Japanese FITs on July 1
Japan has officially put the finishing touches on its feed-in tariffs. The one for solar and wind are especially high and guaranteed for 20 years.
On July 1, 42 Yen (0.42 euros) will be paid for a kilowatt-hour of solar power from arrays with an output of at least 10 kilowatts; 23.1 yen for wind power from turbines with an output of at least 20 kilowatts; and 27.3 for geothermal power from units with an output of at least 15,000 kilowatts. The tariffs for solar and wind are guaranteed for 20 years; the one for geothermal, for 15. The extra cost will be passed on to ratepayers. The government expects monthly power bills for households to increase by 87 yen on the average – less than a euro a month.
At present, Japan only gets 1.6 percent of its energy from renewables. Up until the accident in Fukushima, the Japanese got a third of their power from nuclear plants and were the third biggest nuclear country in the world behind the United States and France. Now, the government plans to increase solar installations threefold from 1.3 gigawatts last year to 3.2-4.7 gigawatts next year.
The rates are likely to cause a run on the Japanese market, which now offers PV feed-in tariffs twice as great as in Germany, currently the world's largest market. In Italy, which has given Germany a run for its money over the past few years, feed-in rates for photovoltaics are also much lower than in Japan. Companies have long been getting into position; from October to April, Japanese project developers announced construction of five large solar farms. Kyocera is also looking into constructing a solar farm with a capacity of 70 megawatts, which would make it the largest one in Japan. With headquarters in Tokyo, Solar Frontier also inaugurated a new Japanese plant with a capacity of 900 megawatts in February 2011, even before the tsunami in Fukushima. Panasonic is also looking into how to serve the home market with solar panels from its new plant in Malaysia, which will go into production in December, thereby increasing the firm's production capacity from 600 to 900 megawatts per year.
Up to now, Japanese firms have dominated the Japanese market. Jesse Pichel, Min Xu and Scott Reynolds, analysts at Jeffries investment bank, say that Japan therefore has some of the highest market prices in the world. But the planned market growth has drawn the attention of foreign manufacturers. China's Yingli has already founded a Japanese subsidiary to set up a sales structure. "It is very important for Yingli to be close to customers," says Masaki Mizuta, head of Yingli's Japanese subsidiary. The analysts at Jefferies believe, however, that Chinese and Taiwanese manufacturers will bring down prices in local partnerships. (Sven Ullrich / Craig Morris)