Another 300 MW solar auction for Japan

Japan’s Ministry of Economy, Trade and Industry has launched a procurement round for large scale PV projects, the fourth of its kind since the auction regime was introduced.

The Japanese government expects to allocate 300 MW of solar power generation capacity and secure lower solar electricity prices than those allocated in the three auctions held between 2017 and 2018. The minimum size of system eligible to bid for a power supply contract has been reduced from 2 MW to 500 kW in this year’s procurement.

Developers have until tomorrow to submit bids and the results will be announced on September 3.

In its projections, the ministry said the average cost of solar power generation from utility scale facilities is expected to drop to ¥10/kWh ($0.093) or less by mid-2021.

Disappointing returns

The previous three auctions were relatively disappointing in terms of final prices and allotted capacity. An under-subscribed first exercise in November 2017 saw only 140 MW of a hoped-for 500 MW of capacity allocated, at an average price of ¥19.6/kWh. The second auction, in September, was more successful in terms of capacity, with around 197 MW secured, but still delivered a pricey lowest bid of ¥16.47.

In the third exercise, finalized in January, final prices fell slightly but remained considerably higher than those seen in other mature markets, at ¥15.01/kWh. The ministry had received 38 bids but pre-qualified only 16, which offered total capacity of around 300 MW. In the event, only seven of the projects – with an aggregate capacity of 196.6 MW – secured contracts.

The Agency for Natural Resources and Energy department of the ministry has admitted it had aimed to secure 1-1.5 GW of new PV capacity through the three procurement rounds.