Japan Set for the Top of the Solar Market

Japan had some optimistic economic news last week showing that the country’s GDP expanded by 0.9 per cent last quarter – its quickest pace in a year. The data suggest that Prime Minister Shinzo Abe’s aggressive stimulus measures may be working. They certainly seem to be working to improve this reputation: investors are more confident in a Japanese leader than any time since September 2010, according to a poll of investors, analysts and traders who are Bloomberg subscribers.

Optimism about Abe’s policies exceed that for counterparts in the US, Europe and China. Abe took office last December after winning an election on a platform of reflation.
But what does this mean for clean energy? The country’s generous solar feed-in tariff continues to bolster demand: Japan Asia Group’s plans are moving ahead to develop 500 megawatts of solar projects over the next three years,

Tetsuo Yamashita, chairman of the company, said at a meeting with analysts on 16 May. It has 24 solar plants already developed in Europe, but may trim its business in that region, Yamashita said. Japan Asia received a  1.6 billion yen loan for five solar projects in its home country from Shinsei Bank and Mitsubishi UFJ Lease & Finance Company, it said in a statement in March.

The preceding day, Eurus Energy Holdings announced plans to build a 115MW solar power station in northern Japan. The aim is to start construction of the 49 billion yen ($US480 billion) project this July and to begin running the station in November 2015. Eurus is a venture between Toyota Tsusho Corporation and Tokyo Electric Power Company (Tepco).

And on 14 May, Nippon Paper Industries said that its joint venture with Mitsubishi will begin construction on a 21MW solar power station in western Japan this autumn. The plant is expected to start selling electricity to Shikoku Electric Power in H2 2014.

Demand for solar power is increasing for non-residential projects, according to data released by the Ministry of Economy, Trade and Industry on 17 May. Approved applications for non-residential solar projects jumped to 11GW by the end of February from just under 6GW at the end of January.

The start of the feed-in tariff last year helped Sharp to reduce losses at its solar unit in the Asian country: global solar sales climbed 16 per cent to 260 billion yen ($US2.54 billion) last fiscal year, mainly driven by an increase in residential demand in Japan, the company said. Sharp’s operating losses fell to 4.4 billion yen ($US43 billion) for the 12 months ended 31 March compared with 21.9 billion yen ($US210  billion) the previous year.

The continued strong demand in Japan and the depreciation of the yen mean that Sharp could have a good 2013. It may want to differentiate its products from competitors – whether on price or quality – as most other major Japanese manufacturers have begun doing.

In any case, Japan is forecast to install 6-9.4GW of solar capacity this year under its feed-in tariff, according to Bloomberg New Energy Finance. This could make it the second-largest – or even the top – solar market in 2013.