On November 26, OCCTO (OCCTO) announced the 22nd round of bidding (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 the 2024/3 survey have been released. From this financial year, all capacities above 250kW will be subject to feed-in tariff (FIP).
Commercial solar power bidding results
(source: Ministry of Economy, Trade and Industry)
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 9.05 yen/kWh is 0.08 yen/kWh lower than the previous price of 9.13 yen/kWh. In addition, the proposed capacity is determined to be 93MW according to the predetermined formula.
Solar bidding system structure
(Source: OCCOT)
As a result, the participation rate was significantly lower than the offered capacity, with 23 successful bids totaling 56,441MW, and all bids were successful. In this year's auction, although the number of participants in the first auction was 1.3 times the advertised capacity, the second auction was only 1/3 of the offered capacity, and the third auction this year was only about 3/5, the number of participants was low for the second consecutive time.
Looking at the 23 successful bids by size, there are 11 mid-range projects with a capacity of 250 kW or more to less than 500 kW, 9 projects with a capacity of 500 kW or more and less than 2 MW of about 1 MW, and 3 super high-end projects. projects with a capacity of 2 MW or more. In the previous 21 sessions, of the 22 successful bids, there were 5 mid-range projects, 16 projects with a capacity of about 1 MW, and 1 high-end project. Compared to this level, the mid-range is twice as large and about 1 MW. However, as the number of high-quality special projects increased from one to three, the possibility of participating in the bidding also increased.
The weighted average successful bid price was 6.84 yen/kWh for the first auction (20th bid), 8.08 yen/kWh for the second auction (21st bid), and 8.17 yen/kWh for this year's auction (22nd bid), compared to the previous auction. The price increased by 0.09 yen. This is the third (19) increase in the weighted average price in the past year and the third consecutive increase since the lowest weighted average price was set at 5.11 yen/kWh. The reason for the increasing weighted average winning bid price while the maximum price decreased is due to the decreasing bidding capacity and ineffective competitive bidding.
This time, the lowest priced project is Kamisato Construction and Miyagi Motoyoshi Solar at 7.50 yen/kWh, up 2.50 yen from the previous price of 5.00 yen/kWh.
In this bid package, the number of approved business plans is 28 (58,641MW), an increase compared to the previous bid package (27 (38,321MW)). The reason for the increase of 20 MW of 1 project is because the number of special expressway projects increased from 1 project last time to 3 projects this time (19.5 MW, 9.99 MW, 13,332 MW).
Of the 28 bids/58,641MW submitted, 24 bids/56,941MW were eligible to participate in the bidding. Of these, 23 bids with a total capacity of 56,441MW actually participated in the bidding, so one bid was decided not to participate.
In this auction, the weighted average winning bid was around 8 yen, similar to the previous bid, lower than the average wholesale electricity market. While electricity prices and wholesale electricity markets remain high, the main method of solar development is external PPAs, with average prices of 14 to 16 yen/kWh. This again shows that this is an insurance policy. against the risk of disruption and market price collapse.
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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