Japan: Renewable energy signed into law

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The debate about future energy supply in Japan has been fierce in the months after the earthquake, tsunami and subsequent Fukushima-Daichi nuclear plant meltdown and continuing radiation scares. Prime Minister Naoto Kan’s leadership has not survived the struggle and it appears as it the passage of this legislation will be one of his last acts in office.

Andrew DeWitt is a politics and public policy professor in Tokyo and he believes that this legislation is a critical step in Japan fully adopting renewable energy. "You have to see everything [in light of] this recent trajectory of politics in Japan. In the wake of Fukushima, public opposition to nuclear energy has gone from basically people not being concerned with ‘nukes’ […] to more than 75 percent against it," DeWit told pv magazine.

The law will be effective as of July 1, 2012. Details as to what the FIT rates would be are yet to be determined. It is also unclear as to whether utilities will be required to purchase solar power. Japan’s electricity utilities remain relatively highly regulated and regional, although there have been recent moves to break up this system, spearheaded by charismatic entrepreneur Masayoshi Son. He made his fortune with his Softbank company when telecommunications in Japan were deregulated.

While the renewable energy bill will provide subsidies for wind, solar and geothermal, Jefferies predict that solar will benefit most. The industry analysts issued a statement in reaction to the bill that read: "we believe solar will be the largest beneficiary of the bill given Japan’s history as the first country to adopt solar as a viable energy source and a number of large Japanese solar companies."

Japan has previously brought forward its solar installed capacity goals at international forums; it now targets 28 GW by 2020. Given this, Jefferies has forecast 4.8 GW cumulative installed photovoltaic capacity by the end of 2011. Annual photovoltaic installation, predicted Jefferies, could reach three GW per year from 2013.

In terms of which firms will profit from the renewable scheme, Jefferies point out that Suntech and Canadian Solar are the two foreign companies most exposed the Japanese market. The New York-based analysts also added that the legislation’s effect would be that, "incremental demand will help to stabilize prices worldwide and tighten the supply chain."

Solar in Japan is featured the third installment of the pv magazine podcast.