The effects of the new Feed-In Tariff Act for solar photovoltaic (PV) energy in the wake of the Fukushima accident in Japan

In 2012, the Japanese government launched the new Feed-In Tariff Act (FIT), which aimed at promoting the stable, integrated rise of renewable energy in the wake of the Fukushima nuclear accident. Solar photovoltaic (PV) energy on both the residential (installation capacity less than 10 kW) and non-residential side (installation capacity 10 kW and above) has been associated with significant benefits with the passage of the new FIT Act. However, a number of issues have emerged during implementation, including unjust enrichment from delayed PV plant operation and high renewable energy taxes. In this paper, we present an overview of the evolution of the FIT and explore how the relevant issues have been addressed through revised government policy. The paper also examines, the FIT's effect on PV energy development. An economic analysis was conducted to identify the impact of FIT fixed price changes on the profitability of solar PV plants on both the residential and nonresidential side from 2012 to 2019. Furthermore, a sensitivity analysis was conducted based on scenarios of future FIT fixed purchase price reductions and PV initial investment cost reductions. The results show that the FIT can potentially be reduced on the residential side and that the current FIT has reached its feasibility limits in terms of non-residential PV investments.

Automated summary

This study provides an overview of Japan's Feed-In Tariff Act introduced in 2012 and the issues that have emerged during its implementation. An economic analysis was conducted to assess the impact of FIT fixed price changes on the profitability of solar PV plants, with sensitivity analysis based on scenarios of future FIT fixed purchase price reductions and PV initial investment cost reductions. The results indicate the potential for FIT reduction on the residential side and the current feasibility limits of non-residential PV investments under the current FIT scheme.