Japan awards just 39.8MW in fifth solar auction

• Japan has awarded just 39.8MW of PV capacity in its fifth solar auction, despite there being more than 416MW initially on offer.

The Ministry of Economy, Trade and Industry (METI) has published the results of the auction for projects of 500kW capacity or more, showing that after accepting 72 initial project proposals with a total capacity of 185.6MW, the ministry only awarded 27 bids for a total of 39.818MW.

With the ceiling price set at JPY13 (US$0.119)/kWh, the weighted average tariff of successful bids was JPY12.57 (US$0.115)/kWh - 0.41 yen less than the previous auction - and the lowest winning bid came in at JPY10.99 (US$0.1)/kWh.

Individual projects were small in size with the largest at just 2MW of capacity, echoing the results of Japan’s fourth auction where the majority of projects were less than 2MW in size. However, the fourth auction was different in that it contracted capacity to four projects above the 20MW mark.

Japan’s previous auction also awarded less capacity than expected after METI’s acceptance of 589.9MW of project proposals was followed up by the ministry awarding just 195.8MW of capacity, at an average price of JPY12.98 (US$0.119)/kWh. In this case, the lowest price was JPY10.5 (US$0.096)/kWh, coming in 0.49 yen lower than that of the latest auction.

The repeated drops in capacity awards relate to a shrinking Japanese market, hit by declining subsidies. The feed-in tariff rate has experienced decreases for six consecutive years since 2013 and will be, METI announced in June 2019, phased out gradually.

The ministry had introduced auctions in an attempt to drive solar prices down, but for now, the desired capacities are not being met under this model even after altering the lowest threshold for bids from a 2MW minimum to 500kW last year.

Nevertheless, the shift from large-scale solar’s dominance to distributed and rooftop solar growth is paving the way for a surge in household energy storage, which is emerging rapidly under a steep government target.