On August 23, OCCTO (OCCTO) announced the 21st auction (based on the Act on Special Measures Regarding the Use of Renewable Energy) targeting solar power generation (high voltage/extra high voltage interconnection projects of 250 kW or more) The results of 2024 (round 2) were announced. From this fiscal year, all capacities above 250kW will be subject to feed-in tariff (FIP).
The maximum price will be announced in advance for the four auctions held this fiscal year. The price will be reduced in steps of 0.07 to 0.08 yen from the initial 9.20 yen/kWh to 9.13 yen/kWh, 9.05 yen/kWh and 8.98 yen/kWh. The current ceiling price of 9.13 yen/kWh is 0.07 yen/kWh lower than the previous price of 9.20 yen/kWh. In addition, the proposed capacity is determined to be 107 MW according to the predetermined formula.
As a result, the participation rate was significantly lower than the offered capacity, with 22 bids totaling 33,761 MW, all of which were awarded. The successful bid rate remained at one-third of the offered capacity. In the previous 20 packages, the total capacity participated in the bid was 1.3 times the offered capacity, which was low compared to the previous 19 packages where the number of participants was more than double the offered capacity and the ineffective packages.
Looking at the 22 successful bids by size, there are 5 mid-range projects from 250kW and above but under 500kW, 16 projects from 500kW and above and under 2MW around 1MW and 1 super high-end project from 2MW and above. In the previous 20th session, out of a total of 47 winning projects, there were 10 mid-range projects, 34 projects with a capacity of around 1MW and 3 projects with a special high-end category. The ratio is almost the same but the number of special projects is high. Similarly, in addition to the decrease in the number of bids, this is one of the reasons why the number of successful bids is still low.
The weighted average winning bid price was 8.08 yen/kWh, up from 6.84 yen/kWh last time, up 1.24 yen from the previous time. This is the second consecutive time the weighted average price has increased. The reason why the weighted average winning bid price has increased while the maximum price has decreased is due to the decreasing bidding capacity and ineffective competitive bidding.
This time, the project with the lowest price is Sun Village at 5.00 yen/kWh, also higher than the previous lowest price (4.55 yen/kWh).
In this package, the number of approved business plans is 27, with a total capacity of 38,321 MW, which is also a significant decrease in both quantity and capacity compared to the previous package (62, 122,498 MW). Of which, 27 bids were eligible to participate in the bidding, with a total capacity of 38,321 MW. However, of these, 22 bids for a capacity of 33,671 MW actually participated in the bidding, so 5 bids decided not to participate.
In this auction, the weighted average winning bid price increased from the previous ¥6 to ¥8, but was still significantly lower than the wholesale electricity market average. While electricity prices and wholesale electricity markets remain high, solar development programs are mainly off-site PPAs with market prices of ¥14 to ¥16/kWh, and the role of the FIP is to support corporate PPAs. Again, this is seen as an insurance policy against the risk of disruption and market price declines.
When developing an off-site PPA business, if it seems like it will take time to finalize the power purchase agreement, there are many cases where the business plan is finalized through FIP certification and negotiations on interconnection. If the bid price is below 10 yen/kWh, it seems that many power generation companies will obtain certification for the time being, reduce the number of interconnections, and switch to off-site PPAs in the future.
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