Japan’s Solar Energy Market

02 Jul, 2019 –

The “Boom”

The years following the disastrous 2011 tsunami, and subsequent nuclear disaster at Fukushima Daichi power plant, marked the start of a golden age for Japan’s renewable energy sector. Out of the variety of other renewable energy sources available, namely Bio-mass, Geo-thermal and Wind – solar PV panel installations have by far been the most popular and wide-spread technology, growing in leaps and bounds between 2012-2017, from 6,632 Mega-Watt capacity to just under 43,000 (almost 6.5 times over this five-year period alone) – third globally, behind Germany and China, the world leaders in solar energy production.

The immediate shutdown of the nation’s entire nuclear power plant infrastructure, which was providing just under 25% of usable energy at the end of 2011, paved the way for the “green” movement to embark on what was then labelled as the “renewable energy revolution”, a trend which has enjoyed wide public support, and has led the government to launch the world’s highest feed-in tariff system, which forced utility suppliers to buy excess solar generated energy from installations feeding this energy into the existing power grid, and launched a solar-farm projects building frenzy which has lasted all the way into mid-2016. Nuclear power plants have been reviewed, renovated and re-started in part, but still account for just under 5% of the national power capacity at this stage – with renewable energy already providing approximately the same level of energy, and bench-marked by the government to rise to 22-24% by 2030.

The “Bust”

In the last two years, however, as existing grids began to feel the strain and have been unable to sufficiently and appropriately upgrade their infrastructures to deal with the ever increasing feed-in supplies and alternating, unstable supply/demand peak times (consumption is far higher in the evening, when solar feed-in is virtually non-existent). These problems can be overcome through the use of solar energy batteries, but these naturally further increase the price of construction and maintenance. As a result of these issues, Japan’s government has cut these tariffs, and have also re-iterated their commitment to large coal and gas projects, due to recent sharp decreases in the cost of these “dirtier” resources. This has led to a large number of solar energy projects going bankrupt, some in mid-development, with a record number of 65 companies shuttering in 2016 alone – mainly due to vague business strategies which relied solely on government subsidies, poor sales, and insufficient capital. Power companies have also been strong advocates of the nuclear re-start policy, as the obligation to pay premium rates since 2012 has been substantially eating into their profits – and have invested a substantial amount of money and other resources in lobbying local and national governing bodies to push towards this goal, with renewable energy being “abandoned by the roadside” as a result of this shift.

The “Real Picture”

Various analysts, however, believe the future of renewable energy in Japan, mainly solar, is still a positive one. They point to the fact that stricter government regulation has weeded out operators who have been delayed and half-baked in their construction and utilisation efforts, by forcing licensees who have failed to secure power grid access out of business. Insurance company coverage policies have meanwhile forced existing operators to better utilize their equipment through proper monitoring and maintenance. Industry experts point out that some of these operators have lost up to 10% of their capacities due to malfunctioning or under-maintained panels, and that consolidation of smaller, less efficient local operators will further increase the efficiency of energy production and utilization. This increase in maintenance and monitoring has provided for a large increase in solar panel maintenance companies branch offices and staff nationwide, providing more employment opportunities and re-vitalizing local rural communities in several areas as a result.

Additionally, as Japan faces a severe shortage of large and open land areas required for large solar energy production – a typical solar farm generating energy equal to one modern nuclear power plant requires 60 square kilometers of land resources – solar operators are now slowly but surely shifting into floating solar installations which, in addition to being easier to construct, as they do not require land excavation or stringent earthquake resistant foundation building standards, are also providing the added value of reducing evaporation and slowing algae growth in freshwater. The construction of floating solar farms also enables these facilities to be in closer proximity to large metropolitan centers, which simplifies delivery and further reduces supply costs.

From Utilities to Households

Lastly, Japan is now also going through a shift from utility-level solar installations to small and mid-sized rooftop installations, which are already a standard feature in many of the nation’s new homes and commercial buildings, and are estimated to provide up to 70% of the national solar capacity in the longer term. What this means, in light of the declining feed-in tariff system, is that many households with solar panels installed will remain with large amounts of excess power on their hands – which would naturally mean a need for better and cheaper energy storage solutions – a trend which electronic giants such as Panasonic and Tesla have been quick to capitalize on. Panasonic strongly believe that 2019 will be the turning-point year in which the number of houses built with rooftop solar panels, combined with the in-attractive level of feed-in tariffs, will create a shift from grid supply to storage and utilization of excess energy. Declining costs of residential solar installations further promise to maintain the high level of interest in this type of construction, and, hopefully, secure Japan’s solar energy future for decades to come.

(Graphs – Wikipedia)

 

(Source – Ziv Nakajima-Magen, Nippon Tradings International”, Graphs – Wikipedia)

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