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Japan struggles to cut its high solar power costs

Government and businesses do not see eye to eye on profitability

A mega solar farm built by Orix. The government has tried to encourage price cutting through auctions, but progress has been slow. 

TOKYO -- With some of the highest solar power costs in the world, Japan introduced an auction system last year to remedy the situation through competition. But that plan hit a stumbling block in the second round of bidding this summer, as it failed to award a single contract to solar farm operators whose desired prices far exceeded government targets.

A feed-in-tariff system was introduced in 2012 to promote the adoption of renewable energy, which has higher costs than thermal or water power, by buying energy from producers at favorable prices. Though renewable energy has taken root as a result, it has also kept costs from falling because the higher rate is passed onto consumers through their electricity bills. 

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