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Asian FITs could be global tipping-point for renewables

Date
19 August 2011
Asian FITs could be global tipping-point for renewables

LONDON: Japan is set to follow China’s lead with legislation to subsidize low carbon energy, which will up investment in the renewables industry and could provide a global tipping-point for the deployment of renewable energy worldwide, providing a major boost for the Clean Revolution.

The bill, which proposes feed-in tariffs (FIT) for renewable energy, is set to be passed by Japan’s lower house of parliament in the next coming days, and supports the country’s aim to grow the renewables market to 10 trillion yen (US$130 billion) by 2020.

Renewable energy already makes up 9% of Japan’s electricity generation. The FIT bill will increase this total, as it requires utilities to purchase renewable energy such as wind, solar, hydro, geothermal and biomas at above market rates.

Tetsunari Iida, Executive Director of the Institute for Sustainable Energy Policies in Tokyo said: “The scheme will create a large market in a short time. It will prompt immediate growth of related industries.” 

While the bill does not specify how much and how long the FIT will be for, Trade Minister Banri Kaieda told parliament last month that rates for renewable energy (except solar) will be up to 20 yen per kilowatt hour for about 15 years, and the rate for solar energy could be higher, possibly double that.

As well as intending to develop the renewable energy markets, the bill was triggered by the need to lessen dependence on nuclear power and will mark the last of three goals that Prime Minister Naoto Kan pledged to action before resigning. 

It is expected that the legislation will be law as soon as August 26 2011, becoming effective on July 1 2012.

The bill follows on from China’s recent announcement from the National Development and Reform Commission in China (NDRC) of a clear pricing policy on solar photovoltaic (PV) power generation.

Damian Ryan, Policy Manager, The Climate Group says: “The likelihood that Japan will follow China in rolling out major policy incentives to scale up renewable energy production is an exciting prospect.  The demand created by these two Asian giants could well provide the global tipping point that accelerates the emergence of renewables as cost-competitive or indeed cost-beating alternatives to fossil fuel power generation.”

Commenting on the NDRC’s announcement earlier this month, Changhua Wu, Greater China Director, The Climate Group said: "China has been leading the world in solar PV manufacturing in the last decade. High cost and inadequacies in grid connection have been major barriers for domestic solar PV installations. The step taken by NDRC today to regulate the pricing of solar power generation is a significant milestone for both China and the world to motivate faster development of domestic solar power industry and market. The clarity of policy direction and incentives for companies to join the league will play an important role to scale-up Chinese solar power generation, which in turn will contribute to tackling of climate challenges globally. This announcement is part of the Clean Revolution." 

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