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Japan’s generous solar FIT 'will open door to foreign firms'

Japan’s generous new PV feed-in tariff (FIT) — to be formally adopted by the government as early as next week — is likely to prove more durable and open to foreign companies than many pessimists assume, according to experts. Tokyo is expected to embrace the proposals put forward by a steering committee in April, offering PV system owners ¥42 ($0.53) per kWh from July — and slightly less for other renewables ­technologies.        Japan’s new solar FIT will be among the highest in the world, uncapped, and good for 20 years at systems larger than 10kW.

At a time when many core ­European demand centres are stagnant or shrinking, the prospect of a booming Japanese market has led to a frenzy of excitement among global PV manufacturers and developers.

Still, the precarious Japanese government — which has seen seven prime ministers over the past six years — remains a ­major concern for many potential ­investors, who have been burned repeatedly in recent years by countries that have slashed their FITs with little warning — and, in some cases, retroactively.

Those fears have been fuelled by the lofty level of Japan’s new FIT.

Although system costs are extremely high in Japan — driven largely by the inflated yen — the FIT will still offer one of the highest internal rates of return in the global PV sector over the next few years.

But experts on the Japanese market are downplaying such concerns, saying that while FIT reductions are to be expected in the coming years, the ­Fukushima nuclear crisis has resulted in a broad and durable ­pro-­renewables political ­consensus.

“This will not be another case like the Czech Republic or somewhere like that, where the government got burned [with a too-high FIT] because they had no clue about PV,” says James Plastow, global product manager for Japanese module maker ­Solar Frontier.

“The Japanese government has been subsidising solar energy for more than 20 years,” Plastow tells Recharge. “They know what they’re doing.”

Izumi Kaizuka, manager of Tokyo solar consultancy RTS, agrees.

“Most of the major political parties are now very pro-renewables,” she says. “So regardless of whether the ruling party changes over the next few years, we think the FIT scheme will be left alone.”

Experts also brush aside concerns that the Japanese PV ­market will remain closed to foreign manufacturers and developers, as it largely is today.

They claim the government is primarily interested in fostering a flourishing renewables market, with supporting home-grown players such as Sharp, Panasonic and Kyocera a distant secondary concern.

Kaizuka says the bureaucratic burden of the market is likely to remain high — but that it applies to all players.

She concedes that domestic firms will inevitably have a head start given their familiarity with the system, but points out that a number of foreign companies are already making inroads.

Kaizuka warns that the biggest bottleneck for the local PV sector is a lack of construction workers, given the huge repairs to infrastructure that must be undertaken as a result of last year’s earthquake and tsunami.

The domestic market will more than double this year to 2.2-2.5GW before rising steadily to about 3.4GW by 2015, Kaizuka predicts.


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