On August 7th, METI announced potential adjustments to curtailment rules for renewable assets under FIT and FIP programs. Starting FY2026, curtailment would apply first to FIT assets over FIP assets, specifically for PV, Wind, and Biomass. This shift could lead to higher curtailment rates for FIT assets, with the savings redirected to FIP assets through the balancing subsidy component of the FIP.
METI is also exploring incentives for integrating co-located batteries with FIP assets, though details are still forthcoming.
These measures aim to encourage a transition from FIT to FIP, offering investors with the right resources and expertise an opportunity to shift projects, secure PPAs, and potentially enhance asset value, especially if the original FIT was in the lower than 25¥/kWh.
However, for assets with a FIT above 25 ¥/kWh, these regulatory changes may lead to decreased revenues and returns.
Nowadays new PV and Wind projects are usually developped under the FIP system combined with a PPA given the current FIT/FIP levels are not sufficient to guarantee their financial viability. This adjustment could improve their financial returns by reducing curtailment rates, but it will not have a major impact on developers deciding between a FIP or a FIT scheme when given the choice.
Source: METI