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Japan: New FIT Gives A Boost to Solar Market
Friday, June 29, 2012:
Japan: New FIT Gives Boost To Solar Market
USA & JAPAN: On May 5, the last operating nuclear plant in Japan was shut down for routine maintenance; however, a report by the Nikkei indicated that Kansai Electric plans to resume operations at the first of two reactors at its Oi power station amid public concern.
Nuclear advocates warn that the first summer in over 40 years without nuclear power will require significant energy saving especially in the Kansai, Kyusyu and Hokkaido districts. However, according to a recent Reuters' poll, 75 percent of Japanese firms support abandoning nuclear power, given alternative energy resources to be secured.
To facilitate renewable energy development and make it an important power resource, the Japanese government is going to put a new feed-in tariff (FIT) scheme into effect on July 1, 2012. The bill offers attractive returns (42 yen/kWh for solar power including sales tax. See the table below for the details of the rates and durations). The FIT could lead a surge of solar power projects in the nation. (Read Japan creates potential 9.6B Solar Boom with FITs)
Bloomberg New Energy Finance also foresees strong growth in Japan's renewable market, specifically for solar PV. Bloomberg projects over 10 GW of new solar installed by 2014 and by then Japan could become the third largest solar market in the world. In 2011, Japan was the fifth largest market, and accounted for about 5 per cent of the total installed capacity of 24 GW.
UPDATE: On June 18th, 2012 Japan's Ministry of Energy, Trade and Industry (METI) approved a system of feed-in tariffs for renewable energy generation for the nation, including rates of JPY 42/kWh ($0.53/kWh) for solar photovoltaic (PV) generation.
The system offers 20-year contracts for PV plants larger than 10 kW, and 10 years for PV plants smaller than 10 kW. Japan's feed-in tariffs will go into effect on July 1st, 2012. The PV rates are more than double feed-in tariff rates in Germany, as well as more than three times the rates paid under the Chinese feed-in tariff. These rates will be subject to annual review.
* US$ based on 1 dollar = 80 yen exchange rate.
Ten regional power companies in Japan operate fourteen mega solar plants with a total of 65 MW capacity (as of February, 2012). They plan to add eleven plants by 2014FY to expand the total capacity to 106.3 MW. Local governments also play a key role to aggressively attract projects in their regions. According to Kankyo Business Online, as of February 21, 11 prefectures and cities have announced available sites for lease with good grid connectivity.
Kankyo Business Online also lists more than 40 ongoing mega solar projects throughout Japan including:
* 30 MW project in Hokkaido prefecture and a 30-40 MW project in Hyogo prefecture both by Eurus Energy, a joint venture of Toyota Tsusho (a trading company in Toyota Motor group) and Tokyo Electric Power Company that plan to start operation in 2013 FY.
* 50 MW project in Aichi prefecture by Mitsui Chemical, Toshiba, Mitsui & Co., Toagosei, Toray and Mitsui Engineering & Shipbuilding that plans to start operation by September, 2013.
* 70MW project in Kagoshima prefecture by Kyocera, IHI and Mizuho Corporate Bank that will start construction in July, 2012.
According to Kyodo News, "Canadian Solar Inc., the world's fifth-largest maker of solar modules, plans to build a plant in Japan with a 150 MW annual production capacity as soon as fiscal 2013 to become the first foreign company to produce solar panels here, company sources said". The company expects an increase in demands spurred by the new FIT scheme. The company also plans to build a 2 MW solar plant in Mie prefecture jointly with Hakuto.
Canadian Solar is not the only player in the solar industry outside Japan who is going to jump into this promising market. Suntech Power, the world's largest solar panel manufacturer, will reinvest in their module assembling facility in Japan to convert it by July this year as a technical support center to strengthen its customer support capability.
Yingli Green Energy, a Hebei-based panel manufacturer, established a fully owned Japanese subsidiary recently. Liansheng Miao, chairman and CEO of the company said: "Japan is an important PV market for us. With the establishment of the Japanese subsidiary, we expect to be closer to our customers and penetrate deeper into this market."
Other players recently expanding its activities in Japan include California-based SunEdison, Jiangsu-based wafer supplier Hareon Solar Technology and Shanghai-based module supplier Chaori Solar Energy Science & Technology, to name a few.
On the other hand, Japanese solar players such as Sharp, Kyocera, Mitsubishi and Panasonic will also leverage the new FIT scheme to expand their business with more focus on the high-performance panels with maximum power generation efficiencies that will call for innovative technologies and materials from suppliers around the world.
-- Yoichiro Ando, SEMI Japan