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Japan challenges China to be world’s biggest solar market in 2014

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A “booming” solar market in Japan has seen the addition of more than 1GW of PV to the grid during April 2014, and could deliver just under 12GW more for the year, if estimates by Bloomberg New Energy Finance are on track.

BNEF, which expects Japan to commission between 10.3 and 11.9 GW of solar PV during 2014 – only slightly less than it predicts from China, the world’s largest market – said in a report last week that the Japanese solar market was benefiting from a 2012 incentive program that once boasted a renewable energy feed-in tariff among the highest in the world.

“What is happening in Japan is a boom,” said BNEF Solar Insight Manager Jenny Chase, noting that the nation had approved over 65GW of solar PV projects through its feed-in tariff, and that more of those were getting built.

And the majority of capacity added during this boom has come from utility-scale projects. According to Solar PV Magazine, more than half of the capacity put online in April came from installations in the 10kw-1MW range, a segment dominated by commercial and institutional systems.

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Takamatsu Ikushima Mega Solar Plant in Kagawa Prefecture, Japan (2.4MW)

“Developers are figuring out the next step. Getting land permissions, getting financing, getting the utility agreements to connect to the grid. And the economics of these projects are really very good,” Chase said.

Izumi Kaizuka, a solar analyst from RTS Corp, agrees. “Providers of residential systems are now focusing on small-scale commercial applications with the capacity 10kW to <50kW,” says Kaizuka.

“The project owner can sell 100% of the energy and the sales is easier and profitable. In case of <10kW application, owners can only sell excess energy.”

Last month, for example, Spanish solar developer Gestamp Solar announced plans to build a 31.6MW PV plant in the Japanese town of Daigo, backed by funding from Deutsche Bank.

PV Magazine reports the Madrid-based company was moved to develop its first project in Japan by the favorable solar conditions created by the country’s Ministry of Economy, Trade and Industry (METI).

Based in Madrid, Spain, Gestamp Solar has developed a number of large scale solar projects around the world, but this proposed 31.6 MW PV plant will be the company’s first venture into Japan. Mitsui and Tokio Marine Asset recently announced plans to fund for 8 Japan solar stations totalling 25MW.

But it hasn’t all been smooth sailing. Japan’s METI has since cut its feed-in price to 32 yen per kilowatt-hour (kwh) starting April for projects 10 kwh or more, down from 36 yen in the year ending in March and lower from the 40 yen in the first year of the incentive program.

And BNEF notes that it expects the nation’s current PV boom to be followed by a bust, and predicts that utility-scale PV installations will drop off “sometime after 2016”.

“Japanese policymakers didn’t expect this kind of explosive introduction of PVs (photovoltaics or solar panels) and that combined with a lack of knowledge of cost, structures and how PVs work, led to mistakes being made,” said Mika Ohbayashi, a director at the Japan Renewable Energy Foundation, in a Reuters report.

Reuters says industry participants report a market hampered by a lack of qualified technicians, delays in approvals, land titles issues and some cost-related delays in approved projects.

“The prices for solar were set too high, then since there was no breakdown by size, nearly everything has been mega solar,” said Hisahi Kajiyama, of the Fujitsu Research Institute, who advised former prime minister Naoto Kan on renewable energy.

Still, estimate from Japan’s Photovoltaic Energy Association remain optimistic. A report released by the industry group last week predict that Japan will have 100GW of solar power generation capacity by fiscal 2030, and 69GW in the year ending March 31, 2021 – even despite the cancellation of some projects.

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