Japan approves feed-in tariff for renewable energy

Japan’s feed-in tariff or FIT is one of the highest in the world.

Japan's march towards renewable energy and away from nuclear energy took a leap forward when it approved new FIT rates that will boost its use of renewable energy such as solar and wind. The incentive will see Japanese utilities buy electricity from developers of renewable energy at fixed rates lasting up to 20 years. Costs will be passed on to consumers who pay higher electricity bills.

Utilities will pay US$0.53 per kilowatt hour (kWh) for electricity generated from solar power, which is twice the FIT in Germany and over three times that paid in China. The wind power subsidy for wind energy above 20kW is US$0.28/kWh and up to 20kW is US$0.73/kWh.

FIT could expand government revenues from renewable generation and related equipment to over US$30 billion by 2016.

FIT aims to reduce Japan’s reliance on nuclear power following the disaster at Fukushima in March 2011. Nuclear power accounted for almost 30 percent of Japan's electricity supply before Fukushima.

Japan estimates its renewable energy capacity will increase to 22,000 megawatts by the end of March 2013 from 19,500 MW today. About 2,000 MW of this capacity will come from solar energy.

The FIT legislation also seeks to cut Japan’s greenhouse gas emissions to 25% of its 1990 level by 2020.