Japan: Grid capacity may limit solar growth

In Japan’s booming solar market, "grid congestion" is emerging as a potential break to the continuing market growth. A shortage of grid capacity in the country’s north, on the island of Hokkaido, is already well known, and now new BNEF analysis is showing that similar issues could potentially emerge in the south of the country.

With 22.4 GW of new renewable energy capacity having been approved, under the FIT program that kicked off in July 2012, BNEF analysis shows that the Chugoku Electric Power Co. and Kyushu Electric Power Co. have less than 1 GW of available grid capacity in southern Japan.

BNEF figures estimates grid capacity of 34 GW as being available for new solar and wind projects throughout the country.

Reforms of Japan’s electricity market are underway at present, with Bloomberg reporting that a bill is expected to be introduced into Japan’s parliament in autumn. BNEF predicts that such deregulation could lead to grid improvements.

Japan’s utility market remains relatively closed, with regional monopolies a feature. There has been pressure on these monopolies in the wake of Fukushima Daiichi nuclear power plant disaster in March, 2011. Telecommunications entrepreneur Masayoshi Son, the billionaire Chairman and CEO of Softbank Corp., has been active in pushing for increased electricity market reregulation. Softbank is already active in developing photovoltaic projects in Japan.