh is kept unchanged

in the house even after introduction of solar PV generation.

The surcharge/kWh used here is the price after the renewable energy becomes quite popular (0.5 yen/kWh).


Mechanism of Feed-in Tariff Scheme for Renewable Energy

Electric utility

Cost bearing adjustment organization (Organization to collect and

distribute the surcharge)

Purchase of electricity at a fixed price

for a government specified period

Sale of electricity from renewable energy sources

Specification of

purchase price and

purchase period Decision of

Surcharge unit price

per kWh

Electricity supply

Collection of surcharge together with

the electricity charge Submission of

collected surcharge

Deliver of

purchase cost

Approval of

facilities Procurement price calculation committee

(appointment of five committee members

requires consent by the Diet)

Electricity

customers

Those who generate power at home

Government

Those engaged in the power generation business using renewable energy sources

4

Genki-kun No. 1, symbol of

“Tsuru City, Town of Water”


Progress of examination

From November 2009 A project team on Japan’s Feed-in Tariff Scheme (five meetings and six hearings were held)

March 2010 Options for the scheme were presented and opinions were invited on the website (318 opinions were received until May 2010)

From April 2010 Regional forums were held (Explanatory meetings were held at 21 places throughout Japan and opinions were invited)

July 2010 “The framework of the system” was announced From October 2010 Examination of detailed design was started at the council

(Advisory Committee for Natural Resources and Energy)

From November 2011 Renewable energy symposium was held (at nine places throughout Japan)

December 2010 “Report on the Detailed Design (Draft)” was presented and public comments were called for (8840 comments were received until January 2011)

February 2011 Compilation of “Report of Feed-in Tariff Scheme Subcommittee” March 2011 Cabinet decision of the bill August 2011 Passing and approval of the bill (August 26)

Feed-in tariff scheme for renewable energy has been examined as follows:

5


Renewable energy to be purchased

Source: “Japan’s Energy 2007” by the Agency for Natural Resources and Agency

“The 11th New Energy Award” by New Energy Foundation etc.

Solar PV power generation for residences (below 10 kW)

Those who generate power using approved facilities

Fives types of energies: Solar PV, Wind power, Small and medium scale hydraulic power (generation of power below 30,000 kW),

Geothermal power and Biomass (that does

not affect the existing applications such as paper and pulp)

Those who can newly start power generation using approved facilities

All of the generated power

shall be purchased

Excess electricity shall be purchased

• It is not necessary to change the wiring at present. You can use it as it is.

• The more you save energy, the more you can sell electricity and can obtain more income from sale of electricity.

6




Purchase price and purchase period

○ Purchase rate and period shall be decided every year corresponding to the type, form of installation and scale of renewable energy sources.

○ Specifically, the price and the period shall be decided based on the opinion from an independent committee (members shall be appointed after authorization by the Diet) after consultation with the ministers concerned (Minister of Agriculture, Forestry and Fisheries; Minister of Land, Infrastructure, Transport and Tourism; Minister of the Environment； and Minister of State for Consumer Affairs).

7

[Reference] Comparison example of current power generation costs

yen/kWh

0

10

20

30

40

50

(Source)

Geothermal: Geothermal Generation Workshop (June 2009)

LNG: Subcommittee to Study Costs and Other Issues, Electricity Industry Committee (January, 2004)

After open examination at the third party committee, the purchase price and the purchase period shall be decided.

Appointment

requires consent by

the Diet

< Points >

• Power generation cost

• Profit to be received by those who

installed facilities

• Service life

• Premium price for three years from

the launch of the scheme etc.


Collection and distribution of surcharge

The equal cost (surcharge/kWh) shall be borne all over Japan. The government shall decide the surcharge/kWh based on the results of the previous fiscal year. However, enterprises that consume an extremely large amount of energy (eight times or more the average unit of manufacturers in case of a manufacturer) and customers affected by the Great East Japan Earthquake shall be exempted from the surcharge.

Since it is possible that the introduction speed of the renewable energy would vary depending on the region, an organization to adjust the burden will be established. The surcharge collected by electric utilities shall be first collected by the cost bearing adjustment organization and then delivered to the electric utilities as grants corresponding to the actual purchase costs.

Electric utility A

Electric utility C

Electric utility B

Electric utility D

Customers of

electric utility A

Supply of electricity

(Payment for purchased electricity) Payment of

the purchase cost

(Grant)

Collected

surcharge

amount

Government Designation Enterprises that consume a large amount of

energy

(exempted from payment of 80% or more of the Surcharge)

Those affected by the Great East Japan Earthquake

(exempted from surcharge payment from July 1, 2012

to March 31, 2013)

8

Customers of

electric utility D

Customers of

electric utility C

Customers of

electric utility B

Payment of

Surcharge together

with the electricity

charge

Approval

Organization to collect and distribute the surcharge (Cost bearing adjustment organization)

This organization first

collects the surcharge

and, after adjusting the

surcharge/kWh so that

it becomes equal all

over Japan, distributes

the necessary cost to

the electric utilities.


9

Excess Electricity Purchasing Scheme has been already introduced for solar PV power generation systems. The electricity purchased under this scheme will be continuously purchased under the newly introduced Feed-in Tariff scheme for renewable energy.

Scope of purchased electricity is enlarged to that from

other renewable energy sources; all generated

electricity will be purchased

Relationship with the current Excess Electricity Purchasing Scheme for Solar PV Power

Support of Future Support by All

Understand the Excess Electricity Purchasing Scheme for Solar PV Power

and cooperate with us.

Renewable Energy

Fostered by All Understand the feed-in tariff scheme and

cooperate with us



Solar energy

[Solar PV power generation]

Electricity customers

[Institutions] [Residences] [Offices]

Unused electricity among generated power

Income by sale

(¥42kWh for residences)

(¥40/kWh for non-residences)

Electricity

Surcharge to promote solar PV power generation*

(borne by all electricity customers)

Electric utility

* Cost required for purchase of excess electricity from solar PV power . It is added to the ordinary electricity charge and borne by all electricity customers.

Mechanism of Excess Electricity Purchasing Scheme for Solar PV Power


(Reference) Difference from the Excess Electricity Purchasing Scheme for Solar PV Power

10

Excess Electricity Purchasing Scheme for solar PV Power

Feed-in Tariff Scheme for Renewable Energy

Excess electricity is purchased

Electricity generated

with solar PV

Electricity consumed

in the residence

Excess

electricity

(purchased)

¥42/kWh

for ten years

Purchase rate and purchase period

Residences

Non-residences

¥40/kWh

for ten years

Electricity customers Electric utility

Surcharge will be collected by each electric utility.

Electricity generated by

solar PV system

Electricity consumed

in the residence

Cost bearing

<Image of excess electricity in case of a residence>

In case of electricity from solar PV system for residences, excess electricity will be

continuously purchased.

Excess

electricity

(purchased)

All generated

electricity

(purchased)

Electricity generated from renewable energy sources

Decided after invitation of opinions from the general public on

the basis of discussion at the governmental council.

* Price is for FY 2011

Purchase rate and purchase period

After consultation with the ministers concerned, the purchase price and

purchase period corresponding to energy source, form of installation and

scale shall be decided based on the opinion from the third-party committee.

The price and period shall be fixed after invitation of public comments.

<Image>

Electricity customers

Adjustment to make the surcharge equal all over Japan

Cost bearing

Electric utility Adjustment organization

Generated electricity is entirely purchased


40.6 49.1

55.8 65.1

74.3 79.2 86.1

89.1

32.8 36.0 38.3

44.4

60.7

74.7

91.7

110.3 110.3

0.0

20.0

40.0

60.0

80.0

100.0

120.0

15年度 16年度 17年度 18年度 19年度 20年度 21年度 22年度 23年度 24年度 25年度 26年度

供給実績

各電気事業者に課してきた義務量の合計

Handling of existing renewable energy power generation facilities

11 * Total supply of electricity all over Japan in FY 2009 was 874,100 million kWh

(Electric Power Investigation Statistics, Agency for Natural Resources and Agency)

(100 million kWh)

Image of total obliged amount

imposed on the electric utilities during

the transitional measure period

Industrial power generation facilities using renewable energy sources are already subject to the Renewables Portfolio Standard (RPS) system introduced in 2003. This system obliges electric utilities to procure a certain amount of renewable energy and has largely contributed to increased use of renewable energy in Japan so far.

New Feed-in Tariff Scheme is for the facilities newly installed. About 1,400 existing facilities for power generation can continue their operation under the same environment as before under the RPS Act.

Transfer from RPS system to

Feed-in Tariff Scheme

FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014

Results of supply

Total of obliged amount imposed

on the electric utilities


Other important matters

The Act clearly specifies that the scheme should be actively reviewed corresponding to the actual situation.

The scheme shall be reviewed at least every three years. In addition, if the Basic Energy Plan is changed, the scheme shall be reviewed on the basis of the contents of the plan after change.

The scheme shall be drastically reviewed by FY 2020.

The government will further enhance PR activities. Further, it will use all possible measures including research and development promotion and review of various regulations in order to popularize renewable energy.

Electric utilities and renewable energy enterprises are required to make efforts in cost reduction.

Review of the Scheme

Responsibility of the Government

Responsibilities of Electric Utilities and Renewable Energy Enterprises

12


Documents

METI · meter 42 yen/kWh, redundancy ratio is 60%, electricity usage per month is 3,000 kW and costs 7,000 yen, and the electricity usage o Power generation with solar PV panel All