1. Introduction

Since the introduction of the FIT (Feed-in-Tariff) scheme in 2012, the amount of renewable energy, mainly solar power generation, has increased. This, however, has made the local community increasingly concerned about its impact on safety, disaster prevention, landscape and environment, as well as the disposal of power generation facilities in the future. In light of the circumstance, the Ministry of Economy, Trade and Industry ("METI") established the "Working Group for Long-term Use of Renewable Energy Resources and Community Coexistence" ("Community Coexistence WG"). From May 2023 onwards, the Community Coexistence WG has been discussing the details on how to revise the "Act on Special Measures for the Promotion of Use of Electricity from Renewable Energy Sources" (Act No. 108 of 2011, the "Renewable Energy Act" or simply "the Act") and the enforcement regulations thereof (METI Ordinance No. 46 of 2012; hereafter, "Enforcement Regulations"). Based on the discussions, one of the revisions to the Renewable Energy Act will be requiring certain business operators to implement briefings to local residents as part of the requirements for application of FIT/FIP (Feed-in-Tariff/Feed-inPremium) certification, in order to enable renewable energy businesses to coexist with the local community through providing appropriate information to local residents. 

In anticipation of the enforcement of the revised Act ("Revised Renewable Energy Act") on April 1st of this year, the Revised Enforcement Regulations and "Implementation Guidelines for Briefings and Prior Notification Measures" ("Implementation Guidelines for Briefings" or simply "Guidelines") have been promulgated on February 20, 2024, which set forth the details for such briefings to local residents. 1 In this paper, we will introduce some of the important points of these developments particularly in briefings upon application for amendment to the business plan and discuss practical measures based on such points.

2. Briefings upon Application for Amendment to the Business Plan

The Revised Renewable Energy Act requires conducting and providing briefing sessions (or advance notice measures, depending on the types of renewable energy facilities) ("Briefings") to local residents when applying for certification of business plans for renewable energy power generation projects, mainly at all high-voltage and extra-high-voltage renewable energy power plants, with certain exceptions. The implementation of Briefings has been added to the existing approval requirements (Article 9, Paragraph 2, Item 7 and Paragraph 4, Item 6 of the revised Act.). The new requirement applies not only for applications for certification of a business plan for new projects but also for certain applications for amendment to the business plan for existing projects. Unless Briefings are conducted, certification of the new business plan or amended business plan may not be approved (Paragraph 1 and 4 of Article 10 of the revised Act).

Chapter 5 of the Implementation Guidelines for Briefings "Briefings upon Application for Amendment to the Business Plan" clarifies the kinds of application for amendment to the business plan that are subject to the Briefings requirement. Specifically, the following application for amendment to the business plan calls for the implementation of Briefings (see also Article 8- 2 of the Revised Enforcement Regulations):

  1. Changes to the approved business operator due to business transfer, merger or company split;
  2. Changes to closely related parties of the approved business operator;
  3. Changes to the location of the renewable energy power generation facilities;
  4. Changes that increase the approved output of the renewable energy power generation facilities by 20% or more, or by 50 kW or more, from the date of the new approval or the latest Briefings, whichever is later;
  5. (For solar power generation facilities) changes that increase the total solar panel output by 20% or more, or by 50 kW or more, from the date of the new approval or the latest Briefings, whichever is later; or
  6. Changes to the renewable energy power generation facility that will require the implementation of Briefings.

With respect to the changes to the approved business operator due to transfer of business, merger or company split described in item (1) and the change of closely related parties described in item (2) (details will be described below), the necessity for the implementation of the Briefings was prompted by the concern that in such situations where renewable energy power generation business operators are replaced, problems typically arise due to lack of communication with the local community (as in the case of starting a new project). However, since these events frequently occur in M&A transactions of renewable energy power generation projects, such new requirements on the business may have significant impact on such transactions practically, and currently we have been asked for legal advice on this point.

3. Scope of "Closely Related Parties" of Renewable Energy Power Generation Business Operators

Discussions at the Community Coexistence WG up to November last year suggested that Briefings should also be required in the event of a "change in the beneficial owner." However, it is not exactly clear who the "beneficial owner" would be. The Revised Enforcement Regulations only stipulates "change of closely related parties of an approved business operator" (Articles 8-2 and 9 of the Revised Enforcement Regulations). In turn, the newly promulgated Implementation Guidelines for Briefings defines "closely related party" as follows:

A "closely related party" is:

  1. member of the approved business operator (if the approved business operator is a membership company (mochibun kaisha));
  2. a shareholder holding a majority of voting rights in the approved business operator (if the approved business operator is a stock company (kabushiki kaisha));
  3. a TK (tokumei kumiai) investor holding a majority of the TK investment in an approved business operator; or
  4. the parent company of an entity specified in (i) through (iii) above (Parent Company as defined in Article 8, Paragraph 3 of Regulation 11 on Terminology, Forms and Preparation Methods of Financial Statements (Ministry of Finance Order No. 59, 1963)).

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Footnote

1. The details of the Revised Enforcement Regulations and Guidelines can be confirmed from the below:

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.