Japan Poised To Become World’s Second Largest Solar Market

Japan will overtake Germany and Italy to become the world’s second largest market for solar electricity, reported Bloomberg News on Monday, with the government set to introduce a new premium tariff on solar energy.

Japan will overtake Germany and Italy to become the world’s second largest market for solar electricity, reported Bloomberg News on Monday, with the government set to introduce a new premium tariff on solar energy.

According to Bloomberg New Energy Finance, the new tariff could result in at least $9.6 billion in additional installations, which will be able to produce 3.2 gigawatts of energy, roughly equal to the output of three atomic reactors.

However while the move could encourage more solar energy companies to set up shop in Japan, some analysts have warned of the increased costs to consumers.

[quote]“This is a mechanism with a high degree of market intervention by setting tariffs artificially high and making users shoulder the cost… We question the effectiveness of such a scheme,” said Masami Hasegawa, senior manager of the environmental policy bureau of Keidanren, Japan’s most powerful business lobby, which counts Toyota and Nippon among its members.[/quote]

According to the Japanese Ministry of Economy, Trade and Industry, Japanese are likely to pay 42 yen (53 cents) a kilowatt-hour for 20 years in order to harness solar power, which is almost three times what industrial users currently pay for conventional power and twice the rate in Germany, the world’s biggest market by installations.

A 42-yen solar rate is also above the previously forecasted 38 yen price, added Takashi Watanabe and Daiki Takayama, Tokyo-based analysts for Goldman Sachs Group Inc; though this price could easily decrease if there is widespread adoption, other analysts noted.

[quote]“We expect Chinese and Taiwanese producers to erode the high domestic share through local partnerships to drive down cost,” said Jefferies Group Inc analysts Jesse Pichel, Min Xu and Scott Reynolds.[/quote]

Related: Solar Power Advantages, Disadvantages of Solar Power, Benefits of Solar Energy

Related: Asia Poised To Overtake Europe As Global Solar Power Leader By 2016

Renewable energy source presently only accounts for just 1 percent of Japan’s energy needs. Some Japanese, as such, have welcomed the tariffs, despite acknowledging the higher price in electricity.

“The high purchasing price under the feed-in-tariff system is great news for us,” said Kazuhiko Katano, an official in Odawara’s Energy Promotion Division, to Reuters. “The higher the price, the faster the penetration of panels will be.”