Some vested interests want you to think that Japan’s new renewable energy feed-in tariffs (FIT) are really expensive! Well, their sort of right – everything costs money, but are the FITs really expensive?
The Japan renewable energy feed-in tariffs system, after its launch in July, will be paid for by electricity consumers. Everyone who buys electricity will have some additional amount tagged onto their bill each month to pay for the renewable deployment.
A typical household with a 7,000 yen (about €68 or US$88 per month) electric bill will be charged an additional renewable energy fee of 70 to 100 yen (about one Euro or US dollar) per month. These fees will be collected from everyone and used to pay for the FITs for renewable energy deployed.
Traditional power rate setting mechanisms are a very inefficient and expensive way to set electricity rates. These mechanisms can, and many times do, incentivize electric utilities to invest in the most expensive forms of power generation. This means that you and I pay way too much for electricity.
In Japan and many other countries/markets, electric utility rates are set through a “Cost Plus” system. As I wrote the other day, the Cost Plus system works like this:
A couple of really well done reviews of Japan’s new FITs are now available. General take is that the FITs appear a bit high on initial examination, but probably not too high based on Japan’s desire for rapid adoption of renewable energy. I recommend everyone read these!
Japanese Proposed Tariffs Submitted
– World’s Highest Feed-in Tariffs
– Differentiated by Technology But Otherwise Little Further Differentiation
– Are the Tariffs too High?
Paul Gipe has done a thorough overview of the new Japanese renewable energy FITs at his excellent Wind-works.org website.
Japanese feed-in tariffs committee report
@Kf_Lenz has also put together an excellent and nuanced examination of the tariffs. I agree with his outlook that the tariffs are not too aggressive when one considers the costs of business in Japan as well as the desire for rapid uptake of renewables by the nation.
Are there any other good analysis reports of the new Japanese FITs on the internets? Please let me know!
Renewable energy FITs are in the news a lot these days here in Japan. “FIT” is the acronym for Feed-In Tariffs – a mechanism for paying for production of renewable energy at a guaranteed price. FITs are designed to encourage both investment in renewable energy production by allowing an energy producers to have a sure fire way to make money off their investment. FITs have proven extremely successful in developing the renewable energy market in a large number of countries.
A silly man commented to me online that FITs are somehow very bad. Initially I thought that this silly person must be misinformed, but upon looking up his name online, I discovered he works in the nuclear industry. FITs are not so good for people with vested interests in nuclear as FITs enable countries to get by without nuclear plants.