IEEE Power & Energy Magazine - November/December 2020 - 59

capital and operational expenses is the relatively small
capacity of solar PV and wind power plants as a result of the
limited availability of land in Japan. Figure 20 presents the
increase of the total FIT cost recovered from the wholesale
market and the surcharge on retail prices. The surcharge
on a retail electricity bill is calculated from the surplus of
FIT tariffs across the hourly wholesale market price in each
area. The total surcharge, which was ¥2.1 trillion in 2017
for the 6% growth in the annual renewable energy generation share, further rose to ¥2.4 trillion in 2019, although the
government has declared a cap on the total surcharges at
¥3.1 trillion, with an 8% increase in the annual renewable
generation share.
The straightforward reasons for the increase in surcharges
are the historically expensive FIT tariffs. Figure 21 shows the
decline in FIT tariffs and future "price targets" through
the categories of renewable generation. The FIT tariffs
on PV generation that is lower than 10 kW and greater
than or equal to 10 kW, which began at ¥42 and ¥40/kWh
respectively, are now ¥24 and ¥14/kWh (in 2019). On the
other hand, many 10-year contracts for installed rooftop PV reached their termination limit in October 2019.
Sustainably managing renewable energy deployment after
the current FIT program is replaced by a new renewable energy deployment program is a major focus area
of Japan's energy policy. The affordability and economy
of renewable energy are closely
related to grid constraints and the
increased need for generation
curtailment/flexibility through
infrastructure investment costs
and the curtailment of renewable
energy generation.

Grid Constraints
Grid constraints often come from
the fact that PV plants are primarily located in areas with low land
prices, whereas wind power plants
are situated in areas that have significant wind resources, and they have
less land price sensitivity. Transmission and distribution lines are
congested with a large and variable
power flow from new and remote
renewable generation plants that
feed into the system. When certain transmission and distribution
lines are overburdened, and the
generation from renewable energy
plants is not manageable, the only
solution is to invest in expanding and strengthening the grid,
which might be expensive and take
many years.
november/december 2020

In Japan, where the rights-of-way of utility lines are
limited, the Japanese Connect and Manage process has
been implemented. This includes three steps for nonwire
solutions to make the best use of existing line capacity
without the difficulties of finding rights-of-way to accommodate new generation, including renewable energy. As
shown in Figure 22, after deducting capacity for emergencies, an operational line capacity is supposed to accommodate the sum of each maximum generation, as with the
previous grid operation in the figure. In step 1, the operational capacity for generation is probabilistically evaluated, reflecting the actual generation variation. In step 2,
the emergency capacity use is reduced, with the condition
that instantaneous generation tripping must occur during
an N−1 contingency. In step 3, the operating capacity is
cut through managing and curtailing wind and solar PV
generation when necessary. Steps 1 and 2 have been implemented since 2018 to create, according to a trial calculation, an additional 46 GW of connecting capacity in Japan.
Step 3 is now in preparation.

Flexibility
The increased need for flexibility comes not only from the
variability of PV and wind generation but the reduced operational capacity of thermal units, which traditionally provided the operating reserves in different time domains. The

2030 Target
Share of Renewables: 24%
Total FIT Cost: ¥4 Trillion
Total Surcharges: ¥3.1 Trillion
2019, Actual
Total FIT Cost: ¥3.6 Trillion
Total Surcharges: ¥2.4 Trillion

2017
Share of Renewables: 16%
Total FIT Cost: ¥2.7 Trillion
Total Surcharges: ¥2.1 Trillion
Surcharge: ¥2.64 kWh

Share of Renewables: +8%

Share of Renewables: +6%

Share of
Renewables: 10%

2010

2017

2019
(Fiscal Year)

2030

figure 20. Past and predicted increases in FIT cost in Japan (US$1 = ¥11). (Source: METI;
used with permission.)
ieee power & energy magazine

IEEE Power & Energy Magazine - November/December 2020

Table of Contents for the Digital Edition of IEEE Power & Energy Magazine - November/December 2020