Proposals forJapan FIT system
Ver.1
Japan Renewable Energy Foundation (JREF)
February 2012

If you have any question, please contact to Shuta Mano, JREF.
Email: s.mano@jref.or.jp TEL: +81-3-6895-1020 URL: http://jref.or.jp

Executive summary
1. Price and term for power purchase(1) Setting the price and term for power purchase・ Transparency, longevity and certainty (TLC) must be ensured inpromoting private investment on renewable energy deployment. Given
that, when the Government defines the price and term for power purchase,it should establish clear rules for setting and adjusting price and show thelong-term prospect of price trend and design FIT system that allows
forecast and projection of price.
・ Set the purchase price at the level high enough to ensure 7% IRR(before-tax) of any electrical power generation projects regardless oftechnologies1 of renewable electricity production.
・ Set the purchase term (term for power purchase agreement) to a longer
period than the statutory useful life of power generation installations,regardless of technologies of electrical power generation. The term has tobe

20 years in principle and the purchase has to be continued beyond

20 years at the price that is higher than avoidable cost.
・ Set the purchase price according to installation size for geothermal, smallhydro and biomass that are easier to achieve economy of scale.
・ Determine the price and term for purchase for power generation
projectsat the earliest possible phase of such projects considering thelength of lead time for development.
(2) Review of the price and term for power purchase・ Show purchase price projection and its term in coming years to make FIT
system foreseeable, as frequent review and change of price and term cannegatively affect business plans of renewable energy installation
operators, investors, manufacturers and so on.
・ As for PV, price of which is expected to fall rapidly in a short term, ensure
appropriate price adjustment by adjusting price-depreciation rate basedon actual newly-installed capacity in a preceding year so as tosupplement regular price review.
(3)Others
・ Add electricity from repowered installations to the list of purchase under
the FIT system, with a view to increase production of renewable electricity
1

PV, wind, geothermal, small-scale hydro and biomass.
Ithrough repowerment.

Repowerment here means replacement of key

components of installations (turbine, water wheel, power generator, etc) in
principle, though different standards have to be set by technology ofelectrical power generation. Establish a program to provide financial
support to project development feasibility study in return for abolishing theexisting subsidy for building new facilities.
・ Stipulate that environment value of renewable electricity (CO2 reduction
effect) belongs to operators of renewable electricity installations. (Pleasesee detailed explanation in the body.)
2. Guaranteed grid access and priority dispatch(1) Guaranteed grid access・ Set guidelines, etc to illustrate examples of exceptions to the guaranteed
grid access of the utility companies which purchase power (as they
operate power transmission) so as to eliminate chances of their arbitrary
decisions.
・ Clarify that the burden of proof is on the utility companies if they rejectcontract of grid access of renewable electricity and require them toannounce the reasons for rejection in writing as soon as possible. Also
get utility companies to present an action plan to overcome the reasons
for rejection with concrete time line.
・ Set a time limit for determination by utility companies on grid access(2) Priority dispatch
・ Ensure to guarantee priority dispatch for electricity from renewable energy
with a view to make the most of renewable electricity.

Allow to regulate

electricity output from renewable energy sources only when no otherchoice is possible.
(3) Damage compensation and other compensation
・ Make utility company liable for damage incurred by Installation operators
due to the rejection of grid access.
・ Make utility company liable for paying the compensation to Installation
operators of renewable electricity generation

when utility companies

regulate electricity output and as a result installation are not able to supply
the pre-defined volume of electricity.
(4) Cost sharing
・ Clarify the rules about grid access cost sharing between InstallationIIoperators and utility companies. Stipulate thatutility companies shall

pay costs of grid addition and enhancement and additional costs incurred
when a grid access point other than the one at the shortest distance ischosen, and installation operators shall bear costs of access from theirfacilities to the grid access point at the shortest distance.
(5) Information disclosure on grid system and installation of feeder
・ Backbone feeders should be installed /improved by an appropriate time
limit with active involvement by the Government in areas with highpotential capacity of renewable energy sources .
・ National government and transmission grid operators should develop a
concrete plan for feeder installation from mid- and long-term perspective.
・ Utility companies should disclose all data pertaining to capacity of feeder
network, converter station capacity etc, on the Web and so on to ensure
the fair grid access.
3. Procedures, organizations(1) Data disclosure
・ Have Utility companies, installation operators and the Government
disclose data regarding FIT for a monitoring purpose to ensure

fair andtransparent procedures. Especially, ensure the disclosure of data
regarding grid access in order to eliminate the risk of arbitrary rejection ofconnection by utility companies.
(2) Establishment of a new independent organization
・ Establish a new independent organization for grid-access disputesettlement to remove influence of utility companies and to ensure
fairness.
(3) Establishment of guidelines and rules to ensure efficient discussions on grid
access.
・ Establish guideline and rules to ensure efficient discussions on grid
access, easing the burden on both installation operators and utility
companies.
(4) Regular progress report
・ Government should prepare and issue progress report covering
information about installed capacity, electricity production volume,
installation costs, etc, on a regular basis (for instance, on a quarterly
basis) to monitor the progress of FIT.
III

Content
Preface ....................................................................................................................................2
1.

2.

3.

4.

Price and term for power purchase ..................................................................................3
1.1

Principle ....................................................................................................................3

1.2

Proposal ....................................................................................................................3(1)

Setting the price and term for power purchase.........................................................3(2)

Review of the price and term for power purchase ....................................................5(3)

Others........................................................................................................................7

Guaranteed grid access and priority dispatch .................................................................8
1.1

Principle ....................................................................................................................8

1.2

Proposals ..................................................................................................................8(1)

Guaranteed grid access ............................................................................................8(2)

Priority dispatch...................................................................................................... 10(3)

Damage compensation and other compensation ................................................... 11(4)

Cost sharing ........................................................................................................... 12(5)

Information disclosure on grid system and installation of feeder .......................... 13

Procedures, organizations ............................................................................................ 14
1.1

Principle ................................................................................................................. 14

1.2

Proposal ................................................................................................................. 14

Others (Excursus) ......................................................................................................... 16

1

Preface
This proposal document is put together by Japan Renewable Energy Foundation (JREF)
based on the deliverable of “International workshop on FIT 2”, which was co-hosted by JREF
and Institute for Sustainable Energy Policies (ISEP) and participated by experts from Japanand abroad in December 2011, the hearings from Japanese renewable energy installation
operators and the examples in overseas. 3This proposal document refers to the Act pertaining to German FIT (Renewable Energy
Sources Act or EEG) because of the following reasons:・The current German FIT is fair, well-balanced and successful because it is a
product of all the efforts that have been made since 1992 to resolve problems
with utility companies and to win public understanding. The FIT is fair,well-balanced and successful.

・Germany has been a global leader in terms of investment on wind and PV
power generation for the past 10 years.

・

Unlike in Spain, there has been no solar bubble in Germany.

・German FIT is highly transparent system backed by actual data.

・Roles and responsibilities of players are clearly stipulated in the Act.

・

Germany was prompt to appropriately correct extremely high pricing on PV
electricity purchase resulting from reckless promotions of PV power generation.

・Germany has been playing a key role in practice sharing among FIT
implementing countries.

We hope this proposal document is useful in designing Japan FIT system and contributes
to the promotion of renewable electricity generation in Japan.
Lots of experts in and outside Japan offered valuable advice on this proposal. The
following people in particular gave us advice based on their plenty of experience:
Dr. Dorte Fouquet (European Renewable Energies Federation/ Lawyer)
Dr. Eric Martinot (Instituite for Sustainable Energy Policies)
Dr. Martin Pehnt (Institute for Energy and Environmental Research)
Mr. Toby. D. Couture (E3 Analytics)

2

For more details about the workshop and materials please visit JREF website at
http://www.jref.or.jp/action/event_20111208.html
3 Prof. Kenji Yamaji, Executive Board Member of JREF, avoided direct involvement in making this
proposal as he was a candidate for a member of Procurement Price Calculation Committee of METI.

2

1. Price and term for power purchase
1.1

Principle

・ Feed-in Tariff system (hereafter “FIT”) is aimed to encourage private investment inrenewable energy. Under the system, purchase of renewable electricity by utility
companies at fixed price is guaranteed for a defined period.
transparency, longevity and certainty (TLC)

4

Given that,are a must in promoting private

investment. Government should establish clear rules for setting price and term for
power purchase and show the long-term prospect of FIT system so as to make it ahighly predictable system.
・ If purchase price is too low, or purchase term is too short, for operators of
Installations generating electricity from renewable energy sources (hereafter“installation operators”) and investors to secure ROI, capital investment inrenewable electricity installations can be discouraged, leading to failure of fulfillingthe objective of FIT. On the other hand, if purchase price is too high, or purchaseterm is too long, Installation operators and investors can rake in a huge profit,
possibly leading to excessive investment. Also, as FIT is designed to haveelectricity users share the cost broadly and thinly in the form of surcharge, public
understanding on FIT is vital to maintain the system. Therefore, when settingpurchase price, it is necessary to strike a better balance between the promotion ofrenewable electricity generation and the control of excessive profits.
1.2

Proposal(1) Setting the price and term for power purchase・ Under the paragraph 2 of Article 3 of the Act on Special Measures concerning theProcurement of Renewable Electric Energy by Utility companies (hereafter the“Act”), the purchase price is to be determined taking account of the profit that
Installation operators should make and other factors including costs. Also the Article
7 of Supplementary Provisions provides particular consideration should be given to
the profit that Installation operators should make when setting the purchase priceduring the period of three years from the Act’s effective date. Considering those
provisions, the price for purchase should be at the level which ensures 7% IRR of
any electrical power generation projects regardless of technologies of renewableelectricity production.

4“Paying for Renewable Energy: TLC at the Right Price” DB Climate Change Advisors,
Deutsche Bank Group, December 20093

Reference: IRR targets in FIT in Germany and Spain
Germany
The target IRR is set at 5-7%, a bit lower than that of other countries, to minimize excessive
profits, but as for off-shore wind a higher IRR is set considering risk level of the electricity
generation technology, which is still under development.
Spain
The target IRR varies depending on the risk level of electricity generation technology. The target
IRR for low risk technology: PV and on-shore wind power are 7% and 8% respectively. The
target IRR for high risk technology: biomass is 9-10%, off-shore wind 9+% and tidal force10+%.
Also IRR target is adjusted based on the gap between the government-set target and the actual
results.

・ FIT is also designed to promote renewable electricity production in locations thatare not easy to build installations on. When setting price, it is vital to factor in thecosts of building projects which had been cancelled due to the geographicaldifficulty, not to mention the costs of existing installations.
・ The purchase term should be set taking account of useful life of electricity procution
facilities and set to a longer period than the statutory useful life at least. Also 20
year-purchase term should be applied to across all the installations producing
renewable electricity.
・ The Article 3 of the Act provides that the price and term for purchase is to be
determined by type of installations generating renewable electricity, installation
mode and scale. However, as characteristics for technologies of electricity
generation vary depending on renewable energy sources, the following points
should be noted when setting the price and term for purchase.
Points to note in setting the purchase price
Points to note
PV・

Apply different price ranges to mega solar power generation
facilities and small-and mid-sized facilities.

・

Differ pricing depending on the location of installations with aview to promote efficient use of land. (For example, apply apreferential price to electricity from installations in landfill aiming
to promote use of landfill.

・Take account of not only module costs but also costs of4peripherals and mounts.
Wind・

Apply different pricing to on-shore and off-shore.

・Apply different pricing to small wind-powered installations topromote small-sized wind.

・

Take account of poorer wind conditions and 20-30% higher
construction costs in Japan than in Europe when setting prices.

Geothermal

・

Set prices based on the size of installation as it is easier toachieve economy of scale.

Small

・

hydro
Biomass

Set prices based on the size of installation as it is easier toachieve economy of scale.

・

Add electricity produced from biogas to the list of purchase under
the FIT system with a view to promote efficient use of waste.

・

set preferential prices to those with high efficiency with a view topromote the use of biomass heating.

・Set prices high enough to encourage the use of byproduct fromlumber industry in the way not conflicting with existing

lumberdistribution system.
・Set the sustainable standard for environment assessment
including impact on ecosystem.

・ The timing of determining purchase price is also important. The time required forbusiness development varies from 2 to 20 years depending on renewable energy
sources. The later purchase price is set, the higher the uncertainty gets, possibly
making it hard to start renewable electricity generation business. So the priceshould be determined when METI grants approval based on the business execution
plan submitted by a installation operator. As for geothermal and wind, which takelonger lead time for installation than other energy sources, the purchase priceshould be determined when permission for development is granted following thecompletion of environment assessment.
(2) Review of the price and term for power purchase・ The Article 3 of the Act provides that the price and term for power purchase is to berevised every year (or every 6 months if necessary). PV requires frequent pricereview because PV equipment cost falls sharply in a short period, while geothermal
and wind don’t need price review very often as installation cost for such energy
sources is not expected to decrease in a short time. The purchase price review at
an appropriate interval works to keep profit at an appropriate level. However, when5

it comes to renewable electricity generation which depends its profitability on theelectricity purchase price, review of the price and term may increase uncertainty ofelectricity generation business.
・ Lead time for renewable electricity business development varies depending onenergy sources; geothermal takes about 10 years, wind 3-4 years while mega solar
takes 6- 12 months and residential PV several months. If the price and term forpurchase is reviewed every 6 – 12 months for the electricity generated fromgeothermal and wind, Installation operators can’t make business plans because
revenue outlook is uncertain.
・ The cap on electricity purchase can be set in different ways: In France, different
caps are set on different technologies. In Holland, the cap is based on budget while
in Spain the cap on PV is set in every quarter and price is adjusted based on actual
purchase to cap ratio. None of the above, however, is preferable because thenumber of installations could drop sharply in the middle of year, posing a huge risk
on private investors.
・ With all the above in mind, here are the proposals on price review.
Show purchase price estimate for years to come so that renewable electricity
installation operators, investors and manufactures can make businessprojection and planning.



Review all renewable energy installations regularly based on evaluation reports
substantiated by fact and data of price and installed capacity.



In addition to regular review, as for PV, price of which is expected to fall rapidly in ashort term, define “triggers” of price review. To be specific, when the number of
installations and the costs of installation are far off from the original assumption, thepurchase price should be adjusted to the level sufficient enough to secure
appropriate profit of Installation operators using a pre-defined adjustment method.
Price adjustment method can be modeled after that of Germany: to adjust pricedecrease rate based on actual newly installed capacity in a preceding year.

6Reference: Price decrease rate applied to PV electricity generation installations in Germany (effective
Jan.2012)

With the base decrease rate set at -9% per annum, if newly installed production capacity registered in
the preceding year is 500MW more or less than the originally assumed 3,000MW, price decrease rates
are to be adjusted as below:
If installed capacity is more than the assumption

If installed capacity is less than the assumption-> Rates of decrease gets bigger by threshold-> Rates of decrease gets smaller by threshold3,500MW : 3% (Total decrease rate : - 12%)2,500MW : - 2.5% (Total decrease rate: - 6.5%)

4,500MW : 6% (Total decrease rate : - 15%)2,000MW : - 5% (Total decrease rate: - 4%)

5,500MW : 9% (Total decrease rate : - 18%)

1,500MW : - 7.5% (Total decrease rate: -1.5%)

6,500MW : 12% (Total decrease rate : - 21%)7,500MW : 15% (Total decrease rate : - 24%)(3) Others
・ Add electricity from improved capacity of existing installation (repowered
installation) to the list of purchase under the FIT, anticipating the addition could
prompt repowerment and in turn help increase renewable electricity production.
Repowerment here means replacement of key component of installation (turbine,water wheel, power generator, etc) in principle, though different standards have to
be set by method of electrical power generation.
・ The subsidy for building renewable electricity generation installation runs counter tothe objective of FIT and thus should be abolished in principle. That said, with a view
to fully utilize potential capacity of renewable electricity generation, a separate
support system needs to be set up for funding business development feasibility
study.
・ Environment value of renewable electricity (CO2 reduction effect) primarily belongs
to Installation operators and the use of renewable electricity (maintenance, sale in
the form of green electricity certificate and sale to utility companies, etc) should beleft to Installation operators. When setting purchase price (tariff), profitability has tobe taken into account by converting the environment value into monetary value
based on emission credit price in Europe, etc. As default rule, the environment
value of renewable electricity is transferred to the purchasing utility companies.
However it is also allowed for Installation operators to keep it and market it to others
7

if they prefer to do so (opt-out).

2. Guaranteed grid access and priority dispatch
1.1

Principle・ Stipulation of rules for the obligation to interconnect with and the priority dispatch ofrenewable electricity makes or breaks the success of FIT. In countries where FIT
has been in place, it is commonly seen that the utility companies reject connectionof renewable energy to their grids on the ground for adverse effects on stablesupply through grid, etc. In order to prevent grid access of renewable electricity
from being rejected by the arbitrary decision of utility companies, it is vital to set
concrete rules and secure transparency in determination by the utility companies ofgrid access.
・ Lack of the concrete time frame for, criteria for judgment of and standard
procedures for determining grid access is posing investment risk (including funding
cost increase) to and imposing operational costs on installation operators. So thematters pertaining to determination of grid access, such as criteria for judgment,time frame and procedures for determination and procedures, should be stipulated
in a law.
・ Once criteria and rules pertaining to determination of grid access are stipulated bya law, Installation operators become able to estimate grid access costs at abusiness planning stage. On the other hand, if criteria and rules are not set forth bya law and are left to discretion of the utility companies, Installation operators will
not be able to estimate grid access cost and investment risk will increase.
・ In grid access cost calculation, transmission cost should be separated from
distribution cost and ask installation operators to share appropriate level of thecosts.
・ These principles are effective only when all the following factors are immediately
regulated by clear-cut rules with clear ownership of responsibilities that are legallybound.
1.2

Proposals(1) Guaranteed grid access・ The Article 4 of the Act sets forth exceptions to the obligation of the utility
companies to enter into agreement to receive feed of renewable electricity if there is“a likelihood of unjust harm to the benefit of the utility companies”. Also, theparagraph 2 of the Article 5 of the Act sets forth exceptions to the obligation of the8utility companies to enter into agreement to connect installations generating
renewable electricity if there is “a likelihood of the occurrence of damage tosecuring the smooth supply of electricity”. With that in mind, here are the proposals
to prevent application of the provision based on arbitrary decision by the utility
companies:

Set guidelines, etc, to illustrate concrete examples where utility companies areallowed to reject interconnection.



Require utility companies to publicize their reasons for rejection ofinterconnection on the Web, etc, as burden of proof for rejected interconnection
is on the utility companies.

・ The utility companies are called on to immediately connect the installation
generating renewable electricity to their grid system at the shortest linear distancefrom the location of the installation upon request from the installation operator.

*Reference: Related German law
German Renewable Energy Act, (“EEG”), Paragraph 1 of Article 5 (“§5(1)”“Grid system operators shall immediately and as a priority connect installations generating
electricity from renewable energy sources and from mine gas to that point in their grid system(grid connection point) which is suitable in terms of the voltage and which is at the shortest
linear distance from the location of the installation if no other grid system has a technicallyand economically more favourable grid connection point....“

・ A time frame should be set for the determination of the grid access so as to reducerisks of and burden on the installation operators.
EEG, §5(5)“Insofar as it is necessary for the determination of the grid connection point and forthe planning of the grid system operator in accordance with section 9, thoseinterested in feeding in electricity and grid system operators must submit to eachother, upon request and within eight weeks, the necessary documentation, inparticular the grid system data required to test and verify the grid compatibility.“

Under the German Renewable Energy Act, installation operators and grid system
operators are required to submit to each other the necessary documentation for thedetermination of the grid access within eight weeks.

9・ The types (and owners) of costs pertaining to grid access should be provided. In
principle, the costs of connection up to grid access point are to be borne byInstallation operators and the costs of grid enhancement are to be borne by theutility companies. However, when the utility companies want to use a grid accesspoint which is not at the shortest linear distance from the location of the installation,
additional costs of grid access should be borne by the utility companies to clarify
who is responsible for the decision on grid access point.
・ In order to guarantee the purchase, transmission and distribution of renewableelectricity, utility companies should be required to immediately take necessary
measures for grid access upon requests by installation operators for connection totheir grid system.
・ When the utility companies reject grid access citing potential risks of unstable
power supply, they should be required to assume the burden of proof and to
publicize the evidence and grounds for such risks.
EEG §9(1)“Upon the request of those interested in feeding in electricity, grid system operators
shall immediately optimise, boost and expand their grid systems in accordance withthe best available technology in order to guarantee the purchase, transmission anddistribution of the electricity generated from renewable energy sources or from minegas. They shall inform the installation operator without delay as soon as the riskarises that technical control will be assumed over their installation in accordancewith section 11(1) first sentence; the expected time, extent and duration of thecontrol shall be communicated. The grid system operator shall immediately publish
the information required in accordance with the second sentence above on his
website and shall thereby describe the affected regions of the grid system and thereasons for the risk.“

Under the German Act, upon the request of Installation operators, grid system
operators shall immediately optimise, boost and expand their grid systems inaccordance with the best available technology in order to guarantee the purchase,transmission and distribution of the electricity generated from renewable energy
sources.
(2) Priority dispatch

・Ensure to guarantee priority dispatch for electricity from renewable energy with a10

view to make the most of renewable electricity. Allow to regulate electricity output
from renewable energy sources only when no other choice is possible.


The Article 13 of the Energy Industry Act of Germany stipulates the priority
measures for ensuring safety and reliability of grids;
1.Reduce congestion by switching transmission network, etc.
2.Control loads by getting large companies to reduce power consumption as
contractual obligation, implement congestion management, control power flowusing backup power from grid system operator.
3.Regulate electricity output from renewable energy sources by issuing load
dispatch instructions(3) Damage compensation and other compensation
・ The paragraphs 3 and 4 of the Article 5 of the Act provides that Minister of Economy,
Trade and Investment issues an advice/order for connection when utility companies
reject grid access by Installation operators without a just reason. It should be
stipulated that Installation operators may demand compensation for the damage
incurred due to the rejected grid access.
EEG, §10(1)In the event that the grid system operator violates his obligations under section
9(1), those interested in feeding in electricity may demand compensation for thedamage incurred. The liability to pay compensation shall not apply if the grid
system operator was not responsible for the violation of the obligation.

・ It should be stipulated that utility companies are obligated to pay Installation
operators compensation for the losses coming from smaller volume of electricity
purchase than contractual volume when utility companies call on renewableelectricity installation operators to regulate electricity output for the sake of gridstabilization, etc.

11

EEG, §11
Notwithstanding their obligation in accordance with section 9, grid system
operators shall be entitled, by way of exception, to take technical control overinstallations connected to their grid system …

1. the grid capacity in the respective grid system area would otherwise beoverloaded on account of that electricity,
2. they have ensured that the largest possible quantity of electricity fromrenewable energy sources and from combined heat and power generation is
being purchased, and3. they have called up the data on the current feed-in situation in the relevant
region of the grid system.
・EEG, §12(1)The grid system operator whose grid system gives rise to the need for theassumption of technical control under section 11(1) shall compensate thoseinstallation operators who, on account of the measures under section 11(1), were
not able to feed in electricity to the extent agreed upon. Where no agreement has
been reached, the lost tariffs and revenues from the use of heat less the expenses
saved shall be paid.

Under the German Act, the grid system operator shall compensate thoseinstallation operators who were not able to feed in contractual electricity upon arequest from the grid system operator for electricity output regulation. Also, theGerman Act stipulates that only those installation with capacity of 100kW or more
can be subject to electricity output regulation. 5(4) Cost sharing
・ It is necessary to clarify the grid access cost sharing between installation operators
and utility companies.

In principle, feeder installation cost to the grid system pointat the shortest distance should be borne by installation operators, and cost toenhance the grid should be borne by utility companies.

5

On the other hand, underfeeding due to output regulation for the sake of grid stabilization is not
subject of compensation (Article 13, Energy Industry Act).

12

EEG, §13,14
Section 13 Grid connection(1) The costs associated with connecting installations generating electricity fromrenewable energy sources or from mine gas to the grid connection point as

defined under section 5(1) or (2) and with installing the necessary metering
devices for recording the quantity of electricity transmitted and received shall beborne by the installation operator.
(2) If the grid system operator assigns the installations a different gridconnection point in accordance with section 5(3), he shall bear the resulting
incremental costs.
Section 14 Capacity expansion
The grid system operator shall bear the costs of optimizing, boosting andexpanding the grid system.

Under the German Act, it clearly stipulates the items which shall be borne byinstallation operators and utility companies respectively in terms cost on grid
system. It is notable that the German Act clearly stipulates grid system operators
to bear additional cost when grid system operators ask installation operators toaccess to a grid access point other than the one at the shortest distance.
(5) Information disclosure on grid system and installation of feeder
・ Backbone feeders should be installed and improved to maximize the potential inwind power resources at Hokkaido and Tohoku regions. To that end, it is necessary
to study the option of unbandling of production and transmission of electricity andinstalling feeders under active leadership of the government.
Since installation of feeder requires a time-consuming process, concrete plan for
coming 10 to 20 years for expansion of feeder should be developed as soon as
possible by identifying regions with high supply potential in renewable energy withthe help of potential survey etc. conducted by Ministry of Environment.
・ Utility companies should publicize on the Web the latest data on congestion atregional grid and interconnection capacity to reduce the uncertainty on grid systemand the cost relating to interconnection procedures.
Ontario Power Authority of Canada 6 and Nova Scotia Power publicize grid
related data including renewable electricity interconnection capacity. Such data6

http://fit.powerauthority.on.ca/connection-availability-resources13

is accessible on the Web along with location information taking advantage of
Google map. That allows preliminary screening of candidate locations for
new renewable energy installation. .

3. Procedures, organizations
1.1

Principle・ FIT is feasible only when the private investment is promoted for the expansion ofrenewable electricity volume, and it is absolutely necessary to clarify criteria andrules, and ensure objectivity and transparency of decisions.

Therefore it isimportant to put every effort to make FIT a high predictable system for those whoare involved in the renewable energy business through clarifying the criteria andrules of system and ensuring the objectivity and transparency of decisions as muchas possible.
・ Appropriate term and price for purchase are also indispensable factors for theinvestment, which requires comprehensive and quality data.

Therefore it isnecessary for the system operation to collect and disclose quality data.
・ It is preferable to establish a third-party organization independent from utility
companies for interconnection dispute settlement between a renewable electricity
installation operator and an utility company, considering we cannot completely
eliminate the possibility of unfair or uncertain decisions to be made by utility
companies, which are competing with renewable electricity installation operators in
the electrical power production business. Making decisions on the grid system bya third-party organization objectively can reduce investment risk for installation
operations, and it can also contribute to a healthy and stable growth of therenewable energy market.
1.2

Proposal

・ Utility companies, installation operators and the Government should disclose allkinds of data regarding FIT for the implementation of fair and transparent procedure.
Especially disclosure of data regarding grid system (interconnection capacity,
congestion status, rationale if interconnection is refused, necessary period for theinterconnection, etc.) is essential to eliminate the risk of arbitrary refusal ofconnection by utility companies. It is also important to ask installation operators to
immediately provide details such as appropriate purchase price, introduction
forecast of robust grid system, which are necessary for the healthy operation of FIT.

14

EEG §45, 52
Section 45 Basic principle
Installation operators, grid system operators and utility companies shall makeavailable to each other without delay the data required for the nationwide

equalization scheme in accordance with sections 34 to 39, in particular thosereferred to in sections 46 to 50. Section 38 shall apply mutatis mutandis. Data
recorded and published in the Register of Installations to be established inaccordance with section 64(1) first sentence no. 9 shall no longer be transmitted
in accordance with sections 45 to 52 from the date of publication of the data.
Section 52 Data to be made public(1) Grid system operators and utility companies shall publish on their website
1. any details in accordance with sections 45 to 49 immediately after theirtransmission, and2. the report concerning the ascertainment of data they have provided inaccordance with sections 45 to 49, without delay after 30 September of any given
year, and retain this information until the end of the following year; section 48(1)shall remain unaffected.
(2) The information and the report must enable a qualified third party to fully
understand the equalized quantities of electricity and tariff payments without
further information being required.

In the German Act, installation operators, grid system operators, and utility
companies are asked to provide and disclose information in principle, and theirroles and responsibilities are clearly stipulated. In addition, grid system operators
and utility companies are requested to publish details regarding purchase,transmission, etc. on their website within a certain period so that a third party canhave access to such information.
・ Electric Power System Council of Japan (“ESCJ”) is not appropriate as anorganization to settle disputes regarding grid access from the perspective of
independency from utility companies and transparency of decision-making;therefore it is necessary to establish a third-party organization newly.
・ Guideline and rules are also needed for the promotion of efficiency of discussion onconnection to ease the burden on both installation operators and utility companies.
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・ The Government should prepare and issue progress report covering information
about installed capacity, electricity production volume, installation costs on a regularbasis (for instance, on a quarterly basis) to confirm the progress of the FIT including
status on designing term and price for purchase, status on dispute settlement
interconnection, and outlook for renewable energy deployment..

4. Others (Excursus)
It is vital to implement the following policies along with FIT system in order topromote renewable energy deployment① Improve procedural efficiency of environment impact assessment, etc② Establishment of independent organization, etc. for the steady implementation ofvarious regulatory reforms regarding renewable electricity production and the
management of the progress③ Early target setting for the introduction of renewable energy. Target should befeasible but bold, incorporating a wide range of views from the general public.
④ Steady implementation of separation of production and transmission⑤ Steady implementation of electricity system, and study on reform and restructuringof regulatory.

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