Japanese solar market poised for explosive growth

Japan’s rapid adoption of solar energy

Japanese solar market poised for explosive growthJapan’s existing 7.4 gigawatts of installed solar capacity is expected to double this year, thanks to the country’s aggressive feed-in tariff.

Word of Japan’s rapid adoption of solar energy has the industry buzzing. Bloomberg New Energy Finance reported last week that Japan is expected to trail only China in new solar capacity installed this year. Several market analysts, like Lux Research, have reported that the solar market in Japan should remain strong for years to come as the Japanese people express increasingly strong opposition to nuclear facilities like the Fukushima Daiichi plant that failed after the 2011 earthquake and tsunami.

Japanese property owners and entrepreneurs aren’t wasting any time. They are installing solar. The new feed-in tariff that began in July coincides with a perfect storm of market factors that will enable explosive growth in the Japanese market.

When European countries like Germany and Italy launched their feed-in tariffs in the mid 2000s, they were the early adopters. Solar panel prices were high and the significant tariffs drove a market that couldn’t have existed without subsidies.

But when Japan implemented its feed-in tariff in July 2012, solar panel prices had just spent a year nose-diving and continued plummeting throughout 2012.

The low cost of solar panels combined with the high cost of electricity generated from imported fossil fuels and a short supply of power resulting from more than 50 nuclear facilities knocked offline by politics, the Japanese solar market is ripe for rapid advances. Utility companies are hungry to buy any kind of electricity, even renewable, from whoever is producing it. And companies like Lawson, which installed solar panels atop the roofs of 1,000 of its Japanese convenience stores, and international utility-scale solar developers are happy to sell power back to the grid.

Bloomberg New Energy Finance revised earlier estimates that the island nation would install 3.2 to 4 gigawatts of solar this year to forecast installations of 6.1 to 9.4 gigawatts, which could potentially trump China, which is expected to install 6.2 to 10.5 gigawatts this year.

Both figures are grand and illustrate a new global solar market with explosive potential. The most solar ever installed in a single country was 7.9 gigawatts in Italy in 2011.

Many analysts believe this is just the beginning of an industry that will ramp up in Japan and continue to grow as solar and other renewable energy sources only account for a tiny fraction of the country’s total generation capacity.