Consumer (Co-)Ownership in Renewables in Japan

The Japanese Ministry of the Environment is actively supporting the spread of “community power” initiatives. The Feed-In Tariff (FIT) Law itself apparently does not actively seek to promote consumer (co-)ownership providing disadvantageous conditions for citizen- and community-based projects. At the same time, the Japanese government views distributed RE as an important vehicle to promote regional economic growth and employment, as well as resilience against natural disasters; it has initiated budgetary measures to promote regional deployment under the guidance of various ministries such as the Ministry of Economy, Trade and Industry, the Ministry for Agriculture, Forestry and Fisheries, or the Ministry of Environment. With the exception of cooperatives RE business can take all possible legal forms of business associations under Japanese commercial and corporate law such as joint stock company (KK), limited liability company (LLC), or limited liability partnership (LLP), but also not-for-profit organizational schemes. The RE project itself is often housed in a Special Purpose Company (Tokubetsu mokuteki kaisha/SPC) for transactional, tax, and accounting reasons. To avoid capital market regulation, citizens often form an anonymous partnership with less than 49 members that will invest the privately solicited funds in RE projects; such a scheme only requires notification to, not registration with, the Local Financial Bureau. Alternatively, citizens entrust their funds with a trust company (Shintaku Kaisha) registered with the FSA that will establish a Special Purpose Company to invest and operate RE projects.