Japan's Economy Ministry plans to consolidate small-scale solar power projects as the feed-in tariff (FIT) system is phased out by 2032, aiming to boost renewable energy efforts.
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| Japan's government looks to promote solar power consolidation with new incentives for certified operators as the feed-in tariff system nears its end in 2032. Image: ChicHue |
Tokyo, Japan — March 9, 2025:
Japan’s Ministry of Economy, Trade, and Industry (METI) is set to launch an initiative in fiscal 2025 to encourage the consolidation of small-scale solar power generation projects, as the country plans to phase out its feed-in tariff (FIT) system by fiscal 2032. This move comes amid concerns over the potential exodus of small business operators as the system, which guarantees fixed prices for electricity from renewable sources, nears its end.
The FIT system was introduced in 2012 in response to the Fukushima No. 1 nuclear disaster, aimed at accelerating the adoption of renewable energy sources, including solar power. Under the system, utility companies were obligated to purchase solar electricity at a set price for 20 years, giving businesses more security to invest in solar projects. However, as the FIT program is phased out, the government is concerned that many smaller solar power operators may struggle to continue operations.
To address these challenges, the government plans to offer preferential treatment to "certified operators" with significant solar generation capacity. These operators, who will be required to have a capacity of at least 50,000 kilowatts, will gain early access to opportunities to acquire smaller solar projects. In addition, they will be exempt from certain regulatory requirements, including holding public briefings for local governments and responding quickly to technical issues.
The initiative is part of Japan's broader efforts to boost its renewable energy capacity. In February, the Cabinet approved an updated Strategic Energy Plan, which sets ambitious targets for renewable energy sources, aiming for renewable energy to account for 40-50% of the nation's power generation by fiscal 2040. Solar power, in particular, is expected to increase its share of the power mix from 9.8% in fiscal 2023 to between 23% and 29% by 2040.
The FIT system played a significant role in the rapid expansion of solar power in Japan. In the first five years of the program, around 460,000 solar projects were launched, accounting for approximately 3-4% of the country’s total electricity output. Smaller-scale projects, particularly those producing 50 kilowatts or less, now represent 34% of the total number of projects in the country. In contrast, larger projects account for only 25% of the market share, far below the figures seen in countries like Germany, where larger projects dominate the market.
To mitigate the impact of the FIT phase-out, METI plans to actively support consolidation and ensure that small operators can continue to participate in the solar power sector. The ministry’s plan aims to streamline the industry, allowing for more efficient power generation and helping Japan meet its renewable energy goals.
As Japan works to consolidate its solar power sector and transition to a post-FIT landscape, the government’s actions reflect the country’s broader commitment to reducing its carbon footprint and increasing the share of renewable energy in its power mix.