Japan Decommissioning Reserve Proposal

The Ministry of Economy, Trade and Industry (METI) has developed a new regulation planned for rollout in 2022, requiring that solar power generators create a Mandatory Decommissioning Cost Reserve.  

Solar power has driven the Japan renewable energy market since the introduction of Feed-in Tariff (FIT) programs in July 2012.  As of December 2019, 53.27GW solar power has been installed, accounting for more than 85 percent of the total renewable energy sector total of, 61.35GW.  Unique to the Japan market, Japan’s solar projects are smaller in scale compared with the other markets.  Small solar projects with 10-50kw account for 95 percent of the project number base and 30-40 percent of the capacity base.  There have been growing concerns about the risk of abandoned solar panel waste at the end of the FIT period, or at the end of the projects’ life cycle.  To respond to the growing concerns, in April 2018, METI urged solar power projects with FIT certificates to secure funds for decommissioning their facility, revising the Guidelines on Business Plans for Solar Power Facilities,  and in July 2018, updated the Guidelines to require the solar power generators to report their plans and the status of decommissioning cost reserves.  Yet, METI has recognized only 20 percent of the projects had created the reserves promoted by the guidelines, and decided to develop a mandatory reserve scheme.  

Against this backdrop, in April 2019 METI established the Working Group for Securing Funds for Decommissioning Solar Power Facilities to discuss the details of the mandatory reserve scheme.  The Interim Report based on the working group’s 8-month discussion was released in December 2019, and the new regulation for the Mandatory Decommissioning Cost Reserve was approved by the cabinet on February 25th, 2020.  The new regulation will apply to all solar projects larger than 10kW with FIT certificates, and the fund reserve must commence from the 11th year of the project lifecycles.  

METI will develop the details of the new regulation and plans to enact it at the beginning of the Japanese 2022 fiscal year, April 1, 2022.  Commercial Service Japan encourages U.S. business involved in solar projects in Japan to monitor the progress and details of the new regulation.  

For more information, please contact Minae Suzuki, U.S. Commercial Service Tokyo, at Minae.Suzuki@trade.gov.