Monthly Report

METI mulls revising generation output curtailment rules to distinguish between FIT and FIP assets

August 8, 2024
Solar Power Plants
Japan’s current curtailment rules do not distinguish between FIT and FIP power plants.

The Ministry of Economy, Trade and Industry (METI) is considering changing the order in which power generation asset output is curtailed as soon as during fiscal year 2026. The topic was discussed at the 66th meeting of the ministry’s ‘Subcommittee on the Large-Scale Introduction of Renewable Energy and Next-Generation Power Network’ held on August 7, 2024.

To incentivize power generator’s to switch from the feed-in-tariff (FIT) scheme, which offers guaranteed per-kWh revenue to renewable asset owners, to the recently introduced feed-in-premium (FIP) scheme, which offers a variable premium on top of the revenues asset owners can make by selling the power and renewable energy certificates they generate, the ministry plans to distinguish between FIT and FIP assets in its curtailment order.

While currently, biomass power plants are the third in the curtailment order and solar and wind assets the fourth, the subcommittee suggested further breaking down the order to FIT biomass power plants being curtailed before FIP biomass power plants and FIT solar and wind power plants before FIP solar and wind power plants.

The proposal is not without opposition with the belief that reducing curtailment risk for FIP power plants would lead to lesser incentives to install storage batteries being cited as one of the reasons.

Renewable output curtailment has been on the rise in Japan since solar generation was first curtailed in October 2018. Since then, both solar and wind generation curtailment has been on the rise. While curtailment has been lower so far this year than in the last fiscal year, it is still higher than in previous years.

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