Photo/Illutration Ground-mounted commercial solar panels along the Kushiro-Shitsugen road in Kushiro, Hokkaido, on Sept. 18, 2024 (Asahi Shimbun file photo)

The government has finalized plans to end subsidies to large-scale solar power stations, given the declining production costs of solar panels and the increasing environmental damage from the facilities, sources said.

Ground-mounted commercial solar power facilities with an output of 10 kilowatts or more will be ineligible for the subsidies as early as fiscal 2027, they said.

But the government plans to continue providing subsidies for rooftop and agrivoltaic systems, according to the sources.

A Liberal Democratic Party working committee will soon submit the proposal to the government.

A meeting of relevant Cabinet members will be held by the end of December to incorporate the measure into a policy package, the sources said.

LIKELY CHANGES TO SURCHARGE

In 2012, following the Great East Japan Earthquake and Fukushima nuclear disaster, the government launched the Feed-in Tariff (FIT) system, under which electric utilities buy renewable energy at high prices to promote its adoption.

In fiscal 2022, it also introduced the Feed-in Premium (FIP) system, which provides subsidies on top of market prices, rather than purchasing electricity at fixed prices as under the FIT system.

Both systems are funded through a renewable energy surcharge added to electricity bills, which has been cited as a factor behind rising electricity costs.

Total support for renewable energy power is expected to reach 4.9 trillion yen ($31.6 billion) in fiscal 2025, of which 3.1 trillion yen will be covered by the surcharge.

Narrowing the scope of subsidy-eligible renewable energy projects could help curb future increases in the surcharge amounts.

The government also noted that some solar power stations have been installed without receiving subsidies because of declining costs for solar panels.

For example, the planned mega-solar projects near Kushiro-Shitsugen National Park in Hokkaido are not using the government’s subsidy program.

These projects have also raised concerns about their impact on the local ecosystem.

STRICTER STANDARDS EYED 

Disputes over large-scale, ground-mounted commercial solar power projects have increased between operators and local communities.

The government is also considering revising the standards for mandatory environmental impact assessments by tightening screening procedures and amending related ordinances.

Prime Minister Sanae Takaichi has long regarded mega-solar projects as problematic. She previously said the government should undertake a sweeping overhaul of the criteria for renewable energy subsidy eligibility.

However, narrowing the scope of support and strengthening regulations could hinder solar power production, a key pillar of renewable energy.

The government wants solar power to account for 23 percent to 29 percent of the power mix in fiscal 2040, according to the Strategic Energy Plan approved by the Cabinet in February.

This will require doubling or tripling the share of 9.9 percent (preliminary figure) in fiscal 2024.

The pace of solar power deployment has slowed since the period immediately following the 2011 disaster, necessitating additional measures to accelerate the adoption of renewables.

(This article was written by Satoshi Shinden and Keitaro Fukuchi.)

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