Japan’s 13th photo voltaic auctions have been closely undersubscribed as builders battle with land availability, help ranges and familiarity with energy market entry, in response to Shulman Advisory, a Tokyo-based renewables analyst company.
On 26 August, Japan’s Organisation for Cross-regional Coordination of Transmission (OCCTO) introduced the outcomes for the auctions – there was one for each feed-in-premium (FIP) and feed-in-tariffs (FIT).
It confirmed that the FIP public sale had a most of 175MW on supply and a value restrict of ¥9.88/kWh (US$0.07c/kWh) however simply 14.3MW was truly awarded throughout 10 initiatives at a value starting from ¥9.70/kWh to ¥9.87/kWh.
In the meantime, the FIT public sale had 50MW out there at a most value of ¥9.88/kWh however merely 11.9MW was awarded throughout 18 initiatives, with costs starting from ¥9.5/kWh to ¥9.88/kWh.
Dan Shulman, CEO of Shulman advisory and an skilled on Japanese energy markets, mentioned the disappointing outcomes have been down to 3 separate components: a scarcity of accessible land, the FIT cut-off stage being thought-about too low and a scarcity of familiarity with energy market entry.
On the primary level, Shulman mentioned there was mounting native opposition to photo voltaic initiatives in Japan, with a current challenge pulled due to native protests on environmental grounds a pertinent instance.
In relation to the FIT stage, he mentioned it’s thought-about “comparatively low” and that, mixed with rising EPC prices, makes initiatives much less commercially enticing. “EPC prices have been rising since final yr, with larger gear costs driving a few of the improve. A number of builders have informed us {that a} LCOE under ¥10/kWh is tough to attain,” Shulman wrote.
“The lower in common LCOE over the course of 10 years of FIT right here in Japan has not introduced us to the place we must be, significantly by way of the price of civil works and now we’ve large turbulence in worldwide provide chains coinciding with a generational tanking within the worth of the Yen,” Shulman informed PV Tech, including that this was not good for publish (or low) tariff renewables improvement.
Lastly, a “lack of familiarity with energy market entry, balancing operations and prices, mixed with the volatility of the FIP premium, seems to be hindering participation in FIP auctions,” Shulman mentioned.
As a substitute, builders are more and more turning to extra steady company energy buy agreements (PPA), with many company consumers (together with utilities) providing photo voltaic builders an “all-in-one” bundle, together with a hard and fast value PPA and taking over balancing operations and dangers, Shulman famous.
Japanese builders are more and more pondering that “industrial and industrials clients can be prepared to pay extra for company PPAs as soon as they realise that it’s truly a very good hedge towards mid to long run wholesale energy market volatility,” Shulman informed this web site.
“The outcomes imply Japan’s large-scale photo voltaic pipeline is drying up, and this development is more likely to proceed,” Shulman mentioned. “As a substitute, we anticipate the way forward for photo voltaic PV in Japan to revolve round small, distributed initiatives.”
“These can be consolidated in portfolios, with energy bought beneath PPAs, and combination consumers providing balancing and sleeving companies. Future FIP auctions would possibly solely see initiatives with a secured off-taker participant.”
