JAPAN Trends and Developments Contributed by: Takahiro Kobayashi, Shigeki Okatani, Yusuke Murakami and Hirohiko Tanaka, Mori Hamada & Matsumoto
Additional regulation for co-existence with the local community Given that many renewable power plants (espe- cially PV plants) have been rapidly developed all over Japan by numerous developers, there has also been an increase in the number of cases where developers have failed to comply with relevant regulations or have caused a material adverse impact on the local environment. In such context, the government recently intro- duced additional regulations to ensure compli- ance and better engagement with local stake- holders. For example, the government now requires developers to obtain certain material permits related to the development of forest are- as, land reclamation and avoidance of land slide/ erosion at the time of initial application for FIT/ FIP approval. Also, in cases where developers fail to remedy any breach of law and regulations in a timely manner, the tariff or premium (which should have been paid to developers under the FIT/FIP regime) will be withheld by the govern- ment until such breach has been effectively rem- edied. In terms of engagement with local stakehold- ers, developers are now required to take effec- tive measures to give advance notice to local residents about their plan to develop renew- able power plants. Essentially, from 1 April 2024 onwards, developers of renewable power plants (excluding roof-top solar and small solar with a capacity of less than 10 kW) are, in principle, required to hold a briefing session to explain the overview of project plans, the impact on the sur- rounding areas, as well as preventative meas- ures to local residents living within a certain dis- tance of the project site. Such briefing sessions are required not only at the time of initial certifi- cation, but also when important matters related to the certified project are altered, including a
change of the certified developer or its Closely Related Parties. A “Closely Related Party” refers to a person who has a close relationship, such as a capital rela- tionship. Specifically, it refers to the following persons: • the company’s members (if the company is a limited liability company such as Godo Kaisha ); • shareholders holding a majority of voting rights in the business (if the business is a joint stock company, ie, Kabushiki Kaisha ); • silent partners ( Tokumei Kumiai-In ) who hold a majority interest in the relevant silent partner- ships ( Tokumei Kumiai ); and • the parent company of the above. This requirement will come into play in the case of acquisition/M&A transactions of such pro- jects as well and therefore, it will certainly have a material impact on the M&A practice in this sector. These additional regulations are certain to have a huge impact on developers that have invested, or will invest, in renewable energy projects in Japan. As a matter of fact, in a large number of projects where a briefing session has not been implemented by developers in full compliance with the requirements published by METI, such developers have been instructed to repeat the briefing session until full compliance is con- firmed by METI. It has therefore become a seri- ous issue for the whole market to ensure that a briefing session will be implemented in full com- pliance with all the requirements as efficiently as possible, both in terms of time and cost. Having said that, it is clear that the government is committed to further promoting renewable
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