Corporate PPA Guidebook- Japan Section Digest October 2020

Renewable Energy Institute1

Objective and Background⚫

“Corporate PPA Guidebook” is compiled for helping corporate
energy users in Japan to make Power Purchase Agreements,PPAs, for securing renewable electricity to be consumed by
local and global business activities.

⚫

This Digest Edition in English summarizes the sections on
Japan of the Guidebook for overseas corporate energy users
to understand how Corporate PPAs can be made under theexisting Japanese laws and market regulations.

⚫

Due to the regulations, direct PPAs between developers andcorporate energy users are not allowed except Onsite PPAs,
but with involving retailers as electricity providers, Corporate
PPAs are realizable in Japan.

⚫

This document covers Onsite PPAs, Physical PPAs and Virtual
PPAs based on the current and planned new policies such as
Feed-in-Premium.
2

Major Procurement Methods in Japan
MethodDescriptionFeatures

Construct renewable
・ Initial investment or 3rd party owned
Onsiteenergy power plant and ・ Low-cost renewable electricity secured
Generation consume generated
・ Environmental aspects of power plant identified
electricity internally・ Risks of trouble in operation
Purchase renewableelectricity fromregistered retailer

・ Short-time contract available
・ Specific power sources unidentifiable (some cases)
・ Higher tariff than standard products (many cases)

Renewable Purchase certificate
Energyderived from
Certificate renewable electricity

・ Separated from physical procurement
・ Specific power sources unidentifiable (some cases)
・ Additional cost on top of electricity procurement

GreenProductCorporate
PPA

Invest renewableenergy development
and receive electricity
and/or attribute・ New renewable electricity added
・ Retailer involved in 3-way contract for PPA
・ Environmental aspects of power plant identified
・ Business risks of long-term investment
3

Contract Scheme of Onsite PPAs

Onsite PPAs can be made directly between developers
and corporate energy users under the current regulations.
Offsite PPAs require retailers to be involved as electricity
providers using grid network.
4Generation Cost by Sources (LCOE)

Source:BloombergNEF

Average wholesale price is around $90 and standard tariffs
for corporate are around $160. Onsite PPAs are economicallyreasonable and Offsite PPAs will be feasible in early 20’s.
5Standard Contracts in JapanThe contract scheme of electricity is not unique in Japan.
Wholesale contracts are made between generators andretailers or grid operators while retailers make sleeving
contracts with grid operators. Consumers make power
supply contracts with retailers.

6Physical PPAs in JapanIn Physical PPAs, 3-way contracts between generators,retailers and corporates will be made to supply electricity
with environmental attributes.

7

Logistics of Physical PPAs

Corporates pay fixed fees to generators through retailers
including sleeving and management fees. Environmental
attributes are transferred from generators to corporates.

8

Virtual PPAs in JapanIn Virtual PPAs, 3-way contracts between generators, retailers andcorporates will be made for transferring environmental attributes
while the existing contracts of supplying electricity may continue.
9

Logistics of Virtual PPAs

Corporates pay fixed fees to generators through retailers
including sleeving and management fees. Generatorsand retailers adjust the balance of fixed contract prices
and floating market prices.
10

Feed-in-Premium (from FY2022)

Source: METI (translated by Renewable Energy Institute)

Feed-in-Premium will be introduced in April 2022 for large scalesolar and wind projects. Developers receiving the premium cantransfer environmental attributes to consumers through retailers.
11[Contact]
E-mail: info@renewable-ei.org

Renewable Energy Institute12