The lowest bid of 17,200 Yen ($153.20) per MWh in the first Japanese solar auction is still much higher than what was reported in recent auctions elsewhere in the world - even in Germany, where solar power yields are rather low and the maximum system size is 10 MW.
- The first solar auction in Japan has found the lowest bid of 17,200 Yen ($153.20) per MWh, according to Reuters
- Instead of original tendered capacity of 500 MW, the Ministry of Economy, Trade and Industry received bids for only 140 MW
- While much higher than in other countries, the auction price is lower than the 24,000 Yen ($214.32) per MWh currently offered in the country’s feed-in-tariff program
- The ministry is expected to evaluate the results and decide on capacity to be tendered in the next two tenders - each with 500 MW capacity - planned to come out by March 2019
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In the first solar power auction conducted by the Japanese Ministry of Economy, Trade and Industry (METI), the lowest accepted bid was 17,200 Yen ($153.20) per MWh. This is ‘still more than eight times a record-low achieved recently in overseas markets,’ emphasized Reuters. However, the 17,200 Yen is still much lower than the current 24,000 Yen ($214.32) per MWh feed-in tariff level.
The most recent tenders with very low tariffs were conducted in Mexico and Chile. Mexican authorities announced shortlisting 16 bids for its third electricity auction for an average price of $20.57 per MWh. Electricity blog Electrek recently revealed the lowest bid in these auctions has come from Italy’s Green power at $17.7 per MWh, which is the world’s lowest solar tariff bid so far.
In Chile’s technology neutral auction 2017, the entire capacity was awarded to renewable energy players for an average price of $32.5 per MWh (see Average Price Of $32.5/MWh At Chile Auction).
Going by the above, but even compared to Germany, where the last tender in October resulted in the lowest awarded bid of €42.9 per MWh, Japan’s auction tariffs are still very high.In Germany, tendered projects can have capacities between 750 kW and 10 MW.
The Japanese auction was the result of a first among the three 500 MW tenders that METI had announced last year. Minimum capacity that developers were allowed to bid for was 2 MW. However, the first tender could only manage to secure bids for a little over 140 MW. Now, METI is expected to adjust the capacities for the other two rounds.
Bids were capped at 21 Yen ($0.19) per kWh and the bidders were to be selected on the lowest tariff. Bloomberg recently reported that two further auctions will be out by the end of March 2019.
Japan moved towards auctions with the purpose to reduce costs for solar power generation. So far it has been offering a feed-in-tariff (FIT) which is the guaranteed rate set by the government for feeding power to the grid. These auctions are expected to bring in more competition in the market thereby reducing rates and the burden to power users who finance the FITs.