Japan Mulling Auction Process for Large Solar Project Approvals

Japan is considering an auction process to allow solar power competitors to outbid each other for approvals to build large projects in an effort to drive down costs.Japan’s Ministry of Economy, Trade and Industry is seeking to overhaul its current incentive program that is based on a so-called feed-in tariff, or guaranteed payouts, offered to renewable energy producers. That solar tariff is set annually by the government to reflect equipment and operational costs and has dropped every year since it started in July 2012.

“The program led to a rapid expansion of commercial solar and there has been a need for balance between different renewable sources,” according to a draft proposal from a panel set up by METI.According to the new proposal, solar power producers that can operate at the lowest cost will be selected to develop projects. The panel also proposed that the ministry should only give approval to clean-energy developers who secure grid connections to reduce the number of projects that haven’t started after for lack of connectivity.