Costs estimation for renewable electricity policies in Japan

With the launch of a feed-in tariff (FIT), together with a renewable portfolio standard (RPS) and a photovoltaic FIT, three renewable electricity support policies have temporarily coexisted in Japan since 2012. In the policy cost shift scheme, the amount of the purchased kWh from renewable electricity, with avoided costs subtracted, is added to electricity fee as a type of cost, called additional costs of renewables. Because the costs of these systems are ultimately added to electricity fee, an important point from the standpoint of policies´ efficiency is supplying more power at lower cost. However, total additional costs and output by power source, the foundation for considering efficiency, have not been indicated. This study lays out systemic design challenges by estimating additional costs and multiplying this difference by output for each power source. Comparing 2010, when only the RPS recovered its costs, and 2012, after the launch of the FIT, purchased output no more than doubled, while additional costs swelled more than fivefold. The reasons are that the purchase price of solar power in Japan is more than twice the price in European countries and that purchasing targeted not only new equipment but also existing equipment. A combination of both a revised FIT system and R&D policy should be considered for efficient diffusion of renewables.