Ease financial burden on public to steadily spread renewable energy
IT IS essential to make steady progress in the expansion of renewable energy, and also curtail the burden shouldered by the public as much as possible. Maintaining a balance between the two is a task that must be accomplished.
The Economy, Trade and Industry Ministry is set to reconsider the feed-in tariff (FIT) system for renewable energy, a scheme to purchase such energy at fixed prices. The ministry hopes, as a general rule, to introduce a bidding system for solar power generation for all business purposes, thereby reducing purchase prices to about half the current level.
Electricity generated through renewable energy is bought at certain prices by electric power corporations from operators of facilities for power generation, and the power companies recover the money used by adding an extra amount to the electricity bills paid by households and others. The ministry’s move, which puts the principle of competition to work in the determination of purchase prices so the burden on the public can be reduced, is a reasonable course of action.
Initiated by the Democratic Party of Japan-led government in 2012, the FIT system set purchase prices at an exceptionally high level, only with a view to quickly spreading solar power generation.
Consequently, many business operators ventured into solar power generation. Solar energy generated at comparatively high cost accounts for 80 per cent of the sources of electricity so far approved under the FIT program. The renewable energyrelated burden on the public has ballooned to 2.4 trillion yen annually, or about 9,000 yen for the standard family each year.
Although the government has continued to lower purchase prices every year, the FIT scheme is contrived so that high-price purchases will last for up to 20 years in relation to the solar power generation authorised in the past. A heavy price must be paid for the policy error committed by the DPJ-led government.
Under the new bidding system, business operators to be authorised will be limited to those who have proposed prices that fall below the upper limit set by the government.
However, there are concerns that if the upper limit is too low, bidding may fall through, a situation that could hinder the spread of renewable energy. It is essential to properly add up the costs for building powergenerating equipment and reasonable profits, thereby setting the upper limit at a level sufficient to ensure that business operators who have strived to reduce necessary costs can stay in the black.
Another problem is that there are many business operators who have not yet started solar power generation despite having received authorization. Of the facilities authorised from fiscal 2012 to 2014 - a period during which purchase prices were about two times higher than the current level - 40 per cent remain unoperated in terms of powergeneration volume.
The operators who keep their facilities idle seem to be aiming at making their profit margins even greater by building facilities with foreignmanufactured panels whose prices have sharply dropped, compared to the prices at the time of authorization.
If all unoperated solar power- generating facilities start electricity production, it will increase purchase costs by as much as 1.3 yen trillion annually.
The ministry intends, in principle, to reduce the purchase prices initially set for those with idle facilities if they do not start operating the facilities within fiscal 2019. This response can be described as reasonable.
In its basic energy plan, the government has designated renewable energy as a baseload source of electricity for the future. Quick efforts should be made to diversify the types of renewable energy, rectifying the disproportionate emphasis on solar power. The government should implement assistance measures, such as supporting technological development for wind and biomass power generation, which has been delayed. — Yomiuri Shimbun