Japan's Ministry of Economy, Trade and Industry (METI) has released its latest data on solar PV installations under the country's feed-in tariff (FIT). The data was compiled by the Agency for Natural Resources and Energy (ANRE) and regard facilities installed last year up to November 30, 2013.
According to the report, in the first eight months of the fiscal year (April to November 2013) Japan installed 4.585 GW of new solar PV capacity, of which 3.632 GW were utility and commercial installations and 953 MW were household installations.
Cumulative installed solar PV capacity in Japan has now reached 11.858 GW. Compared to other types of renewable energy technology, solar PV proves to be by far the most widespread technology in the country. Thus, cumulative installed small and medium hydro, wind, biomass and geothermal capacities by the end of November last year were 9.605 GW, 2.672 GW, 2.418 GW and 0.501 GW respectively.
Analyzing the solar PV trend
The most obvious trend stemming from METI's latest report is the dominant growth of the solar PV market. Fiscal year 2013 is expected to be a huge success: between April 1 and November 30, Japan installed 4.585 GW compared to 1.673 GW installed between July 1 2012 and March 31 2013. The introduction of the Japanese FIT in July 2012 doubtless had a positive impact on these installation rates.
The second most important trend derived by the recent METI report is the confirmation of the Japanese solar PV market's shift from household installations dominating the market in the fiscal year 2012 and before the introduction of the FIT scheme, to utility and commercial installations clearly taking control of the market from April 2013 onwards.
Specifically, according to METI's report, in the first nine months after the introduction of the FIT scheme, solar PV grew by 969 MW in home installations. Similarly, before the introduction of the FIT, Japan boasted about 4.7 GW of installed household photovoltaic systems. The corresponding figures for non-household installations during the same periods is 0.7 GW and 0.9 GW respectively.
However, since April 2013 this trend has totally shifted. In the eight months ending November 30th, non-household systems installed a total 3.632 GW, while household installations added just 953 MW of solar PV.
Big companies have entered the energy market installing large photovoltaic parks at a fast rate. According to data provided to pv magazine by Izumi Kaizuka of the RTS Corporation, Japan, as of January 2014 there were 53 large scale projects, above 20 MW each, under construction or planning.
Strong market despite lower FITs
In February METI announced it has set up a working group for operating the FIT scheme, "aiming to study and discuss improving the current operation of the scheme." The working group held its first meeting on February 18.
Japan's Photovoltaic Energy Association participates as an observer to the group, which METI says "will hold several meetings to discuss and compile the results of the meetings before the end of fiscal year 2013, expecting the operation of the new scheme to start in fiscal year 2014."
Bloomberg New Energy Finance (BNEF) predicted last month that the solar FIT in Japan will be cut by 14% from April due to falling operation and maintenance (O&M) costs.
Deutsche Bank AG has also published new research data that finds the Japanese solar market will remain strong despite its predictions for a solar FIT cut of around 10% from April. Izumi Kaizuka is also of the opinion that the FIT will be cut by 10%, not the 14% reported by BNEF.
The main obstacles for the PV sector's further growth in Japan, Deutsche Bank argues, remain the grid limitations to accommodate newly installed capacity, labor and equipment shortages, and not a reduction in the FIT. However, despite these problems the bank, expects Japan to install around 6 to 7 GW of new solar PV in 2014.
The bank also estimates that residential PV system costs will fall from ¥465/watt (US$4.57/watt) in the first quarter of 2012 to ¥385/watt (US$3.80/watt) in the fourth quarter of 2014. On the contrary, Deutsche Bank says, the price of non-residential systems has changed slightly, meaning FIT reductions will be based on the residential systems' price differences.
Deutsche Bank's data is in line with METI data as compiled and provided to pv magazine by RTS Corporation.
RTS Corporation adds the cost for non-residential applications in the fourth quarter of 2014 will reach ¥305/watt for 1 MW systems or larger, ¥294/watt for systems between 500 KW to 999KW, ¥324/watt for systems between 50 KW to 499 KW, and ¥369/watt for systems between 10 KW to 49KW.
Ministry hearings under way
On February 14 METI published the results of its investigation concerning the status of solar photovoltaic projects registered under the country's FIT scheme. The reason for METI undertaking this investigation stems from the fact that, while the number of approved projects under the FIT scheme by October 2013 had reached 24.5GW, only 5.7 GW were actually commissioned.
METI promptly launched an investigation looking at 4,699 solar PV projects, each larger than 400 KW, for which a ¥294/KWh tariff has been approved. These projects totalled 13.32 GW.
Of these, METI reports, only 1.1 GW (corresponding to 1049 projects) were commissioned, while another 0.9 GW corresponding to 419 projects were voluntarily suspended.
Of the rest, 3.94 GW or 1,588 projects had the land contract finished and the equipment ordered; 2.58 GW, or 784 projects, had either finished the land contract finished or ordered the equipment, but not both; 1.77 GW, or 187 projects, had not finished the land contract yet neither the equipment was ordered, but were negotiating with utilities regarding interconnection issues or had required additional time due to issues including land decontamination and the projects being in disaster zones; 2.88 GW, or 571 projects, had no land contracts or equipment ordered; and 0.15 GW, or 101 projects, did not submit the necessary documents to be included in the METI inquiry.
The Japanese ministry said that it will hold administrative hearings to be concluded by August 31 2014. Those projects that have not met the specified technical criteria by then, METI said, will have their certifications revoked.
Although not 100% certain, RTS Corporation added that the METI investigation could result in up to 6 GW of projects being cancelled.
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