Japan could cut its tariff to buy solar power by as much as 18 percent next fiscal year following a drop in project operating and maintenance costs, according to estimates by Bloomberg New Energy Finance.
The tariff would be reduced in two stages at the beginning of Japan’s new fiscal year in April and again in July on the third anniversary of the debut of an incentive program to attract investment in clean energy, according to a Jan. 19 report published by the London-based researcher.
The tariff, currently 32 yen per kilowatt hour, may drop to 28.6 yen in April for approved projects, BNEF said. The rate may be reduced again in July to 26.3 yen or lower under the incentive program for clean energy, according to BNEF.
The program, introduced in July 2012, was designed to assure higher tariffs for three years to boost the sector. The tariff for solar has been reduced every year since the program’s debut to reflect falling costs.
A committee advising the ministry of economy and trade last week began an annual review of the incentives. Besides solar, the program covers geothermal, wind, biomass and small hydro power. In addition to resetting rates, the committee is discussing how to end the three-year premium period.
Tariffs for other technologies are expected to remain unchanged since the data to detect trends in the other areas of clean energy development is scarce, according to BNEF. Solar accounts for the majority of projects approved by the ministry under the program so far.