Japan’s bright future in solar power

Japan is forecast to become the world’s largest solar energy market this year, with the installation of new solar power systems more than doubling capacity, a recent report by the U.S. research firm IHS says.Until recently less than 1% of Japan’s electrical power output came from renewables. But following the Fukushima disaster and the power blackouts that followed, Japan has seen an explosion in investment in alternatives. Solar, in particular, has seen a seismic rise of late and is this year poised to become the world’s largest solar market in volume after China.

The boom is striking in part because of how simply it was sparked — by a little-noted government policy, implemented nearly a year ago, that suddenly guaranteed generous payments to anybody selling renewable energy, including solar power.

Because of that policy, known as a feed-in tariff, Japan has become one of the world’s fastest-growing users of solar energy, a shift that comes as this resource-poor country tries to find clean and homegrown alternatives to nuclear power. This year alone, Japan is forecast to install solar panels with the capacity of five to seven modern nuclear reactors.

Starting at 42 yen per kilowatt hour last July and now reduced in April to 37.8 yen (39 cents) the feed-in-tariff is more than double of that offered in China and Germany. Global suppliers in the solar power industry are being drawn to Japan’s market, but domestic firms continue to dominate. As consumers favor domestic brands for their household solar systems, which account for nearly 40 percent of all demand in the country. While the Japanese solar industry is booming, Europe’s is in  decline, installations have decreased by 34 percent due partly to falling prices for solar electricity sales conducted by power firms, IHS said.

In IHS’s report on Japan’s energy mix, Japan’s solar installations jumped by “a stunning 270% (in gigawatts) in the first quarter of 2013.” Such massive growth will allow Japan to take Germany’s pole position and become the world’s largest photovoltaics (PV) market in terms of revenue this year.

“Japan is forecast to install $20 billion worth of PV systems in 2013, up 82% from $11 billion in 2012,” IHS said. “In contrast, the global market is set for tepid 4% growth. The strong revenue performance for Japan this year is partly driven by the high solar prices in the country.” Germany still leads with the total number of units and capacity, however, with its 32,192 megawatts.

Investors saw the boom coming says Hisashi Hoshi of the Institute of Energy Economics. “Despite a shortage of available land in Japan, many corporations who had unused land have rushed in. They can now exploit those plots  to make money by building solar panels and selling on that energy to the utility companies at a good profit.” A 26.5 gigawatt solar power plant in western Japan, enough to power 9,000 households, opened last month, typically built on an unused factory site. Even disused golf courses from the ’80s bubble years are being pressed into productive service, says Hoshi. “How long the boom in solar can last in Japan is hard to tell, but as land runs out, there will be a slowdown,” says Hoshi. “Of course there are still the rooftops to exploit as mobile carrier Softbank is doing. It’s renting rooftops for solar — a very smart and interesting business model.”

Hokkaido is attracting the biggest share of Japan’s solar projects because it offers large patches of inexpensive land, however it’s struggling to cope with the surge in demand. The Ministry of Economy, Trade and Industry said in a statement on April 17 that  developers of solar projects in Hokkaido would be  forced to rethink their plans after the prefecture’s sole utility received applications for large-scale solar plants that would exceed the grid’s capacity.

Hokkaido Electric Power Co. officials have met with applicants to explain that it currently can’t add any more solar to its grid if projects are 2 megawatts or larger, said Satoshi Takada, a spokesman for the utility.

Japan’s struggling electronic companies or also benefiting from the solar power boom. Domestic solar panels are now outselling cheap imports. Japan has a strong solar panel manufacturing industry and companies like Sharp, Kyocera, Sanyo, and Mitsubishi Electric will all benefit from the new energy polices and emphasis on solar power.

These companies are banking on a technological edge to push the quality up of made-in-Japan solar panels while keeping prices down. Doing so could make solar one the few bright points of the Japanese electronics industry. Sharp recently unveiled new solar panels that it claims not only use just 1% of the expensive silicon used in conventional models but are thin enough and clear enough to replace windows.

Others are focusing on efficiency. To make solar electricity affordable on a large scale, researchers have long been trying to develop a low-cost solar cell, which is both highly efficient and easy to manufacture with high output — silicon-based solar cells typically have an efficiency of around 21% for converting sunlight into electricity.

According to Panasonic its prototype solar cell has achieved the world’s highest conversion efficiency at 24.7%, verified by tests performed at Japan’s National Institute of Advanced Industrial Science and Technology. For Japan at least the future of solar power looks bright.

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Sources include: The Japan Times, Fortune Tech, The Washington Post

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