Japan is estimated to have had a 6.5 GW solar market in 2022, supported by the Ministry of the Environment’s (MoE) feed-in tariff (FIT) and feed-in premium (FIP) programs, which expired at the start of 2022. This capacity is comparable to the volume of solar generation capacity that was deployed in 2021.
With power purchase agreements (PPAs) – for the sale of clean energy to corporate consumers and electricity suppliers – the new approach for renewables developers, the Japanese market is very much in a transition period.
The Japan Photovoltaic Energy Association estimates that the nation shipped 3,536 MW of solar modules from January to September 2022, with 3,520 MW of them shipped to Japanese customers. As the figures do not include Chinese-made imports, it is assumed that installation levels were similar to those recorded in 2021, with imports expected to have dominated the total number of solar panels added in the country.
Japanese companies are stepping up panel recycling and battery reuse, particularly with regards to electric vehicle (EV) batteries. Toyota and power company Jera are developing stationary storage featuring used EV batteries, while Tesla Motors is about to enter Japan’s grid-scale energy storage market.
In the mix
Solar is expected to supply 14% to 16% of Japan’s energy mix in fiscal year 2030, with a target PV generation capacity of 117.6 GW (AC). Japan introduced its Sixth Strategic Energy Plan and the Plan for Global Warming Countermeasures in 2022, with prime minister Fumio Kishida chairing the GX (Green Transformation) Implementation Council. The energy policy emphasis will be on renewables and nuclear with the former to make up 36% to 38% of the power mix in 2030.
Municipalities are setting their own renewables targets, allocating clean energy sites, installing panels on public buildings, and offering subsidies. The Tokyo Metropolitan Government (TMG) is set to mandate solar on newly built houses from fiscal year 2025 and Kawasaki, in Kanagawa prefecture, plans to follow suit.
The Ministry of Economy, Trade, and Industry (METI); the MoE; and fellow public body the New Energy and Industrial Technology Development Organization are installing PV demonstration projects. METI is also demonstrating solar-plus-storage for grid balancing purposes.
In 2021, some 50 companies, including electric utilities and virtual power plant operators, demonstrated clean power aggregation as part of three projects. The two government departments are working on net-zero-energy buildings and the MoE’s solar reuse and recycling program includes a demo project to collect residential solar panels in Saitama prefecture, which has the second-largest installed capacity of systems in Japan.
While most PV systems installed in Japan have previously been supported by the FIT program, new business models and services have been launched. A third-party ownership model is being operated by electric utilities, which install residential panels and energy storage systems for no upfront cost. Efforts to promote net-zero-energy housing are also progressing.
Solar arrays are being installed on the roofs of factories and logistics facilities under the PPA business model for commercial customers and public bodies. Solar carports at stores are also gaining a foothold in the nation.
Businesses motivated by environmental, social, and corporate governance policies are driving deployment of off-site, PPA-backed renewables sites, chiefly among members of the international RE100 clean energy initiative.
As in other major markets, conventional energy companies are making large scale investments in clean energy. Power prices have risen since Russia’s invasion of Ukraine and nonprofit industry body the Japan Electric Power Information Center reports the average, pre-surcharge electricity FIT has risen from JPY 15.80 ($0.12)/kWh in January 2021 to JPY 24.19/kWh in October 2022. Solar is a popular solution for companies seeking to avoid further price rises and volatility, whether consumed on-site or procured via corporate PPA.
With PPA-backed solar sites on the rise, new business models are also emerging between the clean energy developers – including engineering, procurement, and construction services providers – who used to bank FITs, and the power utilities and electricity trading companies. As the backlog of FIT-backed renewables plants winds down, developers are looking for new ways to operate.
METI is set to launch a new FIT and FIP program to bolster the deployment of rooftop solar in the new fiscal year. The new prices, which are already applicable, will pay more per kilowatt-hour than ground-mounted projects.
In brief: Key PV industry developments in Japan 2022
|Policy||A basic policy for GX was decided to expand PV introduction to public facilities, housing, factories, warehouses, airports, railways, etc, as well as renewable energy introduction led by local communities.|
|METI started new programs such as the FIP, formulated plans to introduce PV in harmony with local communities, responded to grid constraints, and enhanced the improvement of the dissemination environment though changes to regulations for introduction.|
|The MoE selected 46 municipalities as leading areas of decarbonization to start regional intensive introduction of PV by municipalities.|
|The Ministry of Land, Infrastructure, and Transport enacted the Revised Building Energy Efficiency Act, mandating energy conservation standards, and will promote PV installation on roads, railway facilities, and airports.|
|Municipalities||Many municipalities started to expand the introduction of renewable energy, such as setting installation targets and areas to promote renewable energy introduction, introducing PV to municipal facilities, and funding subsidies for installation.|
|TMG mandates PV installations in newly built houses from fiscal year 2025.|
|Market||The domestic PV installed capacity is estimated to be 6.5 GW, flat from the previous year, and cumulative installed capacity reached 84.9 GW.|
|The average winning bid of PV projects dropped to JPY 9.70/kWh in the FIT tender, and JPY 9.73/kWh in the FIP tender, dropping below JPY 10 for the first time.|
|Industry||Business models utilizing both off and on-site corporate PPA schemes began to develop.|
|Business models have emerged to enhance PV power generation through collaboration between PV and the conventional energy industry, trading houses, and financial institutions, etc.|
About the author: Izumi Kaizuka is the director of the research division at RTS Corp in Tokyo. The PV consulting firm has nearly 40 years of history and is a member of the PV Market Alliance. Kaizuka leads a range of research projects for the Ministry of Economy, Trade and Industry, the New Energy and Industrial Technology Development Organization (NEDO), and other government organizations. She has been Japan’s representative for the IEA PVPS Task 1 (Group for PV strategic analysis and communication) since 2003. She is also one of the authors of the IEA-PVPS Trends Report, which describes the situation in PV markets.
The views and opinions expressed in this article are the author’s own, and do not necessarily reflect those held by pv magazine.
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