I. Introduction of FIT in July 2012 -

On July 1, 2012, the Act on Special Measures concerning Procurement of Renewable Energy Sourced Electricity by Electric Utilities (Act No. 108 of 2011) (the “RE Act”) came into effect and a feed-in-tariff (“FIT”) system was introduced in Japan in an effort to promote the use of renewable energy.

The RE Act imposes an obligation on electric utility operators (“Utilities”) to purchase electricity generated using renewable energy sources including solar energy (“Renewable Electricity”) from renewable energy electricity suppliers (“Suppliers”) at prices and for time periods designated by the Ministry of Economy, Trade and Industry (“METI”).

The length of the procurement period under the power purchase agreement (the “Procurement Period”) (which is currently twenty years) and the prices (the “Procurement Price”) payable during such Procurement Period as currently determined by METI are quite favorable to Suppliers, and thus, there has been a recent flood of companies building large solar and other power plants based on renewable energy.

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