International Business Articles
In Japan, the “Feed-in Tariff (FIT) System for Renewable Energy” was introduced in 2012. The “Feed-in Tariff (FIT) System for Renewable Energy” (the "System") is a system in which the Japanese government gives its assurance that electric power made by Renewable Energy will be purchased at a certain rate by an electric power company at the located site. “Renewable Energy” means the five (5) energy sources: solar, wind-power, water-power, geothermal heat and biomass. Among these sources, entry into the solar power business has been very active these days.
In the System, the purchase price and purchasing terms are determined by the Minister of Economy, Trade and Industry (the “METI”) each fiscal year. As for solar power, in the 2013 fiscal year (from April 1, 2013 to March 31, 2014), the purchase price was stated to be JPY37.8/kwh (in case the generating power is more than 10kw.), and the purchasing term was stated to be 20 years. These are considered to be fairly high levels compared with other countries. Recently in Japan, not only the number of domestic business operators, but also the number of overseas business operators and the amount of investments from overseas has been increasing significantly.
We would next like to briefly introduce the legal procedures needed for entry into the electric power business under the System.
2. Facility Certification by METI and Applicable Purchase Price
Facility Certification by METI
To utilize the System, an operator has to obtain a Facility Certification (Setsubi-nintei) from METI with regard to whether the electric generating facility and electric generating methods will comply with the levels stated by law.
Also, in order to be eligible to take advantage of the purchase price related to the applicable fiscal year, the operator has to obtain said Facility Certification by the end of said fiscal year (for example, in the case of the 2013 fiscal year, it should be by March 31, 2014).
An application for Facility Certification has to be by way of a written application that satisfies the noted items designated by law as well as the accompanying documents required by law.Also, in general, it takes approximately one (1) month from the time an application is made to be able to obtain a Facility Certification from METI.
Application to enter into Contracts with an Electric Power Company
In addition to the above, in order to be eligible to take advantage of the purchase price related to an applicable fiscal year, the operator has to complete an offer to execute certain agreements (power purchase agreement and system connection agreement) with an electric power company. The process of making an offer to an electric power company is generally carried out by the following steps; (i) the first stage: prior consultation→(ii) the second stage: main deliberation→(iii) the third stage: offer to execute agreements. Generally speaking, the first stage takes one (1) month and the second stage takes two (2) months. Therefore, it is necessary to take into account such time frames when making your schedule.
3. Rights and Permission for Land Utilization
Reservation of utilization rights on the land to be the project site is also essential for starting construction related to a solar power generation business. Briefly speaking, there are two
(2) methods of reservation, one of which is acquisition of the land itself by sale and purchase, and the other of which is establishing a right of lease (or surface right (“Chijyo-ken”)). In both methods, it is necessary to verify in advance whether the land owner duly has the ownership of the land or not, and whether there are any mortgages or other liens on the land or not.
In addition, with regard to the utilization of land, there are various regulations under Japanese law. For example, the development of a certain size and type of land is necessary to obtain permission from a local government. In addition, if the legal classification of the land is “agricultural land (Nouchi)”, permission from the local government to change such land classification is also required. Further, some prefectural or municipal ordinances, such as a landscape ordinance or a treasure-trove ordinance also may exist in some cases. It is necessary to verify these regulations in advance and comply with them appropriately.
In dealing with the procedures concerning these regulations, mutual consultation between the local government and/or local residents might be required in some cases, so the process should be carried out in a prudent manner. Also, in some cases the procedures may take over one (1) year or more, therefore, taking into account such time frame when planning your schedule is also essential.
4. Our Services for Renewable Energy Business
Our law offices would be pleased to provide various types of services for a Renewable Energy Business. For example, we can provide:
- Legal advice regarding the regulations for Renewable Energy Business
- Preparing an application for Facility Certification
- Preparing an application for other necessary permissions and authorizations
- Drafting and/or reviewing of various agreements including the power purchase agreement and land purchase agreement
- Legal due diligence
- Any advice not mentioned above related to a Renewable Energy Business
We are confident in our ability to provide these services on a reasonable fee basis since we fortunately have been able to accumulate a significant amount of experience and know-how in this field.
If you are interested in a Renewable Energy Business in Japan, please feel free to contact the following attorneys at our office:
Kaoru Takamatsu (Mr.), Attorney-at-law(Email to:email@example.com)
Ryoji Sakashita (Mr.),Attorney-at-law(Email to:firstname.lastname@example.org)
For more information about Hayabusa Asuka, please visit the International Society of Primerus Law Firms.