IN DEPTH: PV dominates in Japan
Solar has taken an early grip on Japan's emerging renewables economy.
PV took full advantage of its potential for rapid deployment and a generous new feed-in tariff (FIT) to dominate renewables installations in Japan, new government figures confirm.
Japan increased its renewable energy capacity by 1.394GW between April 2012 and January of this year, the country’s Ministry of Economy, Trade and Industry (METI) said.
Solar accounted for virtually all the additional capacity, with 1.329GW of the total – 1.02GW of that made up of residential installations.
By contrast, Japan brought just 37MW of new wind power capacity into service over the same period.
Travis Woodward, solar analyst at Bloomberg New Energy Finance (BNEF), says: “Solar has taken the lion’s share of new projects, as currently the economics are more attractive and solar can be deployed faster compared to other technologies – partially due to the existing conditions in Japan.”
Woodward notes a number of factors limiting the rapid development of other renewable technologies such as wind.
The waters off the country's Pacific coast, for example, are too deep in many places to accommodate offshore wind technologies that are currently available.
Although the country has significant ambitions offshore – for example through the deployment of floating turbines – this will take time.
Japan also needs to overcome problems related to grid access on the northern island of Hokkaido, where wind resources are abundant, to transmit power to other parts of the country.
The Japanese government decided this month to cut its feed-in tariff for solar energy to ¥37.8 ($0.40) per kWh from ¥42 over 20 years.
It chose to leave the existing FIT rates for other renewable resources unchanged from the scheme’s debut rates, set a year ago.
Analysts believe the cut to the PV FIT is unlikely to slow the strong momentum driving the rapid development of new solar projects in Japan – but say other technologies could gradually gain ground.
"I speculate that (other renewables) will catch up after a long lead time,” Masaaki Kameda, a spokesman for the Japan Photovoltaic Energy Association, tells Recharge, noting that the government’s decision to leave its non-solar FIT rates unchanged might act as a “relief measure" for technologies such as wind.
Kameda says the speed with which new projects can be deployed is another factor favouring solar development at the expense of renewable technologies such as geothermal, biomass and wind.
“(Solar) is very easy to introduce, compared to other renewable resources,” he says. “It takes more time to plan and put wind turbines into place.”
According to BNEF, it remains uncertain whether the heavy weighting of solar in Japan's renewables mix is a problem, as the FIT was primarily designed to quickly introduce new renewable energy capacity over a short period of time.
Both BNEF and Kameda expect more utility-scale projects to come online this year, with BNEF in particular predicting growth in the commercial segment.
“The residential sector will become a smaller proportion of total solar installations in Japan this year. We expect residential to be only 2GW-2.2GW of our 6.1GW-9.4GW forecast for 2013," says BNEF’s Woodward.
"Non-residential solar projects can sell all power generated under the FIT, while residential can only sell surplus power under the buyback scheme."