Solar Energy System Approvals Surge Following Launch of Japan’s Renewable Energy Feed-in Tariff

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Approvals for new solar and renewable power capacity in Japan look set to exceed a projected fiscal 2013 total of 2,500 megawatts (MW). They’re on pace to do so by the end of 2012 as opposed to end of March, 2013 (the conventional fiscal year-end for Japanese government and business), however.

The Japanese Ministry of Economy, Trade and Industry (METI) announced it has approved a higher than expected 725 MW of non-residential solar photovoltaic (PV) systems alone in the two months ending in August, according to a Denki Shimbun report.

Enactment of a higher than expected government solar energy feed-in tariff rate of 42 yen ($0.525) per kilowatt-hour (kWh) in July has prompted a surge in solar PV systems permit applications at METI. METI had approved new renewable power capacity of 1,300 MW as of the end of August.

Besides approving a total 725 MW of non-residential solar PV systems in the first two months to end August — the first two months the feed-in tariff was in effect — METI also approved 306 MW of residential solar PV systems. In addition to the solar approvals, 262 MW of new wind power installations, 1 MW of small- and medium-scale hydropower systems, and 6 MW of biomass power systems were approved, according to Denki Shimbun’s report.

Japan’s Feed-in Tariff Leads to Solar Power Surge

METI’s non-residential solar PV systems approvals have surpassed an initially projected 500 MW fiscal year total in just two months following the introduction of the national renewable energy feed-in tariff. New large-scale, non-residential solar PV systems approvals accounted for some 80% of the 725 MW of total new solar PV approvals METI has made in the first two months of the feed-in tariff.

The unexpectedly high solar feed-in tariff rate means manufacturers “can earn more money as they produce more modules,” an industry source told Denki Shimbun. It has also prompted Japanese banks to aggressively pursue financing opportunities.

Indicative of the surging interest and investment in Japan’s renewable energy market, Softbank, Japan’s third-largest mobile phone company announced plans to build a massive wind farm in northern Japan that would make it the country’s largest provider of wind power. The planned 500-wind turbine facility on Hokkaido island is to produce as 1 gigawatt (GW) or clean renewable power, according to a Bloomberg News report. Softbank and Mitsui Co. also plan to build the country’s largest solar power plant.

Japan’s new renewable and solar energy feed-in tariff is even attracting solar energy project developers and manufacturers overseas. Spain’s Gestamp Solar announced that it is going into a partnership with Japanese energy consultancy Kankyo-Keiei that entails working together to install an initial 30 MW of rooftop solar PV systems, with a longer term goal of installing 10-times that amount.

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12 thoughts on “Solar Energy System Approvals Surge Following Launch of Japan’s Renewable Energy Feed-in Tariff

  • “rate of 42 yen ($0.525) per kilowatt-hour (kWh) in July has prompted a surge in solar PV systems permit applications at METI”

    With an estimated cost price of $ 0.10-$ 0.15 per kWh, who wouldn’t rush to take advantage of this goldmine?

    This FiT is far too high. We have seen the results in other countries (eg. Spain, UK) of FiT’s that are not compatible with the PV prices of 2012. If the Japanese government doesn’t lower the FiT or set a market cap, they’ll be handling applications in the GW’s very soon.

    • Isnt that a good thing? they are trying to replace the capacity of their entire Nuclear fleet plus use less fossil fuels that they have to import so I could see this rate staying for a year or two so they have a great start and than lowering it little by little so they have a system like Germany’s

      • I agree, if they limit the life of the high FiT. Get the installation industry started very rapidly and then scale back support as installation companies and supply chains appear.

        Japan needs fixes fast, otherwise they’re going to feel a lot of pressure to turn the reactors back on. Shoveling some money into the solar industry right now could make a big difference next summer.

        • Too high an FiT will just cause a boom-bust scenario. The costs will spiral out of control and panic ensues. The naysayers will get plenty of ammo, accusing solar power of not being cost effective.

          Furthermore, the lavish profits to be made just attract ‘solar cowboys’ wanting to make a quick buck instead of building a solid industry.

          • Yes, but as suggested, start high to kickstart the process and scale back as fast as possible without disrupting the system.

            Let installers make some extra money at first in order to recoup their equipment investments and figure out the process. Obviously there will likely be some who enter the business who will wash out, but that always happens.

            Boom happens when the subsidies are kept too high too long.

        • Bob,

          “start high to kickstart the process and scale back as fast as possible without disrupting the system”

          It isn’t that simple as you think. Large projects have long planning times. They must be certain of a FiT to get the financing complete. You can not suddenly change the rules halfway into the game. There is a limit to the speed at which you can reduce the FiT.

          Otoh, if necessary things can move very quickly, as evidenced by the year-end rushed in Germany.

          I think a $0.25-$0.30 would have been a way better starting point. But we’ll see how things work out.

  • I was surprised with how high the Japanese tariff was and the number of years it will apply for. But it’s far from a disaster, especially for a country like Japan. In the past Japan has thrown a huge effort into certain industrial or technological areas and they’ve had a lot of success from it. They’ve also had some big failures, (eg. nuclear power) but even failures which didn’t end up making or saving Japan money have often been of benefit to the rest of the world through the development of new technology and reductions in prices.

  • I’m glad republicans are still completely ignoring science AND profit. And I’m sure it’s Obama’s fault for not leading the world in renewables.

  • So what did Japan’s last meltdown cost, will we every really know? Do we add the cost of the invasion of ocean life on the west cost. What to cost of the those who can never move home, or can’t sleep at night?
    All cost are relative. Yes the Japan FITwas higher than I expected, yes it will come down in the future. But it is working to get a boat load of green energy built in a very short time.

  • the rate is WAY too high. it should be halved, and given only to systems under 30KW. having huge installations uses land, centralises, (which means transmission lines); solar has far more support when it is owned by the populous.

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