The meltdown of the Fukushima Daiichi nuclear power plant brought an end to the nuclear energy era in Japan. To address the generation capacity shortage created, renewable energy sectors are being encouraged to fill the gap and are getting a big kick-start from a new national feed-in tariff (FIT) program. Already, this FIT is spurring new investments in solar projects, and the Japan Photovoltaic Energy Association predicts that by 2030, installed capacity could be as much as 100 gigawatts. Japan stands to become the second largest market for solar power behind Germany.
Feed-in tariffs are one way to incentivize distributed generation by paying for each kilowatt-hour of energy generated and “fed into” the grid at the location of consumption – at the distribution level of the grid – mitigating the need for large, centralized power plants. Though solar may be the most popular technology taking advantage of this opportunity, facilities generating electricity from wind, geothermal, biomass, and small hydro are also eligible for Japan’s FIT program. Rates vary for the different technologies and contract lengths, ranging from about 30 to 75 cents per kilowatt-hour, with solar getting about 53 cents per kilowatt-hour. That is over twice the rate Germany offers in its feed-in tariff that started back in 2000, which has been the prime example for using a FIT to induce widespread solar deployment. Furthermore, it could greatly reduce the typical cost of solar power globally moving forward, making solar power generation a profitable venture from the start.
While Japan’s feed-in tariff is nation-wide, the U.S. lacks such a national program and instead relies upon a growing variety of state, utility, and municipal FITs. The resulting variety of FIT programs make it difficult to keep track of their applicable locality, availability, duration, and the economic benefit of each program. Additionally, the rate offered often decreases over time and is bound by a time and/or capacity limit. Therefore, it is important to be fully prepared and ready to act when these programs first begin accepting applications.
Partnering with Alta Energy can provide the guidance commercial property owners need to truly make the best of the available opportunities across their real estate portfolio. This includes not just feed-in tariffs, but other rebates and incentives, various tax benefits, and financing structure alternatives so that every solar project deployed reflects the best set of options available.