Contributed By Nagashima Ohno & Tsunematsu
The Act on the Promotion of Use of Non-fossil Energy Sources and Effective Use of Fossil Energy Materials by Energy Suppliers (Act No 72 of 2009, as amended) was promulgated with recognition of the importance of developing non-fossil energy sources.
Pursuant to the Act, the government published the basic policy to achieve its purpose, whereby it targets an increase in the share of non-fossil energy sources to 44% by 2030, and electricity suppliers of 500,000 MWh or more are required to prepare and submit an implementation plan to achieve such target and a progress report every year.
In order to achieve the above target, the Act on Special Measures Concerning Procurement of Electricity from Renewable Energy Sources by Electricity Utilities (Act No 108 of 2011, as amended, or the FiT Act) was promulgated in 2011, while the feed-in tariff regime (FiT Regime) was introduced in 2012. The FiT Act boosted the development of alternative energy sources as the feed-in tariff was very generous to developers.
Under the FiT Act, renewable energy that meets statutory and regulatory requirements is sold at a fixed price for 20 years to transmission and distribution network operators, and transmission and distribution network operators are not allowed to refuse to purchase such renewable energy, with very limited exceptions.
The renewable energy that can benefit from the FiT Regime is electricity generated by solar, wind, hydro, geothermal or biomass generation.
In order to promote investment in renewable energy, the feed-in tariff – ie, the price of renewable energy – is set at a rate higher than the market rate, and any additional cost incurred by transmission and distribution network operators in relation to the purchase of the renewable energy is transferred to and assumed by consumers through a surcharge being imposed on consumers. Electricity retailers are required to transfer funds collected from their customers as a surcharge to the Green Investment Promotion Organization (GIO), and GIO pools such funds received from electricity retailers. GIO distributes those pooled funds to the purchasers of energy sold in the FiT regime so that additional costs incurred by those purchasers will be compensated.
Also, in order to promote the development of renewable energy, the government has introduced a reduced rate of property tax for certain qualified renewable energy facilities during the first three years.
See the following:
https://elaws.e-gov.go.jp/search/elawsSearch/elaws_search/lsg0500/detail?lawId=421AC0000000072 (currently there is no English translation of the entire law)