Japan offshore FIT fails to excite

The panel advising Japan’s Trade Ministry on subsidy rates for renewables has officially thrown its weight behind a separate feed-in tariff for offshore wind, albeit at a lower level than many in the wind industry may be hoping for.

For months, industry sources have been confident that when the next slate of FITs was announced – covering projects installed between April 2014 and March 2015 – it would include a separate subsidy for offshore wind, which is currently paid at the same rate as onshore wind.

The panel, established last November, has formally endorsed an offshore wind FIT of ¥36 ($0.35) per kWh – up from the ¥22/kWh payout currently offered to onshore and offshore wind developers.

Analysts, however, remain sceptical that such a rate, which may set a precedent for future subsidies, is high enough to encourage significant development in Japan’s nascent offshore wind market, given the country’s challenging physical conditions and lack of experience in the sector.

Meanwhile, the panel has recommended cutting the FIT for large PV by 11% to ¥32 ($0.31) per kWh – a level more or less in line with expectations, and likely to continue fuelling Japan’s solar boom.

The panel recommended cutting the FIT for small PV – or systems smaller than 10kW – by less than 3% to ¥37/kWh.

The recommendations are not binding, and the government may still tweak the rates before the new FITs come into effect from next month.