Is Japan losing its Solar focus?

Japan has seen an unprecedented boom in solar power generation after the country shut down its nuclear power plants and started to give a generous feed in tariff (higher electricity prices) for solar electricity. This has led to 6+GW of installations in the last 2-3 years and made Japan the second largest installer in the world, after China. Driven by attractive tariffs financial investors have put money in droves in large scale solar power plants in the country, using any piece of cheap land to install PV and thin film solar panels. However this boom is set to slow down, as it comes under structural impediments of the Japanese power sector.

The Japanese power sector is not developed as the other western power markets where the transmission, generation and distribution is uncoupled. This allows for greater play of market forces and compels the utilities to be more efficient and responsive to customer demands. Japan’s power sector is controlled by 10 utilities that control both the generation as well as distribution of power. They have not invested too much in the smart grid and making the grid amenable for increasing penetration of renewable energy, which is intermittent in nature. Everything was fine as solar power penetration in Japan was negligible. Japan has also never been a wind energy friendly country relying mostly on imported coal and gas for power. Now the country’s grid is failed to integrate greater amounts of solar energy as the networks are old and do not have the capacity.

Read more about the Japanese Solar Industry.

Kyushu which has seen the most amount of solar installation has its utility shutting the doors on new solar power installations. Even though a number of solar power plants have gotten the required land and government approvals, these projects are stuck now because they can’t get grid access approvals. Utilities have little incentive to increase distributed or utility solar power, as it eats up their own demand and revenues. They have to be prodded by the government through laws and rules to increase the uptake of green energy, which is both environment friendly and leads to greater energy security. Japan which has almost no domestic sources of fossil fuels benefits greatly from solar power, as it reduces dependence on energy imports. I think that the Japanese government needs to increase its focus on solar energy. The last government has revolutionized the solar sector by giving high feed in tariffs. The new Abe government is more pro-nuclear and pro-industry. However, it needs to keep its solar focus for the long term benefit of the country.