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Article posted: 11/30/2013 6:30 AM

Certified mega solar plants producing 12% of output

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By Washington Post

TOKYO -- Solar power facility operators that acquired government approval under a feed-in tariff system are producing 12 percent of their total authorized output capacity, a survey by the Economy, Trade and Industry Ministry has found.

To expand the use of renewable energy sources, the government began in July last year the feed-in tariff, which obliges power companies to purchase electricity generated by solar or other renewable energy sources at prices higher than regular electricity rates for a set period of time.

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Because the purchase price is set at the time of certification, many businesses likely acquired approval when the purchase price was high and plan to construct facilities when solar panels became cheaper. The ministry is considering canceling approvals for companies found to have sought approval with no intention to build facilities quickly, ministry sources said.

On Monday, the ministry submitted a progress report on its survey on the current status of the solar power business to a panel of experts discussing energy policies.

As the price for fiscal 2012 was set at 42 yen (about 42 cents) for one kilowatt-hour generated by solar power, a relatively high price to make it easier for businesses to benefit, many applied to set up mega solar power plants.

As a result, the total output of certified power facilities with a capacity of 10 kilowatts or more, excluding those for residences, was 20 times higher in July than it was before the start of the system. However, only 12 percent of the total approved output is actually generated now.

The purchase price is reviewed every fiscal year by considering such factors as solar panel prices. The price for fiscal 2013 was set at about 38 yen, and a continued decline in panel prices is likely.

However, the current system does not stipulate a deadline for businesses to start power generation after winning approval, although the purchase price remains fixed from when they were certified.

Consequently, some businesses may have applied for approval when the purchase price was high, with plans to build mega solar facilities when panel price are lower to increase profitability, the sources said.

The ministry began the ongoing survey in August.

Although some cases with legitimate reasons for not beginning operations, such as canceling plans outright or being unable to begin construction, were reported to the expert panel, the ministry believes "a considerable number" of businesses won approval but have not even secured land to build mega solar plants.

The feed-in tariff system was established under the banner of abolishing the use of nuclear power, which was advocated by the Democratic Party of Japan following the Great East Japan Earthquake. Some experts pointed out flaws in the system as being behind the delays in plant construction.

Besides the absence of provisions regarding deadlines to start power generation, other potential problems include the absence of penalties for businesses that fail to build power facilities and no ban on the selling of certifications.

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