Japan: Legislation Determines Purchase Price for Geothermal Energy for Three Years

Amendments to Japan's Renewable Energy Act (Lexology)

The Amendments provide for the Ministry of Economy, Trade and Industry to determine the applicable purchase price for geothermal projects for a consecutive three-year period, so as to facilitate potential developers in determining the profitability of any such potential renewable energy project.

(Courtesy CIA.gov)

On April 1, 2017, substantial portions of the Amendments to The Act on Special Measures Concerning the Procurement of Renewable Energy by Operators of Electric Utilities will become effective. These Amendments, enacted on June 3, 2016, represent the most comprehensive set of changes to Japan's feed-in tariff system since the implementation of the Act in 2012.

The Amendments reflect the efforts of the Ministry of Economy, Trade and Industry to cause certified renewable energy facilities to meet certain feasibility criteria and to commence operation and power production within a specified period of time following certification.

These Amendments will also require owners of renewable energy facilities to enter into an interconnection agreement with the relevant utility before certification and will introduce a bidding process for determining the purchase price for power generated by large-scale solar projects.

In an effort to promote the development of renewable energy beyond solar power, these Amendments will provide for the fixing of the purchase price for three consecutive years following certification in the case of certain renewable energy projects (such as wind, geothermal, and biomass) that require several years and substantial cost to complete a feasibility study.

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