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Basis: Special Measures Law Concerning the Use of New Energy by Electric Utilities
    (promulgated 7th June 2002)
 
The RPS( Renewables Portfolio Standard ) System is aimed at furthering the use of new energy by annually
imposing an obligation on electricity retailers to use a certain amount of electricity from new energy
( hereinafter referred to as "New Energy Electricity"), according to the amount of their retailing electricity
in order to ensure the stability and suitability of energy supply, based on "Special Measures Law Concerning
the Use of New Energy by Electric Utilities"( hereinafter referred to as the "RPS Law").

An obligation bearing electricity retailer may, choose to meet its obligation from the following options,
@. by genaration of electricity oneself, A. by purchasing the new energy electricity from another party, or
B. by purchasing an "New Energy Certificates" from another party.
To take measures relating to the supply of new energy by electricity retailers in order to enhance the
stability of energy supply, thereby contributing to environmental conservation and furthering the overall
healthy development of the national economy.
 
 

 
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To take measures relating to the use of new energy by electricity retailers in order to enhance the
stability of energy supply, thereby contributing to environmental conservation and furthering the overall
healthy development of the national economy.
 

 
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Solar Generation
Wind Generation
Biomass
Medium and Small - Sized Hydro Generation (stations up to 1MW capacity)
Geothermal Generation
 

 
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The Minister of Economy, Trade and Industry establishes annual targets of utilization of electricity from
new energy by electric retailers.
The target for 2014 is 16.0 TWh.
 
( TWh / fiscal year )
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
7.32 7.66 8.00 8.34 8.67 9.27 10.33 12.20 13.15 14.10 15.05 16.00
 

 
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The Minister for Economy Trade and Industry, in consideration of the usage target, imposes an obligation
on electricity retailers to use a certain amount of electricity from new energy.
 
1) Calculation Method for the Obligation Amount
 
Obligation Amount” = “Supply Volume of the Electricity Retailer (for Previous Year)” *
“Usage Target Rate ” * “Adjustment Rate”
 
Where
 
“Usage Target Rate ” = “National Usage Target (for Corresponding Year)” / “National Volume
of Electricity Supply (for Previous Year)”

“Adjustment Rate” = “Rate Accounting for the Situation of Voltage Variation that Necessarily
Accompanies the Installation of New Energy Generation Facilities (Value 1 - 0.9)”
 
2) Adjustment Method for the Obligation Amount Transitional Measures
 
As transitional measures, the following adjustment method has been determined in order to
provide an adjustment over the seven years following enactment of the law (ie, leading up to
the year before 2010) that set practical implementation targets for each retailer based on
their actual prior results;
“Post Adjustment Obligation Amount” = “Pre Adjustment Obligation Amount”
/ “Usage Target Rate” * “Adjusted Usage Target Rate”
 
Where
 
“Adjusted Usage Target Rate" = “Usage Target Rate” - {(“Existing Rate of Use of Top-
Runner” - “Own Existing Rate of Use”) * “Progressive Adjustment Rate”}

“Existing Rate of Use” = “Volume of New Energy Based Electricity Supply (for the year
2002)” / ”Total Electricity Supply (for the fiscal year 2002)”
 
The “Progressive Adjustment Rate” can be found in the table below, with the value corresponding to each progressive year
( TWh / fiscal year )
2003 2004 2005 2006 2007 2008 2009 2010
1 1 1 9/10 3/5 2/5 1/5 0
 
 
 
 

 
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The Minister for Economy Trade and Industry, in consideration of the usage target, imposes an obligation on electricity retailers to use a certain amount of electricity from new energy.
 
1) Way to Fulfill the Obligations
 
An obligation bearing electricity retailer may, choose to meet its obligation from the following options whichever method is deemed most appropriate by economic or other considerations
 
i.
By generation of electricity oneself
ii. By purchasing the new energy based electricity from another party
iii. By purchasing a "New Energy Certificates” from another party
“New Energy Certificates”
  The amount of electricity recorded in an electronic account as the amount having been generated and supplied by an accredited facility
In Japanese RPS System, electricity retailers can meet obligation both by new energy electricity itself and New Energy Certificates (what is called " Renewable Energy Certificates)"). Therefore New Energy Certificates are rarely issued for all new energy electricity in the case of i and ii.)
 
Procedure Details
 
i.
Electricity retailers must submit their obligation amount of electricity from new energy to the Minister of Economy Trade and Industry by June 1st of each year.
ii. Electricity retailers must fulfill their obligation to use a volume of new energy electricity in excess of the obligation amount.
iii. Electricity retailers must make a submission by the following June 1st as to the status of the fulfillment of their obligation.
When there is a shortfall of up to 20% of the obligation amount, the shortfall may be carried over to the next period (referred to as 'borrowing').
 
2) “New Energy Certificates”
 
i.
The “New Energy Certificates” is managed via an electronic account. Parties that may open an account are new energy electricity generators and electricity retailers. In order to acquire a "New Energy Certificates”, whenever new energy based electricity has been generated, the new electricity generator or purchasing retailer makes a submission. The government accepts the submission and records it in the electronic account as a "New Energy Certificates” (this is to take place on a quarterly basis).
ii.
It is then possible to sell the "New Energy Certificates” that has been recorded in the account to other generators and retailers.
iii.
"New Energy Certificates” are recorded in units of 1 MWh.
An ID is attached for each unit of 1MWh.
iv.
"New Energy Certificates” are valid for a period of 2 years, including the year in which it was generated (referred to as 'banking').
 
3) Recommendations / Orders / Penalties
 
i.
Recommendations, Orders
 
In cases where the electricity retailer has failed to fulfill their obligation without proper reason, the Minister for Economy Trade and Industry may issue a recommendation or make an order for specific performance by a set deadline.
The preconditions by which a recommendation is issued is that the obligation amount is unachievable, even when taking into account banking/borrowing and an upper pricing limit (of JPY 11/kWh). Orders are issued in cases where there is no improvement even following the issuing of a recommendation.
ii.
Penalties
  In cases where an order issued under 'i.' above is violated, a fine not exceeding 1 million yen may be applied.
 

 
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Anyone who generates, or tries to generate electricity from new energy may apply to the Minister for Economy, Trade and Industry for accreditation.
 
(Accreditation Criteria)
 
a) Generation Equipment
 
The equipment must be set up in such a way as to allow accurate measurement of
the sold (usable) volume of electricity from new energy generated.
 
b) Generation Method
 
In cases where electricity generation is combined with methods other than
recognised new energy sources (such as mixing with heavy oil fuels and such), the
generation method must be one where it is possible to accurately monitor / record
the proportion of generation originating from new energy.
The renewability must be ensured (ie, geothermal)
 

 
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a) Provisions related to accreditation of facilities came into force on December 6th, 2002
b) Provisions related to obligations of electricity retailers shall come into force on April 1st, 2003