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The Limits of Japan’s Solar Energy “Gold Rush”

Ukishima Ground

TEPCO’s Ukishima megasolar plant in Kawasaki (SNA)

By Leo Mittag

SNA (Tokyo) — More than two years after the Fukushima disaster, the effects of the government’s first efforts to reduce the nation’s dependency on nuclear power are clearly visible to the citizens of Anpachi in Gifu Prefecture, where Sanyo, now Panasonic, constructed its 315-meter-wide Solar Ark consisting of over 5,000 solar panels. Besides generating 530,000 kilowatt hours annually, the site also features a museum and several outdoor exhibitions.

The Solar Ark visualizes Japan’s development into the world’s largest market for solar power in 2012, following the introduction of the new feed-in tariffs (FITs) in 2008. In 2013 alone, an estimated 5.3 gigawatts of capacity will be installed in Japan according to Kyodo News, dwarfed only by China’s 6.8 gigawatts. This rapid increase ranks Japan (11.7 gigawatts) third to Germany and Italy in terms of absolute cumulative capacity installed and makes it only the third country to exceed 10 gigawatts.

Since Japanese investors seem to prefer installing solar panels produced by Japanese companies, it is mostly producers like Kyocera, Panasonic, or Mitsubishi that seem to profit from the recent surge in demand for such panels.

“We recently revised our worldwide sales target for this fiscal year from 1GW to 1.2GW. This is an increase of 150% from 800MW in the last fiscal year,” as an official Kyocera spokesperson puts it.

This gold-rush atmosphere not only stimulates the domestic and international economies, but it also emphasizes the role of the FITs, which were significantly revised in 2012 through the insistence of Naoto Kan, and is currently set at 37.8 Yen per kilowatt.

This means that any power company is obligated to purchase solar power at a certain rate from any producer feeding electricity into the grid. Since the rate is much higher than the actual value, solar power plants have become more profitable and the price for panels has decreased.

However, the rate fixed by the Japanese government is among the highest in the world. Other countries that attempted to increase the share of solar power in their energy mix through FITs include Italy, Germany, and other European countries. Yet in the case of Germany, FITs rarely exceed 10 yen per kilowatt hour – less than a third than that of Japan.

Judging from these numbers, one would assume that the Japanese FITs are inefficient and set too high, but it has to be taken into consideration that Japan still has a long way to go as its FITs were introduced nine years after those of Germany, and prices are still about 2.5 times as high. Subsequently, with decreasing prices, the growth of the cumulative capacity will also become more significant and stable.

Within Japan, this development will mainly support the anti-nuclear lobby as it emphasizes the potential of renewable energies like solar power to become reliable and affordable alternatives to nuclear power. One gigawatt of capacity can replace one nuclear reactor, meaning that, this year alone, five reactors could theoretically be replaced.

However, the pro-nuclear Abe administration is now eyeing cuts in the FITs of up to 20%, according to the Nihon Keizai Shinbun.

This ambitious solar revolution which, according to official government figures, is aimed at generating 10% of all energy demand through solar power plants by 2050, bears certain risks. Unreliable weather conditions and a lack of space cause solar power to be more expensive in Japan than in countries like Spain or the United States. Furthermore, the spatial concentration of most capacity in Hokkaido may result in an unstable dependency.

The government’s high FITs and the results they seem to be producing have not, however, led all analysts to see a bright future for Japan’s efforts to rely on renewable energies. Ulrike Schaede, professor at the University of California San Diego, tells the SNA that she is among the skeptics: “I don’t think that, given its climate, Japan will ever be able to rely on solar and wind in large amounts.”

Leo Mittag is a contributing writer to the Shingetsu News Agency focusing on energy policy issues.

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