DLA Piper: Japan's Renewable Energy Feed-In Tariff Regime

DLA Piper: Japan's Renewable Energy Feed-In Tariff Regime

By Stephen Webb and Michelle Thomsen

Prior to the Fukushima nuclear disaster in March 2011, Japan relied on nuclear power for roughly 30% of its energy needs, with 60% coming from conventional sources such as coal, oil and natural gas. Hydroelectric power accounted for 9% of Japan's energy resources, with other renewables - solar, wind, biomass and geothermal energy - contributing only 1% of the total power capacity of the nation. Since the disaster, however, all of Japan's nuclear reactors have been taken offline, leaving power generated from the remaining sources to fill the gap. Currently, 90% of all power in Japan is derived from fossil fuels.

In an effort to diversify the country's energy base, the Japanese Diet has taken an aggressive measure to encourage the development of renewable energy resources. The Act on Purchase of Renewable Energy Sourced Electricity by Electric Utilities (Act), which became effective on 1 July 2012, establishes a feed-in tariff regime for renewable energy. Under the Act, electric utility operators are required to purchase electricity generated from renewable sources (renewable electricity) from suppliers for prices and durations fixed by the Minister of Economy, Trade and Industry. This regime guarantees a market with fixed, and relatively high, prices for electricity generated from renewable resources, and is widely expected to spur investment in Japan's renewable energy supply industry.

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