Higher FIT Considered for Offshore Wind Projects; Lower FIT Possible for Solar PV from April 2014

Japan does not have the kind of shallow offshore waters that form the ideal environment for offshore wind.  Instead, the ocean surrounding Japan drops off deeply, and conditions can be harsh.  The offshore wind projects now being tested is for massive floating platforms, anchored with huge chains. The project participants are major companies, with big company overhead and long planning horizons.

That is expensive, to say the least.

In addition to the 1GW Fukushima project mentioned earlier this year, Marubeni is reported to be leading a 125MW project offshore of Kashima, Ibaraki.  Other smaller demonstration projects are planned elsewhere, from Kyushu to Hokkaido.

So it was not such a big surprise to see reports in the press last week that a higher feed-in tariff rate is being considered for offshore wind.  The current year's FIT for wind generated power is 22 yen per kWh.  From next year, according to Nikkei, a tariff for offshore projects is being considered of 30-40 yen per kWh, likely around 1.5 times the rate for land-based wind.  Such a differential is not uncommon in European feed-in tariff regimes.

Meanwhile, according to the same source, it is likely that the solar PV tariff (now 36 yen) will be reduced to a level somewhere between 30 and 35 yen (plus tax).  It was recently announced that residential solar installations are down 15% from last year.  Perhaps the FIT pricing committee should consider retaining 36 yen pricing for residential rooftop and "mini" solar projects, even if the tariff is cut to somewhere in the 30-35 yen range next year for larger open field installations?

Unfortunately, a high FIT rate does not seem to be enough to jumpstart some of the other renewables areas.  Geothermal, in particular, needs some kind of boost to get around NIMBY complaints and unproven worries about projects' impact upon hotspring water resources.  Onshore wind requires accelerated environmental assessment procedures if it is to make an impact.