Japan to become the second largest PV market after China in 2013, says IHS

By Editor


Greentech Lead Asia: Japan is expected to install over 5 GW of solar capacity overtaking Germany, Italy and the U.S for the first time. With this capacity, Japan will become the second largest PV market after China this year, says a new report from IMS Research, a part of IHS.

In the first quarter itself, Japan plans to install 1 GW of PV projects.

Japanese government has been aggressively pursuing solar since it decided to shut down the nuclear power plants two years ago. The market hugely benefits from the feed-in tariff (FiT) paying up to ¥42 (US$0.44) per kilowatt hour.

The FiT is likely to be reduced by approximately 10 percent on 1 April, however.

Despite this cut, Japanese FiT remains the most attractive such offer globally, and the research agency expects this could lead to stiff competition in the market.

“And while a 10 percent reduction in tariffs is widely expected by industry players, this will have little effect on both internal rates of return and market demand. Furthermore, many systems that have already applied for the higher FiT are able to benefit from this rate of ¥42 even if they are installed after 1 April,” IHS researchers said.

Residential system prices in Japan are roughly double than those installed in Germany. The ability to sell modules and inverters at significant premium compared to the rest of the world, coupled with high demand and growth, provides a much-needed profit stream for Japanese suppliers

Japan is attracting foreign investments to its shores. Many Chinese and U.S module suppliers are now serving Japanese market. However, they are still the minority and needed to resort to OEM partnerships with Japanese manufacturers.

Foreign companies offering solar modules face stringent regulations from the certification board as well as the utilities, meaning they need substantial product redesigns before they are able to target Japanese market effectively.  Japanese customers are somewhat reluctant to buying foreign products.

The report notes that many foreign companies that have tried to break into the Japanese market have failed leaving Japanese partners the burden of supporting a product no longer sold locally by the overseas manufacturer.

Larger projects, over 2MW are also driving the country’s PV growth. However, this growth will be short lived and the projects will face a decline next year.

However, the so-called mega-solar projects are being deployed at a rapid rate, they are expected to account for approximately 25 percent of total demand in 2013, the researchers noted.

Commercial rooftops are another segment that could contribute to growing PV market in Japan. Systems in the range of 10-50kW are in very high demand in Japan due to high incentives, high electricity prices, power shortages for commercial properties and relatively simple regulations for installations of this size, IHS said.

Also read: China, Japan, India, and Australia to account for 90% of solar PV demand in APAC in 2013: NPD Solarbuzz

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