On January 17th, METI released the details of its 101th procurement price calculation committee.
One major proposed change is to temporarily increase the balancing subsidy included into the Feed-in-Premium payments of qualifying solar PV and wind assets by 1¥/kWh for FY2025 and a yet to be determined value untile at least FY2028. Assets that qualified for FIP until FY2026 will profit from this increase.
METI made it clear in its recent regulatory discussions of the past ~4 months that it is looking at ways to increase the ratio of FIP assets over FIT assets. Its target is to reach 25% of FIP assets (25% of the FIP+FIT total) in the next 2 years. To reach this goal it is planning to change the curtailment order and curtail FIT assets before FIP assets of the same technology starting in FY2026 or FY2027. With this new rule, the curtailment of FIT assets would increase enough to free some money to promote FIP assets.
METI is now considering using this money to increase the balancing subsidy component of FIP solar PV and wind assets for FY2025 (+1¥/kWh) and until FY2028 (amount to be disclosed in the future). This would be particularly impactful for FIP assets as the balancing subsidy component is paid even when the asset capture prices are high and the premium is theoretically “0¥/kWh” .
METI expects this, together with the change in curtailment order, to be enough of an incentive to push IPPs to switch their FIT assets to FIP. This will however be limited by the appetite of lenders for additional risk that comes with FIP, and the capabilities of the IPPs to potentially increase the value of the assets by signing PPAs and increasing the corresponding total revenue. Such contracts have already been signed with high FIP projects in the past couple years and should be seriously considered by assets owners.
Source: METI