Japan May Cut Solar Tariff by 14% as Operating Costs Decline

Japan may cut its tariff on purchases of solar power by 14 percent to reflect the lower costs of operations and maintenance, according to estimates by Bloomberg New Energy Finance.

The tariff may fall to 31.1 yen (30 cents) per kilowatt hour plus tax, the London-based researcher said in a report dated yesterday. The current rate is 36 yen per kilowatt hour plus sales tax. The sales tax, currently 5 percent, will be raised to 8 percent in the year beginning April 1.

A committee of experts advising the Ministry of Economy, Trade and Industry is reviewing tariffs for renewable energy including wind and geothermal for fiscal 2014. The reviewed rate would be applied to new applications.

The ministry has reduced its operations and maintenance cost estimates for solar projects to 8 million yen per megawatt a year from 9 million yen per megawatt, BNEF said in the report.

The ministry also raised its capacity factor estimates to 13 percent from 12 percent, according to the report. Capacity factor indicates how often an electric generator runs for a certain period of time.

Before it's here, it's on the Bloomberg Terminal.