Japan’s residential and small commercial solar industry could represent a “huge, huge opportunity” for suppliers of inverters and module-level power electronics, according to an analyst with market research firm IHS.
Cormac Gilligan, senior analyst for solar at the firm’s UK-based office, was in attendance at the PV Expo in Tokyo last week. He told PV Tech that for installations of up to 100kW capacity, IHS is expecting the Japanese market to be around 5.6GW on the AC side of the inverter in 2015, which he said represented a “huge, huge opportunity” for companies in that market segment.
“On a global scale, it’s not the biggest [market] but it’s in the top three. That’s why a lot of the western suppliers are still trying to spend all the effort to get Japan Electrical Safety and Environment Technology Laboratories (JET) certification, that’s one of the main barriers. They have to get this certification for microinverters or single-phase, or string inverters less than 20kW.”
Gilligan’s team at IHS recently issued a report on the international balance of systems market, which predicted revenues of US$19 billion worldwide by 2019. The report – which deals only with DC-side components – stated that Asia was likely to be the strongest performing region in a sector which would grow by around 5% annually.
Gilligan said that the other main barrier for international entrants to the Japanese market besides the stringent JET accreditation process was developing locally-based channel partners, with Japanese industry in general having a “closed shop” image while also catering to a particularly brand-conscious public.
“In the Japanese market they sell the module and inverter together in a kit, typically, as Sharp or Panasonic does. Developing channel partners via the module suppliers can take a long time, that’s the bottleneck for them [international entrants].”
In an interview with PV Tech, Enphase Energy co-founder Raghu Belur spoke of the obvious attractiveness of the Japanese market. Enphase has not launched its products for sale in Japan and Belur was visiting Tokyo to meet with representatives of Eliiy Power, which is supplying battery components to Enphase’s new home energy storage system. When asked if Enphase was planning a Japanese launch, Belur was unable to go into further detail besides hinting that it was something the company had thought about.
“So, we’re clearly don’t give any guidance on which countries we’re going to,” Belur said.
“Having said that, I don’t know if there’s any inverter company that’s not looking at the big markets, the new markets China, India, Japan. All of those countries are of great interest to any inverter company that’s out there, there’s a great need and [the industry is] going well.”
According to Gilligan, some of the brand consciousness which makes Japan a tricky market in the first place also means products retain a high value.
“…Because average inverter prices are typically the highest in Japan right now, there is greater scope to accommodate a premium product or a higher priced product in the Japanese market and therefore that makes it very attractive for microinverter suppliers to enter the market,” he said.
“They like high quality, premium products and that’s possibly why some of the leading microinverter suppliers might enter the market. I think that’s kind of the secret to it.”
Gilligan said that one interesting aside is that power optimisers do not require JET certification, meaning the path to market could be a little smoother for companies in that field.
Ampt, a US provider of power optimisers, had sent a representative to the show. Mark Kanjorski, the company’s marketing director who has a background in consulting services, said module level power electronics such as Ampt’s could cut significantly the amount of cabling required for Japanese solar power projects at various scales.
“The cost of cabling and wiring and converters is sky high in this market. Part of that is because it’s a closed market between buyers and sellers and part of it is because of the high FiT, meaning there’s more money to spend.”
However, Kanjorski said that he felt his company could make some inroads into this closed market as the FiT rate drops and ends completely by 2020. Kanjorski said he believed the Japanese market is “right on the cusp of addressing” the high costs of electrical components.
Other international companies, such as Chinese tier one module makers Canadian Solar, Trina Solar and JA Solar and inverter maker Sungrow, told PV Tech they were all looking more and more to cater to demand from residential and commercial scale markets in Japan.