Japan: Power shortages and FITs clear way for PV

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Post-Fukushima Japan has been closely watched by the photovoltaic industry, as the country moves away from electricity production that had previously heavily favored nuclear power. In a move that would have been unthinkable even months ago, the country will head into the summer months, in which temperatures in some parts of the country can soar, without any nuclear reactors online.

Japanese daily the Asahi Shimbun has reported that the debate as to whether nuclear power will play a role in country’s future energy mix has raged since the Fukushima-Daiichi disaster. The Asahi reports that a committee formed under the Department of Economy, Trade and Industry (METI) has debated the issue, with polarized opinions being expressed.

While clarity is yet to have emerged from the negotiations within the Japanese government, the committee formed to set Japan’s revamped FITs for renewable energy have recommended a relatively high tariff for photovoltaics. The committee advised late last month that a tariff of 40 Yen/kWh (US$0.50) will be advised for residential photovoltaics – to be paid over 20 years, exclusive of tax – and 42 Yen/kWh (US$0.52) – for ten years, tax included, for electricity fed back into the grid.

These figures are as yet only a recommendation by the FIT Purchase Price Study Committee and the final rates are to be set my the METI.

On the back of these proposed FITs, stock analysts Jefferies released a statement in which it advised that the FITs represent good news for the industry, particularly in 2013 and beyond. Jefferies concluded that IRRs for photovoltaic array could be greater than 20 percent, adding also that panel prices in the country are the highest globally.

"On the heels of the new FIT, a new master energy plan is being revised in Japan, and it may target up to 100GW of cumulative PV capacity by 2030, from 4.7GW installed at the end of 2011," wrote Jefferies analyst Jesse Pichel. Japanese installation prices are also high and some companies, such as CIGS manufacturer Solar Frontier, told pv magazine that they are working with regulators to bring that cost down.