Japan Renewables Alert 70

Orrick, Herrington & Sutcliffe LLP

日本語: FIT/FIP説明会要件の運用実態

Today’s Topic

METI’s Implementation of the FIT/FIP Information Session Requirement

Amendments to the Act on Special Measures Concerning Promotion of Utilization of Renewable Energy Electricity (Act No. 108 of 2011, the “REA”) and the Rule for the Enforcement of the REA (METI Ministerial Order No. 46 of 2012, the “REA Rule”), effective as of April 1, 2024, introduced a requirement for holding resident briefings as a condition for FIT/FIP certification for projects of 50kW or more. One year has now passed since this requirement was implemented. Recently, due to the Ministry of Economy, Trade and Industry’s (“METI”) overly rigid application of the new rules, developers who have established good relationships with local residents have had their FIP certification rejected and have been required to repeat information sessions. METI’s materials (see here (only in Japanese), p. 8) may give the impression that METI has been busy admonishing inappropriate projects in a reasonable manner; however, in reality, many projects providing substantively sufficient explanations to local residents have been forced to rerun the information sessions due to METI’s strict and formalistic administration.

This Alert provides an overview of the current practical application of the information session requirement, which is essential for all developers and investors involved in FIT/FIP projects. We are also providing information on areas about which we have recently received numerous inquiries.

1. How the Information Session Requirement Is Stipulated

Since April 1, 2024, developers are required to hold information sessions for residents in the surrounding area when applying for FIT/FIP certification for renewable energy facilities of 50kW or more (see REA, art. 9, para. 2, item 7; para. 4, item 6; REA Rule, art. 4-2-3, para. 1) (see also METI’s website here (only in Japanese)). In principle, such information sessions must be held at least three (3) months prior to the application for certification (or the deadline for the correction of application documents in the case of FIT/FIP auction projects). This requirement applies not only to new FIT/FIP certification applications but also to FIT/FIP amendment certification applications on certain changes, such as the change of the “operator” or “closely related parties” of projects (REA Rule, art. 10, paras. 1, 4).

Information sessions, as a requirement for certification under the REA, must meet the standards set forth in the REA Rule (art. 4-2-3, para. 2). Failure to meet these standards may result in the rejection or revocation of certification.

METI has published guidelines (the “Guidelines”; see here (only in Japanese)) detailing these standards. For example, while the REA Rule only requires that “necessary and appropriate explanations” should be given on certain topics during the information session (REA Rule, art. 4-2-3, para. 2, item 3), the Guidelines further specify that a handout should be distributed to the participants, and explanations given at the site should be based on the same handout material (Chapter 3, Section 4, 1.) providing details on the topics to be explained (Chapter 3, Section 4, 2). While the REA Rule only requires projects to submit “reports and other documents necessary to prove that the information session was held” (art. 4-2, para. 2, item 7-3), the Guidelines further require that the “handout with which METI can confirm that all the topics and items were explained during the information session” (Chapter 3, Section 6).

2. Current Practice in the Implementation of the Information Session Requirement

In the guidance provided by the regional METI Bureaus, the Guidelines are sometimes interpreted in an excessively formalistic and strict manner. The Guidelines were revised on April 1, 2025, one year after the introduction of the requirement. During the public comment process for this revision (comments accepted from February 4 to March 5, 2025, with METI’s responses published on April 1, 2025; see here (only in Japanese)) (such public comment process, the “Public Comment Process”), 76 comments were submitted, including multiple comments questioning METI’s current practice, as one of them points out “METI has been requiring to hold another information session even in the case of the omission of a single item” (see Comment 12).

For example, the REA Rule requires that the agenda of information sessions should cover the project’s “compliance with relevant laws and regulations” (art. 4-2-3, para. 2, item 3(b)). The Guidelines require that explanations should be provided not only for permits needed for the project, but also for the necessity, status and schedule of procedures under the laws and regulations enlisted under METI’s format of the “Relevant Laws and Procedures Status Report” (see METI’s website here (only in Japanese); the “Status Report”), which METI requires applicants to submit separately from the information session requirement (Chapter 3, Section 4, 2).

In some cases, METI decided that they would not render a certification unless the information session was held again due to the fact that the handout materials used in the session did not mention a permit under a certain law listed in METI’s Status Report format—even though the permit was not required for the project. Several opinions submitted in the Public Comment Process raised similar concerns, but METI responded that, even if a permit is not required, the laws enumerated under the Status Report format must still be listed in the handouts, and the fact that it is not required must be stated therein, and that the information session must be conducted again due to the omission of such description (see Comment 12).

Please also note that the format of the Status Report can be revised without any prior notice (recent revisions occurred on April 1, 2022; October 5, 2023; April 1, 2024; April 1, 2025; and May 1, 2025).

In addition, there are also cases where regional METI Bureaus have required information sessions to be held again due to insufficient descriptions in the handouts regarding qualitative items or items not immediately comprehensible from the Guidelines.

3. The Severe Impact of METI’s Practice

As described above, METI has adopted a rigid approach in its certification review, requiring repeated information sessions for any omission of items to be explained, including those not immediately apparent from the REA Rule or Guidelines (see Comment 12). This strict and overly formalistic practice has caused significant confusion among the related parties, increased costs for developers, and even led to complaints from local governments and residents. In light of these circumstances, some comments submitted in the Public Comment Process requested that METI publish templates for handout materials, but METI has been reluctant to provide such templates or checklists (see Comment 12). Furthermore, regional METI Bureaus generally refuse requests from developers for prior review of information session materials. As a result, developers are forced to hold information sessions without knowing if their handout materials are sufficient, and even if they provide thorough explanations to residents, they continue to face the risk of their certification being denied. While METI claims to have provided “thorough responses” through its call center and other occasions (see Comment 12), it is difficult to say that the call center is an effective source of guidance as they generally do not provide information beyond what is publicly available and there were multiple instances in the past where the call center provided incorrect information, clearly inconsistent with actual review practice in relation to several critical matters.

If another information session is required, the direct costs and effort involved, as well as losses and damages due to construction or operational delays, can be substantial. For FIT/FIP auction projects, it must also be noted that, if certification is denied, the bid deposit (JPY 5,000/kW; JPY 100 million for 20MW, JPY 250 million for 50MW) will be forfeited (although it can be carried over only one time to the next year’s auction).

Furthermore, for projects requiring certain development permits (such as forest land development) or subject to environmental impact assessment (EIA) under the national law, resident information sessions are required not only before FIT/FIP certification but also at earlier stages, such as before obtaining development permits or preparing preliminary consideration documents (hairyo-sho) in the EIA procedure, respectively (REA Rule, art. 4-2-3, para. 2, item 7). Information sessions at these early stages may be held several years before certification application, and certification may still be denied if deficiencies in handout materials at these early stages are pointed out years later. In such cases, it may be difficult to revert to the pre-permit or pre-scoping stage, placing developers in a challenging position.

Amendments to the REA Rule effective April 1, 2025, have introduced the “Long-Term Stable Qualified Solar Power Operator” (“LTSQ”) system (art. 4-2-3, para. 1, item 1(b) of the REA Rule). Under this system, for FIT/FIP solar projects, if the transferee of the project (new “operator” or “closely related party”) is LTSQ certified by METI, an information session is not necessarily required for application changes due to the transfer, though stipulated advance notification measures to local residents is required in that case. However, not all operators are eligible for LTSQ certification as it is limited to listed stock companies (kabushiki kaisha) or entities with investments from local governments.

4. Required Actions

It has been one year since the resident information session requirement was introduced for new FIT/FIP certification applications and FIT/FIP amendment applications involving operator changes, etc. However, as described above, METI’s strict and formalistic application of the requirement risks delaying the COD of renewable energy projects, including those with strong local support and expectation garnered by achieving community consensus and poses significant obstacles to project formation, transfers, investment recovery and new market entry. Not only developers, but also local governments and residents are experiencing greater confusion than when the requirement was introduced due to the significant risks and costs imposed by METI’s administration. It is essential for developers to accurately understand these practical realities and take appropriate measures to minimize risks.

Recently, we have been receiving numerous inquiries regarding information sessions. With our energy team having a long history of supporting both domestic and international renewable energy developers since before the inception of the FIT regime, we are available to provide advice on information sessions at any stage, whether it is before or after the session, so do not hesitate to consult with us if you have any concerns.

5. Future Outlook for the Renewable Energy Industry Including Storage and Data Centers

Despite the significant challenges described above regarding the information session requirement for FIT/FIP projects, the development of renewable energy projects and storage projects remains active through persistent efforts from developers. We also continue to receive inquiries regarding hydrogen, power trading and other areas. In particular, the recent expansion of generative AI has fueled growing interest in the construction of and power supply to data centers, which led METI’s Public-Private Roundtable Forum on Watts and Bitts Linkage to issue its interim report on June 6, 2025 (see here (only in Japanese)). We have also been receiving multiple inquiries related to data centers and have held a panel discussion on data centers in May 2025 (see here). As we will be distributing our guide on data centers this month, please subscribe if you are interested (see here; subscribe here).

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. Attorney Advertising.

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