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istockphoto.com | selensergen

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4 power companies resume purchases of solar power with more control

Four major power companies in Japan reopened their doors to buying solar power on Jan. 26, as government regulations making it easier for them to restrict their purchases came into force.

The move by Hokkaido Electric Power Co., Tohoku Electric Power Co., Shikoku Electric Power Co. and Kyushu Electric Power Co., was a response to new rules from the Ministry of Economy Trade and Industry that give the utilities more flexibility in asking renewable energy suppliers to restrict the amount of power they provide, should the need arise.

At the same time, suppliers of renewable energy now face an increased risk of not being able to sell all the electricity they produce. This could discourage market newcomers.

Major power companies in Japan are required to purchase power generated through renewable sources at fixed prices. However, by October last year, the four power companies, together with Okinawa Electric Power Co., had halted procedures to purchase new units of solar power. The utilities explained that they faced too many applications from solar power suppliers wanting to sell them electricity, and that the amount they would receive would exceed their capacity.

In December, the ministry introduced rules allowing utilities to flexibly control generation of renewable energy when they had too much, making it easier for power companies to accept renewable energy.

Originally, power companies were able to restrict purchases of solar and wind power only when the generating capacity was 500 kilowatts or more. Under the rules that came into force on Jan. 26, the generating capacity provision was removed, allowing restrictions for all solar and wind power, including power for homes. Furthermore, the length of time they could retain restrictions was changed from 30 days per year to 360 hours per year for solar power and 720 hours for wind power, allowing them to implement restrictions by the hour rather than by the day.

Furthermore, since the Hokkaido, Tohoku and Kyushu power companies had already topped the limit for solar power that the Ministry of Economy, Trade and Industry had calculated that they could receive, they will face no limits on the length of time over which they can implement restrictions on purchases.

However, with no upper limit on restrictions, the risks for renewable energy suppliers increase. This could result in companies giving up on entering the market one after another. The Hokkaido, Tohoku and Kyushu power companies accordingly decided this fiscal year to announce forecasts for the length of time over which they would implement restrictions. Furthermore the Organization for Cross-regional Coordination of Transmission Operators will be set up in April, to check whether power companies’ restrictions on power generation are appropriate.

In order for renewable energy to spread nationwide, it is necessary to boost transmission lines feeding the Tokyo, Chubu and Kansai power companies. In fiscal 2015, the Ministry of Economy, Trade and Industry plans to formulate targets for introducing renewable energy in the future, and decide on how to cover the cost of boosting transmission lines.



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