The sterling growth of Japans solar industry may begin to slow this year rather than in 2017, believe many commentators at the PV Expo Japan event that opened today in Tokyo, but the fall away is unlikely to be as steep as some had feared.
On day one of the show, held in conjunction with Japans Smart Energy Week, crowds were as busy as last year despite repeated warnings from the industry that difficult times lie ahead for Japans solar industry.
Recent changes announced to the countrys energy sector include a 11% reduction to the feed-in tariff (FIT), an end to tax breaks for commercial solar installations, and the introduction of a reverse auction process that is set to seriously alter the landscape of Japanese PV deployment.
These liberalizations of the market had prompted some analysts to forecast something of a goldrush for solar in Japan this year. In February, Bloomberg New Energy Finance (BNEF) reported that it expects Japan to grow by between 13.2 GW and 14.3 GW in 2016.
However, Izumi Kaizuka from RTS Corporation told pv magazine that they expect the market to grow by approximately 8 GW in 2016, echoing projections by Kyocera that forecast a 7.9 GW market for fiscal year (FY) 2017, which begins on April 1.
For 2017 the market is likely to grow by 7-8 GW and that will gradually shrink over the next few years to a sustainable 3-4 GW market, but this wont be until about 2020, Kaizuka said. By that date, the residential and commercial sectors will be account for about 80% of the market.
Ichiro Ikeda, the general manager of Kyoceras marketing division for the corporate solar energy group, presented to pv magazine company data that suggests Japan will end the current fiscal year with 9.8 GW of new solar PV installed, suggesting that the peak will occur at the end of this month, before the slow contraction to 7.9 GW for FY 2017, and an incremental decrease from there on.
Mega solar projects wont be feasible so the goal is to ensure that the approved projects are completed.But Kyocera will focus largely now on the residential market, which has a lot of scope to grow, even with the changes to the feed-in tariff.
New sweet spot for Japan solar
Given the changes already confirmed and those still to come, a growing handful of companies in the industry are augmenting their product offering to take advantage of how the Japanese market is expected to evolve.
For U.S. power optimizer company Ampt, this means a solar sweet spot for the commercial and small utility-scale sector where systems sized between 1-2 MW will prove the most attractive for EPCs operating in the increasingly straitened Japanese solar industry.
U.S. company Ampt is already working with a Japanese partner on the development of a 1.7 MW system in the country, utilizing its DC power optimizers to overcome the inherent and logistical difficulties of building at large scale in Japan.
Systems sized between 1-2 MW are a sweet spot for this market, Mark Kanjorski, Ampts director of marketing, told pv magazine. Large systems are becoming more and more difficult to build, so one of the areas where we are gaining traction is that when you are concerned about land use, and trying to pack as much DC as possible, it pays to use a power optimizer.
"I have heard from some EPCs that it is costing US15 to 30 cents a watt just to flatten land. So in some cases Ampt is interesting because we are making projects possible, and enable developers to deploy in hilly areas or otherwise imperfect locations. This, Kanjorski said, is set to become a significant trend for the Japanese market. However, the switch to rooftop solar will also nurture a larger embrace of module-level power electronics, he added.
Japans falling FIT and high value electricity market means that every percent you can squeeze out of the system is valuable.
So we focus on maximum power point tracking (MPPT) and can also double string lengths; this eliminates half of the BOS costs. The cost of BOS in Japan is higher than average some of that is because market forces havent hit hard yet and also because of the high FITs there has been less optimization on the system. This is set to change as the market undergoes this current transformation.
PV Expo Japan began today and continues throughout the week. pv magazine will be reporting live and direct from the event until Friday, so be sure to check back daily for the latest news and opinion from the show.