“With a potential for growth to 100 GW to 200 GW-scale installed capacity, PV is the leading power source of renewable energy,” RTS Corp., a Tokyo-based PV consulting firm, says in its latest monthly report on the Japanese solar industry.
Demand has fallen from the peaks seen during the early years of Japan's former feed-in tariff
(FIT) system, with the Japan Photovoltaic Energy Association (JPEA) recently reporting that PV module shipments fell 17% year on year in in fiscal 2017 to 5.67 GW.
Cumulative solar installations stood at 46.8 GW at the end of 2017, according to the International Renewable Energy Agency (IRENA). However, RTS said in December that Japan appears poised to surpass its 2030 solar installation target of 64 GW
within the next two years, roughly 10 years ahead of schedule. It expects the country to install 6 GW to 7.5 GW
(DC) of solar in the current year.
However, to maintain momentum and stay on target, the Japanese authorities need to align their activities more effectively, RTS says. It has also argued for different corners of the solar industry to work in concert, while calling for the establishment of an industry association that brings solar, wind, biomass, geothermal and other renewable energy sources together under a single umbrella.
“Concerning PV power generation, since cooperation with peripheral and different industries are expected hereafter, now it is a good chance to transform the conventional weak industry structure into a robust one,” it says. “The PV industry has to be united to establish a robust dissemination framework which would be a good example for other renewable energy industry associations.”
Japan’s Ministry of Economy, Trade and Industry (METI) last week wrapped up public consultations on a recently approved draft proposal for the country’s fifth strategic energy plan. The draft proposal of the document, which outlines the development of the country’s energy industry through 2050, is soon due for approval by the Cabinet, which is already working with a range of ministries to set the fiscal 2019 budget for the energy plan.
However, RTS argues that METI needs to start aligning its aims more effectively with those of other industries that have a say in PV development, including the Ministry of the Environment (MoE), the Ministry of Agriculture, Forestry and Fisheries (MAFF) and the Ministry of Land, Infrastructure, Transport and Tourism (MLIT). It says that the four ministries now need to work together more effectively in pursuit of a common vision, as all of them are now promoting policies that will shape the deployment of solar in the decades to come.
The MAFF, for example, recently revealed that it would start offering permits of up to 10 years to allow PV generation facilities to coexist with active farming operations, up from a previous limit of three years. A consortium in Shizuoka prefecture also recently started discussions on related demonstration tests. The MoE, meanwhile, is working on its fifth plan for the environment, while the MLIT continues to promote the adoption of Net Zero Energy buildings, which are playing a key role in driving the deployment of rooftop PV arrays and battery storage systems.
“However, relying only on such a system where each ministry promotes introduction of renewable energy individually, the degree of freedom in dissemination will not increase,” RTS says. “It is important to strengthen the leading function for expanding introduction of renewable energy which belongs to the Ministerial Council on Renewable Energy, Hydrogen and Related Issues promoted by the national government across the Cabinet Office, ministries and agencies and develop a dissemination framework which includes cooperation among 47 prefectures, in addition to the government-level cooperation.”
That said, RTS acknowledges the ongoing progress that is being made in support of greater renewables deployment. The Japan Electric Power Exchange (JEPX), for example, recently held its first tender for non-fossil-fuel certificates, following a relatively recent series of reforms that paved the way for new electricity generators to compete for residential customers with the country’s utilities. The JEPX is set to introduce futures contracts before the end of this year, as well.
At the municipal level, the Tokyo metropolitan government recently started accepting applications for distributed-generation renewables projects for fiscal 2018, with the minimum requirement for PV systems being lowered from 10 kW or more to 5 kW. The city of Yokohama, meanwhile, has started promoting the deployment of virtual power plants (VPPs) at schools. And in support of greater nationwide PV deployment, four capacity auctions
will be held from August through May 2019, RTS says.
Perhaps more importantly, the national government is still moving forward with efforts to reform the electricity market, including efforts to legally separate utilities' generation and transmission businesses. “As electricity system reform progresses, it is becoming significant that some of the conventional energy industries which had little interest in renewable energy have started to focus on the renewable energy business,” RTS observes.
However, while greater coordination will be key to ensuring that Japan reaches the PV installation targets it ends up setting in the final draft of its fifth strategic energy plan, METI nonetheless remains the linchpin of future development. RTS believes that the ministry will continue to focus on bringing down PV system prices through the upcoming capacity auctions. It will also continue to work on ongoing issues such as how to dispose of old solar panels, while encouraging the development of a secondary market for operational PV assets.
“In preparation for the drastic change of the market environment, the target should be the development of (an) industry which is based on the cumulative installed capacity presupposing power supply of 100 to 200 billion kWh/year, replacing the conventional industrial structure based on newly installed capacity,” RTS concludes.
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