Japan is poised to overtake Italy and become the world’s second-biggest market for solar power, as incentives starting July 1 propel sales. It could eventually top Germany, which holds the No. 1 spot.
Industry Minister Yukio Edano on Monday set a price for solar electricity that is about triple what industrial users now pay for conventional power. That may drive at least $9.6 billion in new installations with 3.2 gigawatts of capacity, Bloomberg New Energy Finance forecast. That is about equal to the output of three atomic reactors.
“The tariff is very attractive,” said Mina Sekiguchi, associate partner and head of energy and infrastructure at KPMG in Japan. “The rate reflects the government’s intention to set up many solar power stations very quickly.”
Prime Minister Yoshihiko Noda’s effort to cut dependence on atomic energy, which provided about 30 percent of Japan’s power before the Fukushima nuclear meltdown in 2011, will help a solar industry suffering from incentive cuts across Europe.
Under the new program, utilities will buy solar, biomass, wind, geothermal and hydro power. All costs will be passed on to consumers in surcharges, which the government estimates will average about ¥100 a month.
The measures beginning in July expand on a program started in November 2009 that requires utilities to buy unused solar power. That expanded the market for rooftop residential panels.
The five largest Japanese solar projects planned or under consideration were all announced between October and April, as the government worked out details of the feed-in tariff program, according to New Energy Finance.
Dozens of companies have announced plans to take advantage of the subsidies. Yingli, a solar energy company based in Baoding, China, has set up a unit in Japan.
“Being closer to the customers is extremely important for Yingli,” Masaki Mizuta, managing director of Yingli Japan, said May 4. “We also believe that this is a key success factor in Japan.”
Kyocera is “aggressively” expanding its solar division, said Sanae Iwasaki, a spokeswoman for the company, which is in Kyoto, Japan.
“More players will enter the market for investment purposes,” Ms. Iwasaki said. “There will be more importance on the quality. We will pursue cost-cutting by producing panels with higher conversion efficiency.”
But the push is also raising concern among Japanese business groups that aid for clean power will raise bills and slow the Japanese economic recovery.
“This is a mechanism with a high degree of market intervention, by setting tariffs artificially high and making users shoulder the cost,” said Masami Hasegawa, senior manager of the environmental policy bureau of Keidanren, the most powerful Japanese business lobby, which counts Toyota Motor and Nippon Steel as members. “We question the effectiveness of such a scheme.”
Utilities will pay ¥42, or about 53 cents, per kilowatt-hour for 20 years to solar power producers, almost twice the rate in Germany, the world’s biggest market by number of installations. The solar tariff was among incentive rates for clean energy announced Monday by the Ministry of Economy, Trade and Industry.
Developers are counting on the subsidies and have accelerated construction plans this year for solar parks.
“We hear every day a new announcement of a megawatt-scale project,” Izumi Kaizuka, a solar industry analyst at RTS, said in Munich, referring to projects of one megawatt or bigger.
Japan ranked sixth worldwide by new installations last year, when it added 1.3 gigawatts of solar to raise its installed base to 5 gigawatts. Next year, builders will construct roughly triple that level, or another 3.2 gigawatts to 4.7 gigawatts, New Energy Finance forecasts. A gigawatt is enough to supply about 243,000 homes in Japan.
Only China will exceed Japan in terms of solar capacity growth, New Energy Finance estimates.
Japanese companies like Kyocera and Sharp, which kept the photovoltaic industry alive when the United States scrapped investments in the 1990s, are gearing up to supply their home market.
“We no longer have enough electricity, especially during the day, and that is when solar power can help,” said Mikio Katayama, chairman of the electronics manufacturer Sharp and the Japan Photovoltaic Energy Association. “This is a very good rate to promote investment and megasolars.”
The German company Q-Cells overtook Sharp as the biggest solar cell producer in 2007, according to the International Energy Agency. Now Chinese manufacturers like Suntech Power Holdings and Yingli dominate the industry as their lower prices helped push Q-Cells and several other Western rivals into bankruptcy protection.
Japan got about 1.6 percent of its energy from renewables in 2011, the smallest portion among the Group of 7 industrialized countries after Canada. It trailed the United States and France in the Group of 7 in atomic power consumption. The shift toward solar reflects concern that the cost of fossil fuels will rise in the coming decades.
“Japan’s manufacturing economy was severely challenged by the oil crisis of the 1970s,” said Arthur Mitchell, senior counselor in the Tokyo office of the law firm White & Case, whose expertise includes environmental and power policies. “Assuming that the price of energy and almost everything else will rise, Japan is betting it will once again become the most efficient user of energy.”
The ¥42 rate, aimed at 10-kilowatt or bigger plants, is above the ¥38 price the industry expected, Takashi Watanabe and Daiki Takayama, Tokyo-based analysts for Goldman Sachs Group, wrote in a note in April.
Germany is cutting subsidies and plans to offer €0.14 to €0.19, or 17 to 24.6 cents, per kilowatt-hour, depending on size. Italy’s rate is €0.13 to €0.24.
Utility-scale projects may earn 6 percent internal rates of return, and that could increase to more than 18 percent if developers can bring system costs closer to international levels, Travis Woodward, a New Energy Finance analyst, wrote in a note on June 6. He also estimates residential solar systems are being sold in Japan for $6.28 a watt, more than double the $2.70 a watt price in Germany.
Japan is one of the highest average-selling-price markets, dominated by a few large installers, the Jefferies Group analysts Jesse Pichel, Min Xu and Scott Reynolds said in an April 30 report.
“We expect Chinese and Taiwanese producers to erode the high domestic share through local partnerships to drive down cost,” the analysts said.
SOURCE: http://www.nytimes.com/2012/06/19/business/global/japan-poised-to-become-second-biggest-market-for-solar-power.html?_r=1&pagewanted=all
Industry Minister Yukio Edano on Monday set a price for solar electricity that is about triple what industrial users now pay for conventional power. That may drive at least $9.6 billion in new installations with 3.2 gigawatts of capacity, Bloomberg New Energy Finance forecast. That is about equal to the output of three atomic reactors.
“The tariff is very attractive,” said Mina Sekiguchi, associate partner and head of energy and infrastructure at KPMG in Japan. “The rate reflects the government’s intention to set up many solar power stations very quickly.”
Prime Minister Yoshihiko Noda’s effort to cut dependence on atomic energy, which provided about 30 percent of Japan’s power before the Fukushima nuclear meltdown in 2011, will help a solar industry suffering from incentive cuts across Europe.
Under the new program, utilities will buy solar, biomass, wind, geothermal and hydro power. All costs will be passed on to consumers in surcharges, which the government estimates will average about ¥100 a month.
The measures beginning in July expand on a program started in November 2009 that requires utilities to buy unused solar power. That expanded the market for rooftop residential panels.
The five largest Japanese solar projects planned or under consideration were all announced between October and April, as the government worked out details of the feed-in tariff program, according to New Energy Finance.
Dozens of companies have announced plans to take advantage of the subsidies. Yingli, a solar energy company based in Baoding, China, has set up a unit in Japan.
“Being closer to the customers is extremely important for Yingli,” Masaki Mizuta, managing director of Yingli Japan, said May 4. “We also believe that this is a key success factor in Japan.”
Kyocera is “aggressively” expanding its solar division, said Sanae Iwasaki, a spokeswoman for the company, which is in Kyoto, Japan.
“More players will enter the market for investment purposes,” Ms. Iwasaki said. “There will be more importance on the quality. We will pursue cost-cutting by producing panels with higher conversion efficiency.”
But the push is also raising concern among Japanese business groups that aid for clean power will raise bills and slow the Japanese economic recovery.
“This is a mechanism with a high degree of market intervention, by setting tariffs artificially high and making users shoulder the cost,” said Masami Hasegawa, senior manager of the environmental policy bureau of Keidanren, the most powerful Japanese business lobby, which counts Toyota Motor and Nippon Steel as members. “We question the effectiveness of such a scheme.”
Utilities will pay ¥42, or about 53 cents, per kilowatt-hour for 20 years to solar power producers, almost twice the rate in Germany, the world’s biggest market by number of installations. The solar tariff was among incentive rates for clean energy announced Monday by the Ministry of Economy, Trade and Industry.
Developers are counting on the subsidies and have accelerated construction plans this year for solar parks.
“We hear every day a new announcement of a megawatt-scale project,” Izumi Kaizuka, a solar industry analyst at RTS, said in Munich, referring to projects of one megawatt or bigger.
Japan ranked sixth worldwide by new installations last year, when it added 1.3 gigawatts of solar to raise its installed base to 5 gigawatts. Next year, builders will construct roughly triple that level, or another 3.2 gigawatts to 4.7 gigawatts, New Energy Finance forecasts. A gigawatt is enough to supply about 243,000 homes in Japan.
Only China will exceed Japan in terms of solar capacity growth, New Energy Finance estimates.
Japanese companies like Kyocera and Sharp, which kept the photovoltaic industry alive when the United States scrapped investments in the 1990s, are gearing up to supply their home market.
“We no longer have enough electricity, especially during the day, and that is when solar power can help,” said Mikio Katayama, chairman of the electronics manufacturer Sharp and the Japan Photovoltaic Energy Association. “This is a very good rate to promote investment and megasolars.”
The German company Q-Cells overtook Sharp as the biggest solar cell producer in 2007, according to the International Energy Agency. Now Chinese manufacturers like Suntech Power Holdings and Yingli dominate the industry as their lower prices helped push Q-Cells and several other Western rivals into bankruptcy protection.
Japan got about 1.6 percent of its energy from renewables in 2011, the smallest portion among the Group of 7 industrialized countries after Canada. It trailed the United States and France in the Group of 7 in atomic power consumption. The shift toward solar reflects concern that the cost of fossil fuels will rise in the coming decades.
“Japan’s manufacturing economy was severely challenged by the oil crisis of the 1970s,” said Arthur Mitchell, senior counselor in the Tokyo office of the law firm White & Case, whose expertise includes environmental and power policies. “Assuming that the price of energy and almost everything else will rise, Japan is betting it will once again become the most efficient user of energy.”
The ¥42 rate, aimed at 10-kilowatt or bigger plants, is above the ¥38 price the industry expected, Takashi Watanabe and Daiki Takayama, Tokyo-based analysts for Goldman Sachs Group, wrote in a note in April.
Germany is cutting subsidies and plans to offer €0.14 to €0.19, or 17 to 24.6 cents, per kilowatt-hour, depending on size. Italy’s rate is €0.13 to €0.24.
Utility-scale projects may earn 6 percent internal rates of return, and that could increase to more than 18 percent if developers can bring system costs closer to international levels, Travis Woodward, a New Energy Finance analyst, wrote in a note on June 6. He also estimates residential solar systems are being sold in Japan for $6.28 a watt, more than double the $2.70 a watt price in Germany.
Japan is one of the highest average-selling-price markets, dominated by a few large installers, the Jefferies Group analysts Jesse Pichel, Min Xu and Scott Reynolds said in an April 30 report.
“We expect Chinese and Taiwanese producers to erode the high domestic share through local partnerships to drive down cost,” the analysts said.
SOURCE: http://www.nytimes.com/2012/06/19/business/global/japan-poised-to-become-second-biggest-market-for-solar-power.html?_r=1&pagewanted=all
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