Waseda University Institute of Comparative Law

     On August 26, 2011, the Act on Special Measures Concerning Renewable Energy Electric Procurement by Operators of Electric Utilities (hereinafter referred to as “the Act”) was established, and it was decided that the Act would be in effect as of July 1, 2012. The Act introduces the Feed-in Tariff (FIT) to promote the prevalence of renewable energy, and strangely, the Cabinet decision on the bill for the Act was made on the morning of March 11, 2011, just before the Great Tohoku Earthquake.

     The Act imposes obligations on operators of electric utilities concerning the conclusion of contracts conforming to the fixed price and period set by the government for the procurement of electricity generated from renewable energy sources.

     The renewable energy resources to which the procurement obligations apply are solar power, wind power, hydroelectric power, geothermal power, and heat produced from biomass (paragraph 4 of Article 2). Additionally, the conditions for the procurement obligation are to receive certification of the facilities for generating electricity that the method of generating electricity fulfills the specific standards set forth by the Minister of Economy, Trade and Industry (hereinafter referred to as “the competent Minister”) (Article 6).

     In the Act, the procurement period and procurement prices (hereinafter referred to as “Procurement Prices, etc.”) are set every year in consideration of the cost of power generation, profit for suppliers, and the depreciation period of facilities according to the kinds and types of use (roof use, ground use, or the like) of the renewable energy resources, scale of facilities (output), or the like by the competent Minister(paragraph 1 to paragraph 3 of Article 3). The setting of Procurement Prices, etc., has a direct impact on the charges levied on electricity consumers; it is prescribed that this point shall be taken into consideration when setting them (paragraph 4 of Article 3) (for enterprises consuming large volumes of electricity, measures shall be implemented to reduce the charge rate as stipulated by Article 17). In addition, the competent Minister is to have a discussion with the ministers concerned (the Minister of Agriculture, Forestry and Fisheries; the Minister of Land, Infrastructure and Transport; the Minister of Environment; and the Minister for Consumer Policy) and hear their opinions, as well as to hear the opinions of the Committee on Calculation of Procurement Prices, etc., which newly established (paragraph 5 of Article 3). The said Committee is aiming to put the opinions together by the end of April 2012.

     The operators of electric utilities may not, when they receive the request from the suppliers of renewable electrical energy certified by the competent Minister, refuse to conclude a purchase contract unless there is an appropriate reason (Article 4). Since the suppliers need to connect their own power generation facilities to the power lines and substation facilities, the operators of electric utilities may not refuse such connections without an appropriate reason (Article 5).

     It can be expected that the prevalence of renewable energy will gain momentum by the Act, but on the other hand, since the increase in the burden of electricity charges and/or impacts on the motivation of the new entrants are of concern depending on the setting of the Procurement Prices, etc., discreet consideration to this effect is required.