Japan solar poised for cost-revenue parity, says JREF

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Solar power in Japan is close to becoming profitable, says the country’s leading renewables watchdog, the Japan Renewable Energy Foundation (JREF).

Since 2011 Fukushima nuclear disaster, solar power’s importance to the country’s energy supply has increased, buouyed by supportive government subsidies designed to help wean the country off nuclear and fossil fuels.

Now, according to JREF, the industry is poised to reach cost-revenue parity, and should become profitable before the second half of the year. In July, the Japan’s Ministry of Economy, Trade and Industry is set to reduce the attractive feed-in tariff (FIT) by a further 16%, bringing to an end three years of premium rates.

However, the country is ready to join other G7 nations in providing a profitable landscape for solar power, says JREF.

“Solar has come of age in Japan and from now on will be replacing imported uranium and fossil fuels,” said JREF executive board chairman Tomas Kaberger. “In trying to protect their fossil fuel and nuclear plants, Japan’s electric power companies can only delay developments here,” he added, referring to the 10 regional utilities that have dominated Japan’s electricity industry since the 1950s.

By March 2016, the country will have retired a further 2.4 GW of oil-fired energy plants, and will have replaced then with renewable options. Since 2011, when the country’s 43 nuclear reactors were idled, Japan has added 25 GW of renewable power, of which solar energy accounts for 80%.

With solar costs falling, PV is poised to play a leading role in the continued transition of Japan’s energy landscape. “Just as shale extraction reconfigured oil and gas, no other technology is closer to transforming power markets than distributed and utility-scale solar,” said consultancy firm Wood Mackenzie.

Costs for residential solar power production have more than halved in Japan since 2010, and now stand at below 30 yen/kWh, putting solar close to average household electricity prices.