The recent auction for 107MW of PV capacity saw only 33.6MW awarded, signaling an undersubscription.
Amongst the winners of the 22 projects are Renewable Japan, Hexa, Trina and Daiwa House. The bids went from 5¥/kWh to 9.13¥/kWh. Of the 22 projects, only one is to be connected to the SHV grid with a capacity of 13.3MW. All the other projects are HV.
With a price ceiling set at ¥9.13/kWh, it is unlikely for PV assets to achieve financial viability solely through the FIP scheme. However, these winning assets will be leveraged for Power Purchase Agreements (PPAs).
The low FIP still offers value to winners by ensuring a balancing subsidy that is paid out even if other FIP components yield “¥0/kWh”. This auction’s outcome suggests that developers may underestimate the value of lower-price FIPs, together with being deterred by the complex application process. But more likely, it could indicate a decline in the availability of PV projects over 250kW.
Source: OCCTO