BIPV prospects in Japan bright, despite declining margins

06. December 2011 | Top News, Global PV markets, Industry & Suppliers, Markets & Trends | By:  Eckhart Gouras

PV Japan kicked off yesterday in Tokyo, Japan, under sunny skies portending a bright future for Japan's photovoltaic, and BIPV market. However, it is clear that overcapacity, and declining prices and margins have impacted both exhibitor numbers, and company strategies.

The trade show spans three days and was originally planned for July, however, the Tohoku Earthquake, as the March disaster is commonly referred to here, forced a postponement until the end of the year. 

Despite this, it certainly mobilized forces in Japan to accelerate the deployment of renewable energy, and especially solar. It is now likely that Japan will broaden its national solar power feed-in tariff (FIT) to include residential, commercial and ground-mounted installations. 

So far, the FIT has been limited to residential projects, but including commercial rooftop installations and large-scale photovoltaic power plants should provide a boom to the Japanese market. What remains unclear is the exact pricing of the FIT, as well as the duration of the subsidy. These parameters should be clarified by this spring.

Declining figures

Organized by SEMI Japan and the Japan Photovoltaic Energy Association (JPEA), PV Japan had 350 exhibitors in 2010. That number is down to 250 this year, although visitors should outnumber last year's by 10 percent. That would put the figure at 50,000 visitors, and JPEA and SEMI Japan expect a jump in numbers on Wednesday, the last day of the show, when the annual Semicon Japan opens its doors.

The pressure on margins is obviously impacting Japanese solar panel manufacturers as well. According to Kazuo Hanada, director of sales and procurement at Yocasol Inc., the market situation has forced a manufacturer like itself, with a production capacity of 60 megawatts (MW) in southern Japan, to focus on niche markets where there is less exposure to the price erosion in the mainstream panel market. 

One of these niches the company is pursuing is building integrated photovoltaics (BIPV) in Japan, which currently has a market size of between one and two MW, according to Hanada. But with the new FIT next year, which should start subsidizing photovoltaic installations on July 1, BIPV projects could expand rapidly.

Another way to escape the onslaught of cheap modules is to offer integrated solutions, which in Sharp's case means tying solar modules into a complete smart home solution, where tablet computers allow homeowners to track photovoltaic power generation and power consumption by key appliances. Sharp will start supplying these solutions to Japanese homeowners next year but it has not released any targets yet for this program for the coming year.

Considerable uncertainty

Overall there is still considerable uncertainty regarding Japan's embrace of solar power in coming years, which might come as a surprise to people outside of the country who have expected a rapid rise in photovoltaics after the earthquake and Fukushima disaster. 

But things tend to take time in Japan and the fact that the country has a new government also adds complexity to the reform of its energy mix.  Even nuclear power will probably survive the fallout and in today's Wall Street Journal Asia, a story on page 4 reads "A Nuclear Japan's Biggest Supporters: Mayors".

According to the WSJ Asia, 33 so-called "nuclear municipalities" in Japan receive about ¥120 billion ($1.5 billion) each year from the central government for their support of this industry. But as the Sharp example shows, Japan can tap into its very strong position in consumer electronics and other technologies to deliver innovative solutions in the photovoltaic industry.

Japanese tend to be modest about their achievements and Sharp is a good example. Just this month, Sharp will connect a 73 MW photovoltaic power plant to the power grid in Thailand and open a 160 MW thin film production facility in Italy. It has also reached a cell efficiency of 36.9 percent for specialized cells destined for satellites developed by JAXA, the Japan Aerospace Exploration Ageny.

Niche markets and quiet innovation seem the modus operandi at Japanese photovoltaic suppliers like Sharp. We look forward to two more days of PV Japan and more interesting developments to report on.

The Japanese market should look very different one year from now and, despite their modesty, the Japanese will have a hard time downplaying the boom a comprehensive FIT and more innovation is likely to bring in the course of next year.


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