Markets

Japan: Tender results and new directions for FY 2018


09 Feb. 2018 by RTS Corporation

RTS Corporation reflects on the recent tender in Japan and what its results signal for the Japanese solar market and the future tenders planned by the government.


RTS


The first tender for large scale PV project (2MW or more) was held in October 2017. The tender capacity and ceiling price were set at 500 MWAC and 21 JPY/kWh, respectively. For the tender, a pay-as-bid scheme was adopted, under which the bidding price is set as the purchase price. PV project business plans for 29 PV projects, with a total capacity of 490 MWAC were submitted for the examination of tender qualification, of which 23 projects (totaling 388 MWAC) were qualified to participate in the tender. According to the tender results released, 9 projects (totaling 141 MWAC) were selected. The lowest bidding price was 17,2 JPY/kWh and the highest bidding prices was 21 JPY/kWh, which corresponded to the ceiling price. As it stands now, an additional tender, or reconsideration of remaining tender-qualified capacity for a next tender, will not be conducted. Of all the winning tenders, 5 projects (totaling 100 MWAC) were withdrawn, as they did not pay the required deposit after winning the tender. Table 1 shows the 9 ‘winning’ projects, including the projects that were withdrawn.

Company Bid price(Yen/kWh) Installed capacity(MW) Note
HINA 17.20 7.26 -
Canadian Solar Project 17.97 15.4 -
Shizen Energy 18.97 18.0 Withdrawn
Shizen Energy 19.39 10.5 Withdrawn
QSolarB (Hanwha Group) 12.0 12.0 Withdrawn
X-Elio17 19.95 30.0 Withdrawn
Hanwha Energy Japan 20.49 30.006 Withdrawn
Royal Lease 21.00 5.6 -
Shinnippou 21.00 12.6 -

Table 1: The winning projects


The remaining 4 projects (totaling 41 MWAC), which paid the deposit, are required to obtain approval of their PV project business plan by the deadline for approval.

The first to third tenders are positioned as trial tenders, and discussions on the upcoming tenders are underway based on the results of the first tender. The Procurement Price Calculation Committee established by the Japanese Ministry of Trade and Industry (METI) analyzed the results and decided on modification of conditions of deposit requirements and rules. METI also invited Japanese PV association, JPEA, that conducted survey of IPPs, to clarify the reasons behind the unpopularity of the tender. IPPs pointed out that it was difficult to find proper sites and conclude grid connection contracts with utilities before participation. Also, the risk of the second deposit (5,000 yen/kW) is too big for IPPs to take, in case the connection contract is late.
 
Reflecting these opinions, the Committee discussed the direction of the tenders that are to be held in FY 2018. The figure below summarizes the discussion. Some IPPs predict that the level of the ceiling price (which, out of precaution, will not be disclosed for the next tender) will still be very high when compared to the international PPA price level. Some developers said that, instead of focusing on the new tenders, they will instead concentrate on formerly approved projects with a higher tariff (in the 2012-2014 period, the FiT was still as high as 36-40 cY/kWh). Therefore it remains to be seen whether the 2nd and 3rd tenders will attracts bidders or not.
 

Table
Figure 1: Discussion point of 2nd and 3rd Tender to be held in 2018

Learn more about the latest developments in the Japanese solar PV market at the fourth edition of Solar Asset Management Asia, the leading Japanese conference on the operational phase of solar PV assets. RTS Corp will take the stage as well and share their expertise with the high-level crowd of both local and international solar O&M and asset management specialists.