While the United States appears suffering from solar phobia, Japan is said to be in the process of unleashing its solar potential. Here's why.
The standard answer for it is the 2011 Fukushima disaster.
The Fukushima Dai-Ichi nuclear power plant accident led to the shutdown of almost all the nation’s nuclear reactors. Pressured to boost energy supplies, the Japanese government has begun offering above-market rates since last July for renewable sources such as solar and wind.
The Japan Photovoltaic Energy Association, Japan’s solar industry body, released earlier this year stats for local shipments of solar cells and solar modules. They rose to 3,809 megawatts in the 12 months ended March 31st, 2013, compared to 1,404 megawatts shipped during the same period a year earlier.
The key to understand this growth is a “feed-in tariff” incentive program created by the government, explained Masaya Ishida, publisher of EE Times Japan. The feed-in tariff scheme, designed to offer above-market rates for energy from renewable sources, is boosting applications for solar installations across the country.
More specifically, tariff approved last June by the Japanese government is 42 yen per kilowatt hour (about 0.406 euro/kWh or 0.534 dollar/kWh). Effective as of July, 2012, it covers the first ten years of excess generation for systems less than 10 kW, and generation for twenty years for systems over 10 kW.
However, it’s important to note that Japan’s tariff for solar was reduced in April, 2013 to 37.8 yen (37.5 cents) per kilowatt hour. This is, however, still more than twice similar surcharges in China and Germany, at 1 yuan (16 cents) per kilowatt hour and 0.1082 euro (14 cents) per kilowatt hour, respectively.
Japan’s generous feed-in tariff system prompted many non-traditional energy companies to join the solar movement, according to Ishida. Companies with idle land, vacant factories or industrial rooftops could invest in solar installation to generate power, with return on investment almost guaranteed over a certain period of time by the feed-in tariff system.
It’s no longer the residential segment driving solar installation in Japan. The commercial segment and utility-scale projects of 10 kw to 1,000 kw are increasing solar power in Japan, Ishida explained.
Trend for domestic shipment of PV modules and breakdown of their use
A recent Bloomberg New Energy Finance report estimated that Japan’s commercial and utility-scale projects will boost solar installations to a range of 6.1 to 9.4 gigawatts in 2013. Previous forecasts anticipated 3.2 to 4 gigawatts.
Put it in a global context, this upward revision puts Japan ahead of the U.S. and possibly ahead of China, the Bloomberg group’s report said. China is forecast to add between 6.2 and 10.5 gigawatts, while additions in the U.S. may total 3.3 to 3.9 gigawatts.
Both the IHS and Bloomberg reports, however, pointed out that the PV market in Japan is not without challenge. One of the big issues is in PV system costs in Japan that remain high by international standards. Analysts say that solar system prices will need to come closer to the global average to make a sustainable market.
IHS also pointed out that capitalizing on solar opportunities in Japan “is not a straightforward task for international suppliers. Strict certification requirements, particularly for inverters, make it difficult for suppliers to release products.”
When asked about high PV system costs in Japan, Ishida explained that new entrants in the solar market in Japan often prefer solar panels that are not just efficient but that are capable of sustaining their efficiency for many years – in order to take advantage of the feed-in tariff system.
A strong preference for Japanese brands — particularly in the residential market, which will account for nearly 40 percent of demand in 2013 — is not good news for international PV suppliers. In turn, it means that “forging partnerships with local suppliers is essential,” concluded the IHS report.