Will Japans booming PV market turn to bust in the coming years? This was one of the key questions raised at the 2014 PV Japan, held in Tokyo last week. While precise answers as to the markets outlook vary, many at the show and supplying the market remain bullish for its outlook. This is based on a number of key factors.
1: Japan needs electricity: As a highly electrified economy and country where summer temperatures over much of the company send the mercury soaring and humidity uncomfortably high, Japan consumes a lot of power. As is well known, the country switching off all of its 50 nuclear reactors on two occasions after the Fukushima-Daiichi nuclear disaster of 2011 has amplified this situation.
Energy savings measures have been deployed but can only go so far. For example, in one of the Tokyo offices of Japans Ministry of Economy, Trade and Industry, which administrates it FIT program, the Super Cool Biz policy has been adopted. The policy sees air conditioners in METIs offices set to 28C (82.5F) and staff allowed to wear more casual attire such as short-sleeved shirts and going without jackets.
There is, however, only so much energy a manufacturing country like Japan can save, and the government intends to restart a number of the countrys reactors. But despite this urgent need for power, local opposition to the reactor restarts is holding the process up.
Given all of this, Japan is quite simply looking to all generation sources, and with solars fast deployment and the countrys long history in the technology, it is proving a popular choice.
2: Many GWs already approved: Japans leading solar analysts RTS Corporation report that 37.5 GW of new PV capacity has been approved by METI, under its current FIT scheme. While some of this wont be realized due to land, financing and grid constraints, if as little as 50% of this capacity does go ahead, it will continue to deliver well over 6 GW/a of demand through to 2017.
Others believe that METI has processed an even higher number of projects and pv magazine heard reports of between 50 GW up to 70 GW of capacity or at least opportunities having been green lighted. This is all under the current generous FIT rates.
RTS calculates that with the projects it sees as going ahead, 2014 and 2015 will be the peak years for PV, and 2018 the trough. RTS sees solar delivering around 7 GW of new generating capacity next year, and above 6 GW in 2016.
METI has stepped up moves to strike out projects that are not moving forward, either having not secured land or financing, however there will still be a vast project pipeline for developers and suppliers.
3: Major companies benefiting: As has been seen in solar markets worldwide, energy is political and the what exactly the government and METI decides to do with future FITs and the projects currently in various stages of development will be crucial. And when politics are involved, the powerful have a major say.
It is here that the Japanese market differs from places such as Germany. While in Germany a number of small or medium sized companies developed and profited from the FIT program, while large established players saw only a down side. By contrast in Japan, major domestic companies have benefited from the PV boom.
The strong preference for Japanese products and brands has lead to Sharp, Kyocera, Mitsubishi, Panasonic and Solar Frontier backed by Showa Shell Sekiyu all benefit greatly from the boom. Large, established Japanese construction companies have also been involved in PV power plant development and institutional investors have been able to attain favorable return on investment after years of economic stagnation.
The role that big business has played in Japans boom, some argue, means that PV remains popular in the corridors of power in Japan even as the FIT bill mounts. At PV Japan, the favor solar enjoys in high political circles was demonstrated by the attendance of former Prime Minister Junichiro Koizumi.
Looking to suppliers, despite the strong preference for domestically produced modules and components, it is clear for all solar industry observers to see how the booming Japanese market has delivered vast opportunities for foreign suppliers. From OEM module manufacturers, through BOS, mounting system and even EPCs, the major solar brands have all seen Japan deliver crucial demand, and at healthy margins.
This is borne out in RTS Corporation figures that show that while only 775 MW of foreign PV modules were imported to Japan in 2012, this has increased to over 4 GW in 2013. 2014 and 2015 look likely to follow suit, presenting major opportunities.
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