The Japanese PV market is predicted to experience a 120% growth spurt in 2013, according to a new report from market analysts at IHS.
In the race for world domination, Japan is expected to install a total of 5GW this year, with 1GW predicted for the first quarter of 2013 alone. The country will overtake Germany, Italy and the US, making it the second largest market of 2013, behind China.
Japan’s PV market currently benefits from a feed-in tariff (FiT) paying up to ¥42 (US$0.44) per kilowatt hour, even though this is likely to be reduced by approximately 10% on 1 April.
Author of the report The PV Market in Japan, Ash Sharma, senior director of solar research at IHS, said: “At ¥42 Japan’s FiT is by far the most attractive globally – overly generous perhaps, which could lead to overheating of the market.
“And while a 10% reduction in tariffs is widely expected by industry players, this will have little effect on both internal rates of return and market demand. Furthermore, many systems that have already applied for the higher FiT are able to benefit from this rate of ¥42 even if they are installed after 1 April.”
The price of solar cells in Japan has helped to boost the residential market acting as a “lifeline” for struggling Japanese companies. Earlier this month, the Japan Photovoltaic Energy Association (JPEA) reported 146.9% increase in sales of solar cells in the fourth quarter of 2012.
“Residential system prices in Japan are roughly double than those installed in Germany. The ability to sell modules and inverters at significant premium compared to the rest of the world, coupled with high demand and growth, provides a much-needed profit stream for Japanese suppliers,” commented Frank Xie, report co-author and IHS senior analyst for PV and solar research.
According to IHS, Japan has been attempting to attract foreign PV companies to its shores in order to help accelerate supply.
Sharma commented: “While many Chinese and even US module suppliers are now serving the Japanese market, they remain the minority and have largely needed to resort to OEM [original equipment manufacture] agreements and partnerships with Japanese manufacturers, despite being highly regarded brands in the rest of the world.
“Simply put, Japanese customers want to buy Japanese modules. Non-Japanese inverter companies have found it even harder to serve this market as tough regulations from the certification board – JET – and even more stringent requirements from utilities, have meant that substantial product redesigns are required before they are able to target this market effectively. As a result, the market is currently suffering from a bottleneck in inverter supply.”
Andrew Moore, International Sales Director, at module supplier Antaris Solar is in agreement: “In Japan it is important to gradually build long-term relationships and to register a local branch office with the Japanese authorities in order reassure partners and consumers alike that Antaris Solar is here for the long term and can be trusted to support products long into the future.
“Many foreign companies have tried to break into the Japanese market but have failed leaving Japanese partners the burden of supporting a product no longer sold locally by the overseas manufacturer."
The report also notes that alongside an expanding residential market, larger projects of over 2MW in size are also driving the country’s PV growth rate. However, IHS believes this will be short-lived and the projects will face a decline next year.
“These so-called ‘mega-solar’ projects are being deployed at a rapid rate, and we expect they will account for approximately 25% of total demand in 2013,” Xie noted.
“Government policy is in clear support of these projects while the country grapples with severe energy shortages following its shunning of nuclear power. However, this is likely to be short-lived and decline after 2014 once the current pipeline of approved projects is completed, largely because of a shortage of land in the country.”
Sharma concluded: “Another segment of the market that gets fewer headlines, but should not be neglected, is commercial rooftops. Systems in the range of 10-50kW are in very high demand in Japan due to high incentives, high electricity prices, power shortages for commercial properties and relatively simple regulations for installations of this size.”
Sabrina Lu Marketing Manager for Asia-Pacific, Middle-east and Africa at ReneSola, told PV-Tech: “Japan’s feed-in-tariff cut may have some impact on those manufacturers who provide high price products. Namely, originally if the FiT is high, the users may not be that sensitive to the price of the products. However, if the FiT was cut, they will become more sensitive to the price, since they will need to think about the IRR of the [mega] project. This will provide opportunity to those suppliers with lower price but good quality.
“For residential market, since Japanese consumers are still relatively conservative about product brands (they would probably pay more for the brand they are already familiar, such as some local brands), the FiT cut may not impact them that much.”