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Japan May Lower Solar Tariff by 11% Following Decline in Costs

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Dec. 20 (Bloomberg) -- Japan may reduce its tariff for purchases of solar power by 11 percent amid falling costs to set up generation systems, Bloomberg New Energy Finance estimated.

Above-market rate for solar could fall to 32 yen (31 cents) per kilowatt hour for fiscal 2014 from the current rate of 36 yen per kilowatt hour for 20 years, the London-based researcher said in a report yesterday. Both rates are before tax.

The Ministry of Economy, Trade and Industry sets the rates for clean energy every year after accounting for system costs.

Tariffs for other types of renewables -- small hydro, wind, geothermal and biomass -- are expected to remain unchanged because more than 90 percent of approved projects have so far been for solar, according to the report.

Surcharges of 0.35 yen per kilowatt hour have been applied for this fiscal year to power consumers. That may rise to 0.77 yen per kilowatt hour next year as solar installations expand, according to BNEF.

The cost of residential solar systems in Japan has dropped about 13 percent to 432 yen per watt for the three-month period ended in June compared with the year earlier, according to data compiled by BNEF.

Japan’s sale tax, currently 5 percent and applicable to tariffs for clean energy, will increase to 8 percent in April.

To contact the reporter on this story: Chisaki Watanabe in Tokyo at cwatanabe5@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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