Newsletter:
"Newsletter Amendments to Renewable Energy Related Laws and Regulations (September 2020)"

Newsletter Amendments to Renewable Energy Related Laws and Regulations (September 2020)

Published: (Tue) 29 Sep 2020

1. Amendment to the Renewable Energy Special Measures Act pursuant to the Energy Resilience Act

The Act to Amend the Electricity Business Act, Etc. for Establishing a Resilient and Sustainable Electricity Supply System (the “Energy Resilience Act”) was enacted effective as of June 5, 2020 upon the passage of the bill therefor by the House of Councilors of the Japanese Diet. The Energy Resilience Act provides for various amendments to energy-related laws, such as the Act on Special Measures Concerning Procurement of Electricity from Renewable Energy Sources by Electricity Utilities (the “Renewable Energy Special Measures Act”) and the Electricity Business Act, and is planned to be enforced starting from April 1, 2022.

Upon the enactment of the Energy Resilience Act, the name of the former law (i.e. the Renewable Energy Special Measures Act) was amended to the “Act on Special Measures to Promote Use of Electricity from Renewable Energy Sources” (the “Renewable Energy Promotion Act”). For renewable energy business operators, the following four items seem the most relevant to their operation under the Renewable Energy Promotion Act and should therefore be noted.

(1) Establishment of an FIP System which is tied to the market
(2) Use of the money collected as public charges for augmentation of the electrical connection system
(3) Legal obligation to accumulate and set aside funds in an external account for the disposal of solar power generation facilities
(4) System for revocation in response to long-term suspension to commence the operations of a power generation plant

In the following paragraphs, we explain the general outlines of the above 4 points.

(1) Establishment of an FIP System tied to the market
The measures and policies in Japan to adapt the renewable energy were previously supported by the feed-in tariff (FIT) system, wherein generated electricity is purchased by utilities. Under the FIT system, the share of the renewable energy was significantly increased. On the other hand, in order to further adopt and promote renewable energy as a main power source, and in view of the present circumstances in foreign countries where the transition to a different system has been promoted in order to consolidate the renewable energy markets, it is considered absolutely necessary to introduce a certain system which allows the renewable energy business to be operated independently from the FIT system. Accordingly, after the enforcement of the Renewable Energy Promotion Act (hereinafter in this Section 1.(1); the “Act”), in addition to the FIT system, Japan has decided to adopt a “feed-in premium” (FIP) system where the power purchase price of a utility is determined based on the market price by adding a certain premium. Under the FIP system, the Renewable Energy Promotion Act (cf. Article 2-2, Paragraph 2 of the Act) stipulates that an accredited business operator under Article 9, Paragraph 4 of the Act (cf. Article 2, Paragraph 5) shall be eligible to receive the subsidy (i.e. the FIP premium) to promote renewable energy supply when supplying the electricity generated by an accredited power plant falling within the eligible plants for such premium by way of market trading, etc. (cf. Article 2-2, Paragraph 1 of the Act). More specifically, such premium is granted when the accredited business operator freely trades the electricity generated by certain renewable energy business on the wholesale market for electricity or through bilateral transaction, by adding “the difference between the prescribed price (i.e. the base price) which constitutes the basis for the income from such electricity sale and the market price (i.e. reference price), multiplied by the amount of the electric power actually sold.” It is interpreted that such premium is designed to ensure investment incentives by granting additional income (i.e. FIP premium) in addition to the ordinary income based on the market price (cf. Article 2-4, Paragraph 2 of the Act; the interim report published in February 2020 by the subcommittee for reformation of the system for making renewable energy the main source of electrical power, which belongs to the sectional committee for basic policy of the natural resources and energy research committee of the Ministry of Economy, Trade and Industry (the “METI Interim Report”)).

 

Continue Reading (PDF)

More Newsletters…

Newsletter Setting-up Business in Japan (February 2021)

Japan continues to attract the interest of foreign investors, wishing to establish or expand their own business presence in this market. Japanese corporate law provides for a broad variety of legal types of investment, the most prevalent of which are described in this newsletter. These include the representative office (I.), the branch (II.), the joint stock corporation (III.) and the limited liability company (IV.).

OPEN PDF
read more

Newsletter Major Trends in Offshore Wind Power Generation in Japan (Oct 2020)

Being designated by the Japanese government as a main power source, new policies to proactively promote renewable energy have been adopted in Japan. Among several renewable energy sources, offshore wind power generation has attracted the most attention because, while the lands suitable for land wind power are limited, Japanese waters offer relatively favorable offshore sites for offshore wind power generation, and thus it is necessary for Japan to introduce wind power generation using such offshore sites (cf. the 5th Basic Energy Plan approved by the Cabinet on July 3, 2018).

OPEN PDF
read more

Newsflash BOJ Filing and FDI Category Expansion (August 2020)

On 7 June 2020 a significant amendment concerning filing obligations of foreign investors in Japan under the Japanese Foreign Exchange and Foreign Trade Act (FEFTA) came into effect which widely expanded the scope of mandatory prior-notification obligations to the competent governmental authorities (i.e. the Ministry of Finance (MOF) and the Ministry or Agency supervising the area of the business concerned) through the Bank of Japan (BOJ).

OPEN PDF
read more