Legal verification of the renewable energy surcharge review – Is it possible to change the FIT price? How can the financial deficit be filled?

✅ Roughly speaking

📌There is a gap between political statements and legal reality —Prime Minister Takaichi and Minister of Economy, Trade and Industry Akazawa talk about "reviewing the levy," but the legal feasibility is limited ⚖️Retroactive changes to already certified FIT prices pose a high risk of being unconstitutional —There are clauses for change in the Renewable Energy Special Measures Act, but there is a possibility of infringing property rights and breaching trust protection 💰The dilemma of reducing the levy and losing financial resources —If the levy is reduced while maintaining the FIT price, a financial shortfall of several trillion yen will occur annually 🎯What is most likely to be realized is tightening the restrictions on new projects —Strengthening cancellation of non-operating projects, stricter certification standards, and prioritizing support targets

✅ Audio summary of this post here

Introduction

This time, following the remarks by Prime Minister Takaichi and Minister of Economy, Trade and Industry Akazawa about a review of the renewable energy surcharge, we will organize what can and cannot be done from a legal perspective.

In November 2025, Prime Minister Takaichi stated at a plenary session of the House of Representatives that "we will examine the nature of renewable energy surcharges, taking into account future technological advances and the necessity of such surcharges" ( Solar Journal, November 20, 2025 ).
Minister of Economy, Trade and Industry Akazawa has also stated that he will "review the targets of support and examine concentrated investment."

However, there appears to be a large gap between political rhetoric and the reality of the legal system.
In this article, I will discuss the following from the perspective of a lawyer involved in renewable energy legal affairs:
We will legally examine four points: 1) the possibility of changing the levy unit price, 2) the possibility of changing already approved FIT prices, 3) the issue of financial resource shortfalls, and 4) reducing levies by reducing approved projects.

Prerequisite knowledge: Basic structure of the FIT system and levies

FIT system structure

The FIT system (feed-in tariff system) was launched in July 2012 based on the Act on Special Measures Concerning the Promotion of the Use of Electricity from Renewable Energy Sources (hereinafter referred to as the Renewable Energy Act).

The key feature of the system is that the procurement price (FIT price) determined at the time of certification is, in principle, fixed for the duration of the contract (usually 20 years) .
This is thought to be a system designed to ensure business predictability for businesses and enable them to obtain loans from financial institutions.

Levy calculation mechanism

The Renewable Energy Generation Promotion Surcharge (hereinafter referred to as the "Renewable Energy Surcharge") is a charge that electric power companies add to electricity bills to cover the costs they incur when purchasing renewable energy electricity.

The calculation formula is as follows :

Levy unit price = (purchase cost - avoidable cost + administrative cost) ÷ expected amount of electricity sold

The levy rate for fiscal year 2025 has been set at 3.98 yen/kWh ( Ministry of Economy, Trade and Industry, March 21, 2025 ).
This is the highest amount since the system was introduced, and will cost an average household (using 400kWh per month) approximately 19,100 yen per year.

The important point is that the levy unit price is in a dependent relationship with the total purchase cost .
In other words, it can be said that the structure is such that unless the purchase costs change, the levy unit price cannot essentially be changed.

First point of discussion: Is it possible to directly reduce the levy unit price?

Legal Framework

The Renewable Energy Special Measures Act stipulates that the levy unit price shall be "set by the Minister of Economy, Trade and Industry before the start of the fiscal year in question in accordance with the calculation method prescribed in the Renewable Energy Special Measures Act" ( Ministry of Economy, Trade and Industry, March 21, 2025 ).

Limits on unit price changes

As is clear from the calculation formula above, in order to reduce the levy unit price, one of the following is required:

Reduce purchase costs —lower the FIT price or reduce the purchase amount
Increase in avoidable costs – Increase in wholesale electricity market prices (policy uncontrollable)
Increase in electricity sales volume - Expansion of electricity consumption (difficult to stimulate demand)

Unless the total purchase cost remains unchanged, it is considered extremely difficult under the current system to arbitrarily lower only the levy "unit price."
Politically, it is impossible to achieve the goal of "lowering the levy" without also taking practical measures such as reducing the purchase costs, both legally and mathematically.

Second point of contention: Is it possible to retroactively change already approved FIT prices?

Principle: Fixity of price at time of certification

The credibility of the FIT system is based on the fundamental principle that, once a project has been certified, the purchase price will not be changed .

This principle is not merely a policy consideration, but is believed to be rooted in the legal foundation of the principle of protecting property rights and protecting trust, guaranteed by Article 29 of the Constitution .
Operators of already approved projects have formulated business plans based on the FIT price at the time of approval, obtained loans from financial institutions, and are making capital investments.

Existence of exceptional change provisions: Article 3, Paragraph 11 of the Renewable Energy Special Measures Act

In fact, the Renewable Energy Special Measures Act contains a provision that allows the procurement prices of already approved projects to be revised retroactively .

Article 3, Paragraph 11 of the Renewable Energy Special Measures Act stipulates the following:

"When significant fluctuations have occurred or are likely to occur in prices or other economic conditions, the Minister of Economy, Trade and Industry may revise the procurement price and procurement period if he/she deems it particularly necessary."

The existence of this provision is disclosed as a risk issue in securities reports, etc. ( Ichigo Green Infrastructure Investment Corporation, September 28, 2023 , page 78).

Substantive applicability of paragraph 11

However, this provision has very high application requirements .

Strictness of application requirements :

1. "Significant fluctuations in prices and other economic conditions" - according to the Ministry of Economy, Trade and Industry's Agency for Natural Resources and Energy, this assumes "exceptional circumstances such as rapid inflation, deflation, or stagflation."
2. "When it is deemed particularly necessary" - A simple reason such as "reducing the burden on the public" is not considered to meet the requirement.

Practical view : The securities report states that "we believe the possibility of such changes to the procurement price and procurement period being implemented is fairly limited" ( Ichigo Green Infrastructure Investment Corporation, September 28, 2023 , page 80).

Price changes due to change approval applications

Apart from Section 11, the FIT price may change due to the actions of the operator itself.
If you need to apply for a change certification as described below, the (usually lower) FIT price at that time will apply ( Easy to understand! Renewable Energy ).

• If the total output of the solar cells increases by 3kW or more, or by 3% or more
• If the total output decreases by 20% or more
• If it becomes necessary to re-enter the connection agreement

These are not "unilateral changes from the system" but rather "new certifications chosen by the businesses themselves."

Legal risks: if Section 11 is invoked

If the government were to invoke Article 11 and take measures to retroactively lower the FIT prices for already approved projects, the following legal risks would likely arise.

1. Risk of infringement of property rights (violation of Article 29 of the Constitution) The FIT price at the time of certification is a legal status that has property value for the operator.
Lowering prices under circumstances that do not meet the requirement of "significant fluctuations in prices and other economic conditions" could be considered an infringement of property rights without just compensation.

② Risk of violating the principle of protecting trust
As a general principle of administrative law, when an administration makes a detrimental change to a legal status it has once granted, it must weigh the significant public interest needs against the trust placed in the business operator.
In a situation where "exceptional circumstances such as rapid inflation" have not yet materialized, it is believed that there is a lack of justification for overturning the trust of businesses that have already made huge investments.

③ Burden of proof that the requirement applies The requirement of "significant fluctuations in prices and other economic conditions" is extremely abstract, and if its applicability is disputed in litigation, the burden of proof would likely be placed on the government.

Conclusion : Although there is a legal basis in Article 3, Paragraph 11 of the Renewable Energy Special Measures Act, the requirements for its activation are extremely strict, and if it is implemented, there is a high risk of inviting lawsuits for unconstitutionality .
We have to say that the feasibility of this is extremely low .

Third point: The dilemma of levy reduction and financial deficit

The structure of the dilemma

This is where the core issue arises.

• FIT price will not be changed → Purchase costs will not change → Levies will not be reduced
• Reduce the levy → Difference with purchase cost occurs → Need to make up the gap somewhere

The purchase cost for fiscal year 2025 is estimated to be approximately 4.854 trillion yen ( Ministry of Economy, Trade and Industry, March 21, 2025 ). If the levy rate were to be reduced by 1 yen/kWh, this would result in a financial shortfall of approximately 770 billion yen per year.

Funding options

Option 1: Compensation from the general account
This is the most direct option, but it is also the scenario that the Ministry of Finance dislikes the most.
A major advantage of the renewable energy surcharge is that it can be collected outside the general account (off-balance sheet) .
Incorporating this into the general account would have a direct impact on the outstanding government bond balance and the fiscal deficit figures, so the political hurdles are thought to be extremely high .

Option 2: Establishment of a new fund
The government has reportedly begun exploring new funding schemes, such as an "Energy and Climate Fund" ( Solar Journal, November 20, 2025 ).
However, there is likely to be criticism that this is merely a "national burden under a different name" and does not result in any real reduction in the burden.

Option 3: Shifting the burden to power companies
Theoretically, it is also possible to ask power companies (and ultimately consumers) to bear the burden by adding it to the transmission and distribution costs.
However, this will ultimately be passed on to consumers in the form of higher electricity rates, and is therefore considered to be inconsistent with the political appeal of "reducing levies."

Conclusion : Reducing levies and securing financial resources are considered to be in a trade-off relationship that is difficult to reconcile legally and financially .
All of these options face high political hurdles and are considered unlikely to be feasible.

Fourth point: Reducing levies by "reducing" certified cases

Change your mindset: Reduce the number of cases

If it is legally and politically difficult to change the already certified FIT price, one possible approach would be to curb future increases in purchase costs by reducing the number of certified projects themselves .

The legal advantage of this method is that it does not directly address certified cases that have become vested rights, but rather targets new cases and cases that are not yet in operation , making it easier to avoid the risk of unconstitutionality that comes with invoking Article 11.

Legal means

① Strict enforcement of the deadline for starting operations
Under the certification expiration system that will come into effect in April 2022, projects that do not begin operation within a certain period of time after FIT certification (three years in principle for solar power) will lose their certification ( understandable! Renewable Energy ).

Due to strict enforcement of this system, it has been reported that approximately 4.2GW of non-operational projects will expire in fiscal 2024 ( PVeyeWEB ).
In the future, it is likely that further expiry will occur due to shortening of grace periods and stricter exception provisions.

Legal Issues
If the delay in the start of operations is due to reasons beyond the operator's control, such as delays in grid connection or delays in obtaining licenses and permits, the legality of the revocation order may be challenged.

② Tightening of new certification standards
The policy stated by Minister of Economy, Trade and Industry Akazawa, "to place priority on supporting the introduction of technologies that aim for regional coexistence," is understood to mean stricter regional coexistence requirements for new certification.

Specifically, the following requirements may be strengthened:

• Obligation to document agreements with local residents
• Expanding the scope of environmental assessments
• Strengthening of inspections of consistency with landscape ordinances and the Natural Parks Act

Legal Issues
If the requirements are made overly strict, it could effectively hinder new entrants and contradict the original purpose of the FIT system, which is to promote the introduction of renewable energy.

③ Focusing on targets of support
Minister of Economy, Trade and Industry Akazawa stated, "We will consider how to provide support, taking into account the progress of cost reductions in conventional solar power generation, and will focus on supporting the introduction of next-generation solar cells such as perovskite and rooftop installations that aim for regional coexistence" ( Solar Journal, November 20, 2025 ).

This is thought to represent a policy shift that will restrict the application of new FIT to conventional solar power, which is already becoming economically independent, and shift support to next-generation technologies .

Legal perspective : This direction is consistent with the original purpose of the FIT system, which is to "promote the economic independence of renewable energy," and is considered to have a high level of legal legitimacy.

Actual movement

The 2025 FIT system reform is thought to be structured in such a way that rooftop solar power generation of 10kW or more will receive preferential purchase prices, while ground-mounted solar power generation will essentially be given poor treatment ( Ministry of Economy, Trade and Industry, March 21, 2025 ).

This is seen as a concrete implementation of the policy direction of "prioritizing support recipients."

Conclusion : Reducing levies by reducing certified cases is considered to be the most legally feasible method .
However, there are limitations to its application to already approved projects, and it will take a medium to long term period for the effects to become apparent.

Legal Feasibility Matrix

The analysis so far can be summarized as follows:

Measures	The possibility of law	Political hurdles	Feasibility	Time when effect appears
Direct reduction of levy unit price	× Difficult (structural constraints of the calculation formula)	－	Extremely low	－
Price changes under Section 11	△ Legal basis but strict requirements	Extremely high	Extremely low	immediate
Compensation from the general account	○ Possible	Extremely high	Low	immediate
Stricter new certification	○ Possible	middle	high	medium to long term
Strengthening cancellation of inactive projects	○ Possible	Low	Extremely high	Short to medium term
Prioritization of support targets	○ Possible	middle	high	medium to long term

A lawyer's perspective: Future prospects

The gap between political rhetoric and legal reality

While Prime Minister Takaichi and Minister of Economy, Trade and Industry Akazawa's recent comments about "reviewing the levy" can be understood as a political appeal, they are considered to be extremely limited in terms of legal feasibility .

The phrase "lowering levies" is popular among the public, but to achieve this, one of the following is required.

• Invoking Article 11 (issues of applicability of requirements and risk of unconstitutionality)
• Huge subsidies from the general account (difficult to maintain fiscal discipline)
• Significant reduction in new projects (it takes time for the effects to appear)

Points that businesses should pay attention to

As a renewable energy business operator, we believe the following points should be kept in mind going forward.

1) Risk management for application for change approval
Changes that involve changing output or re-entering the connection contract require an application for change approval, and there is a risk that a new (lower) FIT price will be applied . Plans for facility changes require careful consideration.

② Compliance with the deadline for commencement of operations
For projects that are not yet operational, strict management of the deadline for commencement of operations is essential. It is recommended that risks of delays in grid connection and approvals be identified early on, and that consultation with the Ministry of Economy, Trade and Industry or application for a grace period be considered if necessary.

3) Meeting the requirements for coexistence with the local community
For new projects, it is expected that meeting the requirements for coexistence with the local community, such as documenting the consensus-building process with local residents and enhancing environmental consideration plans, will become increasingly important in the future.

4. Focus on next-generation technologies
We should continue to gather information on investment opportunities in next-generation technologies such as perovskite solar cells and offshore wind power , which are receiving priority policy support.

⑤ Monitoring the risk of Article 11 being triggered
Theoretically, the possibility of price revisions due to Article 11 is not zero. However, it is questionable whether the current economic situation constitutes an "exceptional situation such as rapid inflation," and in practice it is assessed as being "fairly limited."

Expected future scenarios

From my perspective as someone involved in renewable energy legal affairs, I predict the following future scenario:

Short-term (1-2 years)

• The reality of the "review" is that it mainly focuses on tightening restrictions on new projects
• Accelerating Expiration of Certification for Non-Operating Projects
• Stricter requirements for community coexistence have raised the hurdles for new certification
• The possibility of Article 11 being invoked is extremely low

Mid-term (3-5 years)

• Support shift from conventional solar power to next-generation technologies is gaining momentum
• Strengthening support for large-scale renewable energy such as offshore wind power (however, levy burden will temporarily increase)
• Due to the promotion of the transition to the FIP system, the number of new FIT projects accepted will be gradually reduced.

Long-term (5-10 years)

• The total purchase cost will gradually decrease due to an increase in post-FIT projects
• As renewable energy becomes more economically independent, the surcharge system itself will be gradually reduced
• Transition to new funding schemes, such as carbon pricing (carbon tax/emissions trading)

We believe that cases that have already been approved will generally be protected. The requirements for invoking Article 11 are extremely strict, and there is little political merit in revising prices at the risk of violating the Constitution. It is also unrealistic from the perspective of legal stability.

However, sufficient caution is required regarding the risk of price changes due to reasons on the part of the operator, such as application for change approval or violation of the deadline for starting operations .

summary

In this article, we have examined four issues from a legal perspective following Prime Minister Takaichi and Minister of Economy, Trade and Industry Akazawa's remarks about reviewing the renewable energy surcharge.

The main conclusions are as follows:

1. Direct reduction of the levy unit price is difficult due to the structure of the calculation formula.
2. There are provisions for revising already approved FIT prices (Article 3, Paragraph 11 of the Renewable Energy Special Measures Act), but the requirements for initiating them are extremely strict, and implementing them carries the risk of being unconstitutional.
3. The dilemma of reducing levies and securing financial resources is difficult to achieve at the same time.
4. What is most likely to be realized is stricter enforcement of new and existing projects and strengthening of cancellation of non-operating projects.

Political calls for a review of the levy are expected to continue, but in legal terms, the most realistic scenario is one in which already approved cases will basically be protected, while new and existing cases will be subject to increased restrictions .

As a renewable energy business operator, we believe it is important to build a system that can respond quickly to changes in the system , such as risk management for application for change certification, compliance with deadlines for starting operations, and response to requirements for regional coexistence.

We will continue to monitor system trends and provide legal advice as necessary.