Feed-in tariffs (FIT) for renewable energy became available in Japan in July 2012. The Fit rate for the period from 1April 2014 to 31 March 2015 is 34.56/1kW for solar energy, JPY23.76 Japanese yen (JPY) /1kw for wind power energy, respectively. The operation period is 20 years. The FIT rate is revised annually.
In order to get the FIT, the applicant is required to have the following conditions:
- The power plant development plan is approved by the government.
- The development plan applied for interconnection to transmission line with the electric power company.
Applicants who fulfilled these two conditions by 31 March 2015 will be awarded the FIT, which is applicable without time limit. However, since some plans might have received approval to secure the FIT tariff without a concrete investment schedule, the Ministry of Economy, Trade and Industry (“METI”) changed its approval procedure from April 1, 2014 for solar power equipment. Thus, from the application received by the METI on or after April 1, 2014, the applicant is required to submit copies of land register and purchase agreement/order for equipment to the METI within 180 days from the next day of approval. The METI rescinds its approval if the required documents are not submitted within the deadline or the submitted documents are not sufficient to substantiate land and equipment for solar energy.
Green Investment Tax Incentive
Green Investment Tax incentive is available for the taxpayer who obtained approval for the FIT and acquires solar or wind power generation equipment and places in business within 1 year from the acquisition. The taxpayer can choose one incentive from the following. The equipment is required to be placed in business by 31 March 2016 for 1) and 3), by 31 March 2015 for 2), respectively.
- 30 percent special depreciation in addition to ordinary depreciation
- 100 percent depreciation (i.e. total acquisition costs can be expensed upfront.)
- Tax credit (7 percent of acquisition costs, only available for small and medium sized enterprise (SME). SME is a company with its paid-in capital of JPY100 million or less and is not 50 percent or more owned by a large corporation with its paid-in capital of JPY100 million.)