Fuji Electric enjoys solar sales rise but wider industry concerns loom for Japan

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Fuji Electric, the Japanese holding company which manufactures power electronics and related technologies, has reported a rise in sales from its solar power business segments, in the company’s results for the first half of the Japanese financial year.

The company stated that its solar power project development business saw a rise in orders, with the business divisions that include the sales of solar systems and facility construction services reporting higher than expected earnings. 

In common with several other large Japanese companies involved in the sector, Fuji Electric did not report specific figures for its solar sales. However the company stated that sales by its Power and Social Infrastructure division, which includes the sale of solar power generation systems, rose to ¥62.4 billion (US$55 million) from ¥56.9 billion in the first half of the previous year. Meanwhile the Industrial Infrastructure division, including solar power generation facility construction, reported sales of ¥73.9 billion for the period, up from ¥69.7 billion in H1 2013. Japan’s financial year (JFY) begins in April and finishes at the end of March, meaning the latest results reflect the period from 30 July until 30 September.

In a statement clarifying the difference between forecast and actual business results, Fuji Electric highlighted that net sales were actually ¥5.34 billion higher than forecasted, an upwards revision of 1.6% from ¥340,000 million to ¥345,341 million. This meant that net income leapt by 480.6% over forecasted figures, with ¥1.97 billion of actual sales reported as opposed to the ¥340 million forecasted by the company in April.

Fuji Electric let go of its solar cell business in February of this year, selling it to the Japanese subsidiary of a New Zealand company, ZinniaTek, in a deal which also included a research and development facility in Chiba and production facilities in Kumamoto, both in Japan. In July, Fuji Electric named Chinese tier one manufacturer Yingli Green as one of its “best suppliers” at an in-house awards event. Fuji stated then that Yingli’s modules had contributed to the strong performance of its solar plant business.

From the Japanese solar industry, Panasonic, Sharp and Kyocera have also reported financial figures in the last few days. All three appear to have been adversely affected by a rise in consumption tax, which was set at 8% in April. Another rise is tentatively scheduled for October of next year, which would take it up to 10%. While Panasonic reported a modest rise in PV module sales and the company’s first net cash gain in five years, domestic solar sales in the near future are expected to be impacted by the tax rise.

The good news for Fuji Electric's H1 JFY2014 performance comes at a time when the solar power industry is under pressure in Japan. This is partly to do with delays in getting projects connected due to concerns over available grid capacity, which has lead to several of the country’s regional utilities, which are also responsible for grid infrastructure, curtailing the approval of new solar projects since the end of September. In the period leading up to that decision, however, steps were made to facilitate the construction of some of those previously delayed projects, including deadlines from the government being given to developers to make projects shovel-ready and to get underway, which one analyst said would mean that in the very short term, Japan's solar industry would remain healthy. As reported by PV Tech in early October, a ‘working group’ was appointed by the Ministry of Economy, Trade and Industry (METI) to tackle the grid connection issue. The group met for the first time last month, and is expected to meet three times in total before delivering its findings at the end of this year. Additionally consumer electricity bills have risen, thought to have been caused in part by a generous feed-in tariff (FiT) scheme.

A review of the FiT programme is scheduled to take place at the end of this calendar year, with any decisions made likely to be incorporated into the process that results in the setting of next year’s policy on the FiT, at the end of the financial year. The question of whether nuclear power generation, completely shut down across Japan in the wake of the Fukushima disaster, will come back online has also been hanging over the country and its energy industry.

However, sources including Dr Hiroshi Matsukawa of Tokyo-based analysts RTS PV told PV Tech earlier in the year that due to concerted efforts to clear the backlog of approved projects, construction of projects is expected to continue apace in the immediate future. 

Matsukawa was confident in May that PV projects would continue to be built in significant quantities but the post-FiT era, which is looming over the horizon in 2020, is considered a “pressing concern”. Meanwhile the possibility also exists that the forthcoming review of the FiT scheme could involve wide-ranging changes to support mechanisms. Mika Ohbayashi, director of the Japan Renewable Energy Foundation (JREF), told PV Tech this morning that this could include a switch to a system akin to the Contracts for Difference (CfD) scheme which will soon be introduced in the United Kingdom. 

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