Costs keep falling but Japan’s solar industry is rocked by uncertainty

Share on facebook
Share on twitter
Share on linkedin
Share on reddit
Share on email

The cost of solar in Japan declined as much as 15% in one year, but a lack of clear policy direction from the government has left a number of businesses with a “pessimistic” outlook of the industry’s future, according to a survey by the Japan Renewable Energy Foundation (JREF).

The foundation published results of a recent questionnaire that was sent out to over 100 solar power businesses, including developers.

The survey’s respondents confirmed that solar power system costs have fallen rapidly with the country’s feed-in tariff (FiT) a major contributing factor, creating a competitive environment where not only price but also qualitative competition was encouraged. In this light, it reports back that between the first half of Japanese financial year (JFY) 2013 (from April to October) to the first half of 2014, the cost of systems of between 10kW and 50kW capacity fell by around 7%, installations between 50kW to 500kW fell by 8% and the cost of large-scale systems of 500kW to 2000kW fell by as much as 15%. 

However, JREF also found a widely held view that recent government policy had impacted negatively on the industry, with uncertainty over available grid connection for solar and a review of the FiT which resulted this week in the Ministry of Economy, Trade and Industry (METI) announcing a 16% cut to the tariff this calendar yearA “passive attitude” from the government towards renewable energy is seen as the biggest factor in providing policy risk. This was described as a big change, even from the 2013 fiscal year. The fact that the government overlooked the grid connection issue until it became a major problem is given as one serious example of this. 

This lack of a coherent outlook and revisions of the FiT policy on an unexpectedly short-term basis were also highlighted as contributing factors to uncertainty, as well as the fact that retroactive measures, although not applied in the end, had been considered. While the FiT is set to expire in 2020 anyway, with firms already preparing for this to some extent, the introduction of even shorter-term pressure at unexpected times has not been welcome, it seems. 

However, despite the waiting time and perceived policy risk, the cost of system connection remains relatively low, taking up only 2% of overall system costs. Modules make up 40% of the total, with construction costs running to about 23% power conditioners and related hardware taking 10% and the remainder shared between other costs.

Incidentally, module prices for large-scale systems over 2000kW range from between ¥54,000 per kW to ¥109,000 per kW, while the average price is higher in systems under 10kW was found to be around ¥165,000 per kW. Additionally, smaller systems also have a wider range of price, as much as ¥54,000 per kW while Japanese modules were found to be on average 1.5 times more expensive than their overseas counterparts. 

Conversely, construction costs are much higher for large scale, hitting a peak of about ¥124,000 per kW for plants over 2000kW and remaining between ¥50,000 and ¥73,000 per kW for systems between 10kW and 50kW capacity. There has been a more consistent tendency for big drops in cost, including for system connection, at larger scale, the report says. 

The JREF survey was put together partly in response to the situation which began in October last year, when Kyushu Electric, one of Japan’s regional utility/grid operator monopolies, suspended approvals for large scale solar projects. The result of this and other factors causing pressure on the industry was a review of available grid connection at Kyushu Electric and four other utilities, along with, perhaps more seriously, a wide-ranging review of the feed-in tariff and system operation. These issues are explored in detail in the latest volume of PV Tech Power technical journal

More calls for a nuke-free future

The Japan Renewable Energy Foundation has recently also issued a set of policy recommendations which it says if implemented could enable Japan to be totally nuclear free by 2030. Calling for a commitment to renewable energy from the government, it cites the European Union's 45% by 2030 target and the US state of California's 50% target as evidence of this commitment being shown internationally. Combined with energy saving measures to reduce electricity demand, Japan could itself be far more ambitious and reach an even higher percentage.

In the bigger picture, there has been more activity regarding the nuclear question – in the past few days two nuclear plants are said to have been cleared for reactivation by the country’s inspection agency, while another two have been condemned to decommissioning. There have of course been questions asked around transparency on the nuclear issue, but it is expected that as many as three of Japan’s total fleet could be brought back online this year.

26 January 2022
Join this free webinar for our analysis of the growth of N-Type technology including; new capacity expansions and production output. We'll also be looking at the global manufacturing footprint with forecasts on how much product will be made outside of China this year and which companies are driving technology change across the crystalline silicon value chain.
23 February 2022
Held annually since 2016, the Energy Storage Summit Europe is the place to be for senior stakeholders in the European storage industry. Designed to accelerate deployment of storage, we examine evolving chemistries, business models, project design, revenue stacks and use cases for storage. The 2022 edition will include exclusive content around longer duration solutions, energy strategies for wide-scale deployment of EVs and "EnTech", the event which sits at the intersection of digitisation, decentralisation and decarbonation of the power system. Come to meet TSOs, DSOs, Utilities, Developers, Investors and Lenders and leave with new contacts, partners and a wealth of information.
7 March 2022
Take your chance to join the most powerful platform in the MENA region. Middle East Energy (MEE), Intersolar, and ees, the leading energy exhibitions are joining hands to co-deliver an outstanding renewables and energy storage event at Middle East Energy 2021. Renewables and energy storage at MEE is the largest gathering of solar and renewable energy industry professionals in the Middle East & Africa, offering the most effective trade focused platform to international manufacturers and distributors looking to meet regional buyers.
8 March 2022
As Solar Finance & Investment enters its ninth year, we sit on the cusp of a new power market with solar at its heart. The 2022 edition of the event will build on our years of expertise and relationships to bring investors and lenders together with top developers. Connect with leaders in the field and use exclusive insights to drive investment and development decisions for the future. Meet new and existing project partners at the largest gathering of European solar investors and lenders.
23 March 2022
When it comes to storage, the US market exceeded a gigawatt of advanced energy storage installations (weighted towards lithium ion) at 1.46 GW, more than the previous six years in total! An exponential growth rate could see the market hit 7.5 GW p.a. by 2025. The summit will provide a wealth of content around this vital piece in the US power puzzle, with sessions dedicated to explore how companies are making money from batteries, the latest chemistries and their applications as they apply to different use-cases. We ask how investors can match ESG criteria to batteries and we will bring case studies of successful deployment and project execution onto the stage to examine how you can ensure your own projects are successful.
29 March 2022
Now in its 10th sell-out year, Large Scale Solar returns to Lisbon in 2022. We are excited to gather together face-to-face with the European solar industry as we provide unique and exclusive access to a powerful selection of the market's key stakeholders. Join this elite summit to find out how the market is maturing, which new markets are becoming more exciting, how technology is evolving and who's driving the market forward into the 2020s. Always senior, packed with developers, EPCs, utilities and investors this is the event for companies serious about European solar PV.

Read Next

January 25, 2022
Regulators in Nevada have paved the way for two solar-storage hybrid projects to replace a legacy coal power plant in the US state, approving their sale to utility NV Energy.
January 25, 2022
The Czech Republic’s largest utility, ČEZ Group, should scale up its domestic solar PV portfolio over the next decade instead of pursuing new nuclear power plants, the Institute for Energy Economics and Financial Analysis (IEEFA) has said.
January 25, 2022
SK Ecoplant, part of the South Korean conglomerate SK Group, has signed a US$200 million joint venture (JV) agreement with Vietnamese rooftop specialists Nami Solar for the development of 250MW of rooftop solar in Vietnam over the next four years.
PV Tech Premium
January 25, 2022
European solar power purchase agreement (PPA) prices can be expected to level off this year following a turbulent end to 2021 as the market undergoes a shift in the balance of power to the seller side.
January 25, 2022
Indian PV encapsulant and backsheet manufacturer RenewSys has brought its encapsulant production capacity up to 3GW with the commissioning of a new line in Bengaluru, India, with the company eventually targeting 11GW of capacity through a “phased manner”.
January 25, 2022
A consortium including Saudi solar developer ACWA Power has inaugurated the 500MW Ibri 2 solar project in Oman, which becomes the country’s largest utility-scale solar project to date.  

Subscribe to Newsletter

Upcoming Events

Upcoming Webinars
January 26, 2022
Free Webinar
Solar Media Events
February 23, 2022
London, UK
Solar Media Events
March 8, 2022
London, UK
Solar Media Events
March 23, 2022
Austin, Texas, USA
Solar Media Events
March 29, 2022
Lisbon, Portugal