Japan poised to become world’s second-largest solar market with introduction of new FiT

Facebook
Twitter
LinkedIn
Reddit
Email

With European subsidies being cut left, right and centre, it appears Japan could fill the void and become the world’s second-largest market for solar power generation. The country will be welcoming the international solar community with open arms with the introduction of its latest feed-in tariff, which has the potential to generate US$30 billion by 2016 for the local economy. Industry Minister Yukio Edano approved the new rates this week, effective July 1.

The scheme requires Japanese utilities to buy electricity from renewable sources at a rate of ¥42 for systems of 10kW or more for up to 20 years. This is double the tariff offered in Germany and more than three times that paid in China, reports Reuters.

This article requires Premium SubscriptionBasic (FREE) Subscription

Unlock unlimited access for 12 whole months of distinctive global analysis

Photovoltaics International is now included.

  • Regular insight and analysis of the industry’s biggest developments
  • In-depth interviews with the industry’s leading figures
  • Unlimited digital access to the PV Tech Power journal catalogue
  • Unlimited digital access to the Photovoltaics International journal catalogue
  • Access to more than 1,000 technical papers
  • Discounts on Solar Media’s portfolio of events, in-person and virtual

Or continue reading this article for free

“The tariff is very attractive,” said Mina Sekiguchi, associate partner and head of energy and infrastructure at KPMG in Japan. “The rate reflects the government’s intention to set up many solar power stations very quickly.”

However, on the other side of the fence, Masami Hasegawa, senior manager of the environmental policy bureau of Keidanren, Japan’s most powerful business lobby states, “This is a mechanism with a high degree of market intervention by setting tariffs artificially high and making users shoulder the cost. We question the effectiveness of such a scheme.”

Independent research brokerage CLSA Asia-Pacific anticipates solar capacity in Japan will total approximately 19GW by 2016, alongside the government’s more optimistic 22GW by the end of March next year.

Beneficiaries

Since the legislative discussions for the promotion of renewable energy began last year, following the forced exit of Japanese ex-premier Naoto Kan and the Fukishima disaster, Japanese PV Energy Association announced last month that total shipments grew 5.8% for fiscal 2011.

“We believe the biggest change in market dynamics in the coming year will be a flood of cheap foreign panel manufacturers into Japan,” said CLSA analyst Penn Bowers.

Chinese companies in particular are targeting the Japanese market, especially with the latest verdict from the US Department of Commerce. In particular, companies like Suntech stand to benefit greatly, according to Smallcap Network. “The stock has lost nearly 18% in the last month and the news of Japan promoting solar energy may just be the right catalyst for this oversold stock to jump.”

Trina Solar has been poised to enter the Japanese market since February 2010 without a great deal of success. However, with the inauguration of a headquarters in Singapore to oversee the Asian market and these FiTs, this offers a more positive outlook for the company. 

Reuters also lists Canadian Solar as a foreign solar panel manufacturer set to profit from Japan’s move away from nuclear power as well as Panasonic, Sharp and solar project installer Sekisui Chemicals.

“We no longer have enough electricity, especially during the day, and that is when solar power can help,” said Mikio Katayama, chairman of the electronics manufacturer Sharp Corp. and the Japan Photovoltaic Energy Association.

“This is a very good rate to promote investment and mega solars.”

TÜV Rheinland also set up operations in Tokyo last week. Dr. Manfred Bayerlein, CEO of TÜV Rheinland said, “With the new laboratory facilities in Japan, TÜV Rheinland underpins its global strategy of investing in the establishment of comprehensive infrastructure for testing renewable technologies such as solar, wind and fuel cells, as well as providing services related to electro-mobility. These activities are especially relevant in Japan, considering the recent changes in energy policies declared by the Japanese government.”

Electricity generation in Japan is predominantly from fossil fuels, which has risen to almost 90% due to 50 of the countries nuclear reactors being shut down. The rest of Japan’s electricity comes mostly from hydro power.

Residents who want to install panels on their homes will also be privy to subsidies. “The high purchasing price under the feed-in-tariff system is great news for us,” said Kazuhiko Katano, an official in Odawara's Energy Promotion Division. “The higher the price, the faster the penetration of panels will be.”

According to Bloomberg, Japan ranked sixth worldwide with 1.3GW of new installations last year, bringing its installed capacity to 5GW. Next year builders will erect roughly triple that level, or another 3.2GW to 4.7GW, New Energy Finance forecasts. One gigawatt is enough to supply about 243,000 homes in Japan.
 

Read Next

February 17, 2025
Struggling Swiss solar manufacturer Meyer Burger has successfully extended its loan bridge facility until 21 February 2025.
February 17, 2025
Germany is poised to introduce new rules aimed at removing electricity peaks and negative pricing associated with surplus generation of solar power.
February 17, 2025
Round-up of community solar news with new legislations progressing in the US states of Missouri and Iowa, while New Mexico started construction on the first project in the state.
Premium
February 17, 2025
Brian Grenko of VDE Americas assesses the route to market for perovskite PV products as an alternative to silicon-based technologies.
February 17, 2025
Lee Zeldin said the EPA should "reassume responsibility" for funds issued under the Greenhouse Gas Reduction Fund.
February 17, 2025
A new report from the International Energy Agency (IEA) has shown that solar PV made up 7% of the world's electricity generation in 2024.

Subscribe to Newsletter

Upcoming Events

Solar Media Events
February 19, 2025
Tokyo, Japan
Solar Media Events
March 11, 2025
Frankfurt, Germany
Solar Media Events
March 18, 2025
Sydney, Australia