Canadian Solar connects first Japan project at 2012 FiT rate

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Canadian Solar has made the first dent in what it claims is a 405MW pipeline of PV projects in Japan, connecting a project in Kagoshima, on the southern Japanese island of Kyushu.

The company’s first completed Japan project is a 1.2MW (DC) plant, estimated to produce around 1,533MWh of electricity annually. The electricity will be sold to the local utility, Kyushu Electric Power, on a 20 year power purchase agreement (PPA).

Canadian Solar announced that it will receive the feed-in tariff (FiT) at a rate of ¥40 per kWh (US$0.37), meaning it qualified for the scheme under the 2012 introductory rate that was launched as the programme began in July of that year. The tariff, which is now undergoing a ‘managed degression’ process that sees the rate payable drop by around 11% each year, is at ¥32 per kWh (US$0.32) for commercial customers, two Japanese financial years later.

Chief executive officer and president Shawn Qu claimed the connection of the 1.5MW Kagoshima plant as “an important accomplishment” for Canadian Solar’s project development and engineering, procurement and construction (EPC) teams in Japan. Qu also referred to the project as another step in the company’s ongoing expansion into offering a “total energy solutions strategy”, with the company joining other manufacturers such as its Chinese Tier One rival Yingli Green and SunPower from the US in expanding downstream activities while continuing to produce and supply modules.

The company stated that it expects to also break ground on “approximately” 42.4MW more Japanese projects from its pipeline during the last two quarters of this year. The company says that of its touted 405MW Japan pipeline, around 150MW has grid connection approval.

The gap between approved projects and those that have been completed since the FiT was introduced has been the topic of much discussion around Japan’s solar industry. Analysis firm NPD Solarbuzz puts the pipeline of approved commercial projects at as much as 59GW, with the government unable to turn down projects proposed for the scheme, as long as developers show proof that accredited equipment will be used. Of this huge figure, only a fraction has gone into the ground, including over 7GW connected during Japan’s last financial year.

A recent call for developers of projects accredited and approved for the FiT in Japanese financial year (JFY) 2012 ended with a late August deadline for submission of the required documents. Just under 10% of all JFY2012-approved projects have since had their FiTs revoked, amid fears that some unscrupulous developers might have been waiting for equipment prices and therefore costs to drop before executing their projects while still receiving 2012 FiT rates. There has been no indication yet from Japan’s government how many projects this might refer to, with several other reasons given for the delay including serious grid connection shortages and the difficulty of repurposing agricultural land in Japan for other uses such as power generation.

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