Introduction
Japan's commitment to renewable energy has seen a significant transformation over the past decade. With a strong focus on solar power, the nation has become a leader in photovoltaic (PV) installations given the limited flat surface area. However, the intermittent nature of solar energy has presented challenges in balancing supply and demand. To address these challenges, Japan introduced the Feed-in Premium (FIP) scheme, a pivotal policy aimed at integrating PV systems with energy storage solutions.
What is the FIP Scheme?
The Feed-in Premium (FIP) scheme is an evolution of the earlier Feed-in Tariff (FIT) program, designed to encourage the adoption of renewable energy. While the FIT scheme guaranteed fixed payments for electricity generated from renewable sources, the FIP scheme offers a more dynamic approach. Under the FIP, renewable energy producers receive a premium on top of the market price of electricity, incentivizing them to be more responsive to market signals.
Key Features of the FIP Scheme
- Market Integration: The FIP scheme encourages renewable energy producers to closely watch the electricity market and act accordingly. By receiving a premium that is calculated based on the market price movement, producers are motivated to optimize their generation and storage operations to align with market demands.
- Revenue Stability: Despite the variability of market prices, the premium ensures a stable revenue stream for producers, making investments in renewable energy more attractive.
- Incentive for Storage: The integration of storage solutions, such as batteries, is a crucial aspect of the FIP scheme. By storing excess energy generated during peak production times and releasing it during periods of high demand, storage systems help in stabilizing the grid and maximizing revenue.
Understanding FIP Premium Price Calculation
The FIP premium price calculation involves a specific logic designed to incentivize storage integration and optimization with PV. It boosts potential revenue in regions with high renewable energy generation, such as Kyushu. The premium is calculated by taking the ratio of the total electricity supply excluding periods with a market price of 0.01 yen/kWh to the total electricity supply including periods with a market price of 0.01 yen/kWh. This ratio is then multiplied by the base premium price.
This means that in areas and months where there is a high supply of electricity at the 0.01 yen/kWh rate, the premium is significantly amplified. However, you will not receive any premium for the amount you generate during 0.01yen/kWh time slots.
The amplified revenue with FIP premium will be distributed to the generators who shift the generation to "non 0.01yen/kWh" time slots.
The shows FIP premium price in Tokyo and Kyushu with different FIP price calculated by Tensor Cloud FIP premium calculator.
The premium price significantly increases in months with many 0.01 yen/kWh slots.
The Role of PV + Storage in the FIP Scheme
PV + storage systems play a critical role in the success of the FIP scheme. Here's how:
Balancing Supply and Demand: Solar energy production is highest during the day when demand may not always match supply. Storage systems capture this excess energy and release it when demand increases, ensuring a more balanced and reliable energy supply.
Grid Stability: By reducing the need for curtailment and providing a buffer against fluctuations in generation and consumption, PV + storage systems enhance grid stability. This is particularly important in regions with high renewable energy penetration, such as Kyushu.
Maximizing Revenue: The ability to store and strategically release energy allows producers to minimize curtailment, take more FIP premium and take advantage of price fluctuations in the electricity market. This maximizes the financial returns on their investments in PV and storage technologies.
Case Study: Kyocera TCL Solar GK's Arao Kumamoto PV + Battery Power Station
An excellent example of the FIP scheme in action is the PV + storage power plant operated by Kyocera TCL Solar G.K. in Arao, Kumamoto Prefecture. This project, which started commercial operations in June 2024, leverages Tensor Energy's advanced operating system to optimize battery charge and discharge schedules. The integration of storage at this plant is a testament to the effectiveness of the FIP scheme in promoting advanced renewable energy solutions.
Tensor Energy's Role
At Tensor Energy, we are at the forefront of this renewable revolution. Our Tensor Cloud platform uses AI and machine learning to forecast solar output and market prices in real-time, optimize battery charging/discharging schedules, and generate necessary files for market bidding and regulatory compliance. By partnering with companies like Kyocera TCL Solar, we help maximize the use of renewable energy and increase revenue from electricity sales.
Conclusion
The FIP scheme represents a significant step forward in Japan's renewable energy journey. By promoting the integration of PV systems with energy storage solutions, it addresses the challenges of supply-demand balance and grid stability. Tensor Energy is providing the technology and expertise needed to optimize the performance and financial returns of renewable energy investments. As Japan continues to innovate and lead in renewable energy, the FIP scheme will undoubtedly play a crucial role in the transition and shaping a sustainable and energy-secure future.
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