Nearly 4,000 MW (4 GW) of new solar photovoltaic capacity was installed in Japan between April 1st and October 31st 2013, according to a new report released by Japan’s Ministry of Economy, Trade and Industry (METI). To be exact, 3,993 MW of new PV capacity was installed, based on the data compiled by METI’s Agency for Natural Resources and Energy (ANRE).
“Photovoltaic power facilities steadily continue to be introduced, and the total combined capacity of such facilities as of October 31, 2013, reached 5,852,000 kW after the feed-in tariff scheme was introduced,” METI stated in the report.
Japan’s total installed solar PV capacity currently sits (as of October 31st 2013) right around 11.226 GW — so the 3.99 GW of new solar PV capacity represents quite significant growth. Of this new capacity, roughly 870 MW is from residential projects, and the other 3,123 MW is from non-residential systems.
From July 1, 2012, to March 31, 2013, Japan’s total PV capacity reached 1,673 MW, with residential making up 969 MW and non-residential 704 MW. Prior to the introduction of Japan’s feed-in tariff program, which went into effect July 1, 2012, combined total solar capacity in the country was at about 5.6 GW.
Japan became the first country in the world to surpass the 1 GW of cumulative PV capacity back in 2004. METI launched a subsidy program for residential PV systems in 1994, according to data from NPD Solarbuzz. Initially, the subsidy covered 50% of the cost of PV systems. As a result, until 2005, Japan had the largest installed PV capacity of any country in the world.
Solar PV deployment in Japan slowed in the mid-2000s, due in part to the country’s ten-year energy plan that was approved in March 2002 and called for an expansion of nuclear generation by approximately 30% by 2011. The plan included the construction of between nine and 12 new nuclear power plants, equivalent to 17.5 GW of new nuclear generating capacity.
Of course, after the Fukushima disaster in 2011, the plans for an expansion of the country’s nuclear capacity were nixed — hence the rapid increase in solar capacity since then.
Nathan For the fate of the sons of men and the fate of beasts is the same; as one dies, so dies the other. They all have the same breath, and man has no advantage over the beasts; for all is vanity. – Ecclesiastes 3:19
When it comes to global electricity generation, coal is still king – but not for long
Fast-changing economics mean renewable energy worldwide will represent 34% of all installed capacity by 2030, according to the World Energy Perspective: Cost of Energy Technologies — a report from the World Energy Council (WEC) and Bloomberg New Energy Finance (BNEF).
The report finds many clean energy technologies are already cost competitive with fossil fuels and only getting cheaper, echoing another analysis that found US wind and solar costs fell 50% since 2008. As a result, fossil fuel’s slice of the world energy pie is projected to fall fast, from 67% in 2012 to 40%-45% in 2030.
Falling Renewable LCOE Powers Clean Energy Surge
Vast differences in the cost of building and generating power exist across the globe, but one trend is clear – the levelized cost of electricity (LCOE) continues to fall for mature renewable energy technologies, placing them close to grid parity with fossil fuels. In addition, the cost of producing power from renewables fall continue at a rate related to the level of usage, a trend known as the “experience curve.”
Our study finds that although fossil fuels continue to dominate, renewable energy and the investment appetite for them are growing.
With wider deployment the price of renewables will fall, reducing the risk for investors, and we expect to see greater uptake over the years. — Guy Turner, Chief Economist at BNEF.
The WEC report uses several cost metrics exist to evaluate power generation including capital expenditures, operating expenditures, and capacity factor, but LCOE stands as arguably the most important indicator of renewable energy’s value because it’s the only one that evaluates the total lifecycle costs of producing a megawatt hour (MWh) of power.
LCOE is best explained as the price a project must earn per MWh in order to break even on investment and considers cash flow timing, development and construction, long-term debt, and tax implications to equally evaluate all energy technologies on an equal basis in terms of their actual costs.
But most importantly, LCOE underlines the ascendance of renewable energy across the world – especially wind and solar.
Wind Power Gusts Ahead
Wind power has already become the largest non-hydro renewable electricity source and is projected to more than triple from 5% of global installed capacity in 2012 to 17% by 2030, breezing past large hydropower. From 2000-2010 global onshore and offshore wind capacity increased 30% per year, reaching 200GW installed in 2010.
Onshore wind’s LCOE has fallen 18% since 2009 on the strength of cheaper construction costs and higher capacity factors.
Turbine costs have fallen nearly 30% since 2008, outpacing the traditional experience curve.
The LCOE for onshore wind is cheapest in India and China, running between $47-$113 and making well-sited wind farms in these countries among the cheapest in the world – an incredibly important factor considering their surging demand for power is currently being met by coal.
The LCOE picture isn’t as clearly defined for offshore wind, as 95% of the world’s 4GW installed offshore wind capacity is located in European waters.
By 2020 installed capacity growth in Asia will surge, offsetting Europe’s dominance with 40% of all installed annual capacity – China alone will have 30% of all new capacity. As more offshore wind comes online in different markets, LCOE will become clearer.
Solar’s Remarkable Shine
But if wind’s LCOE drop has been steady, solar energy’s has been meteoric.
The WEC reports feed-in tariffs and plummeting photovoltaic module prices make solar competitive with most forms of power generation – in some markets with expensive power, like Germany, businesses with installed solar now find using their generated power more profitable than selling it to the grid.
As a result, solar power’s worldwide capacity will absolutely boom, growing from 2% of installed capacity in 2012 to 16% by 2030. China and Japan will be biggest beneficiary of solar’s rise, with China set to exceed 50GW installed solar by 2020.
The WEC’s forecast for solar power is incredible, but even this outlook is underestimates solar’s clean energy potential, because it only includes projects above 1 megawatt in capacity – completely ignoring the spread of small-scale rooftop solar and the rise of distributed generation
Fossil Fuel’s Achilles Heel: Operational Costs
In spite of falling renewable costs, fossil fuel generation is still cheaper in most regards, except for one – the price of operation.
This trend is most clearly seen in developed nations like Western Europe, America, and Australia, where the WEC says the potential for significant amounts of new coal generation to come online is low.
Today, developing nations buck this trend and coal is a growing generation source in Brazil, China, and India. In fact low capital costs make China the cheapest country to generate power from coal, less than half the LCOE in Europe or the US.
Put it all together, and it’s clear to see global energy economics are changing fast.
While coal still dominates global electricity production, renewables are catching up with net investment growing seven-fold from 2004-2011, outpacing fossil fuels for the second year in a row in 2012. And as more renewables come online, their costs continue to fall faster and faster from larger economies of scale.
The cost of most technologies, and most dramatically that of solar PV, is coming down with production scale-up in many areas of the world.
With such growth, grid parity will become reality in the coming years. — Dr. Christoph Frei, World Energy Council Secretary General
New research conducted by NPD Solarbuzz and featured on their blog this past week shows that Japanese solar photovoltaic “PV” installations have now passed 10 GW for cumulative PV capacity, only the fifth country to reach the mark. Of the previous four — Germany, Italy, China, and the US — the latter two only reached the milestone within the past few months, highlighting Japan’s achievement.
Japan Hits 10 GW Milestone
Writing on the Solarbuzz website, NPD Group Vice President Finlay Colville pointed to three landmark high-points along Japan’s solar PV leadership, highlighting not only their recent 10 GW milestone, but also that Japan was the first country to reach the 1 GW of cumulative solar PV back in 2004. This was helped along by;
The Ministry of Economy, Trade and Industry (METI) launched a subsidy program for residential PV systems as far back as 1994. Initially, the subsidy covered 50% of the cost of PV systems. The budget for FY 1994 was 2 billion Yen.
Until 2005, Japan had the largest installed PV capacity of any country in the world. This early leadership position was achieved through a well-managed set of programs, coupled with attractive market incentives.
The early growth of the Japanese PV market was a strong factor in establishing Japanese manufacturing as the first dominant force in the solar PV industry. Manufacturers that benefited from the first phase of government initiatives include several of the companies that are now leaders in the domestic PV industry revival: Sharp, Sanyo and Kyocera.
In the Face of Fukushima
Sadly, another factor that has to be considered in Japan’s recent increase in solar PV installation must be the fallout from the Fukushima Daiichi nuclear ‘disaster’ which followed the massive earthquake and subsequent tsunami on March 11, 2011. Corollary evidence might suggest that the launch of the feed-in tariff program in July 2012 which was focused towards fostering the development and installation of renewable energy throughout the country was a direct response to the subsequent shut down of all of Japan’s nuclear reactors in the wake of the disaster. Regardless of the why, however, this feed-in tariff has been instrumental in accelerating the deployment of large-scale renewable technologies, helping the country’s PV market grow rapidly over the past 12 months.
2013 Sees Regular Growth
There is a litany of Japanese solar stories covered here on CleanTechnicato back up these numbers, not the least of which was a report published in March of this year that predicted the number of Japanese solar installations would overtake the US and Germany this year.
“[the] Japanese [PV] market is set to grow by 120 percent in 2013 and install more than 5 gigawatts (GW) of new capacity … with installations expected to exceed 1 GW in the first quarter alone.”
At the end of May, IHS followed up their earlier report, revealing that not only had Japan reached the 1 GW mark for installations in the first quarter, but that they had installed 1.5 GW, “a stunning 270 percent in the first quarter of 2013″ and were on track to become the “world’s largest solar revenue market in 2013″. While the Japanese Agency for Natural Resources and Energy reported that Japan had added 1,240 MW of solar installations in April and May.
Again borrowing from Colville’s piece on the Solarbuzz website, Japan’s PV industry has benefited greatly from renewed interest in the sector, resulting in;
Cumulative solar PV installed in Japan broke through the 10 GW barrier during August 2013 and exceeded 10.5 GW at the end of August.
Until the end of 2012, the Japanese PV market had been heavily weighted towards the rooftop segment, with 97% of PV capacity.
During the first eight months of 2013, the ground-mount segment has accounted for 27% of new solar PV capacity installed.
Over the first three quarters of calendar year 2013, Japan is forecast to install more PV capacity than during the entire three-year period spanning 2010 to 2012.
At the end of August 2013, rooftop solar PV installations remain the dominant type of PV installations by project number and by MW volume, with 89% of market share by capacity. The remaining 11% is spread across the ground-mount and off-grid segments.
Writing more recently, Giles Parkinson from RenewEconomyrecently noted that “China, Japan, and the US will compete for domination in the coming years,” while noting that fresh faces are going to be growing up over that same period, with “strong markets in the rest of Asia, Africa and South America … also emerging.”
Looking back over the past few months of the year, we can see just how efficiently the Japanese solar PV industry has been working. Earlier this month it was revealed that Japan was one of only two countries to be home to a competing solar module manufacturer, outside of China (which is dominating the sector). In May it was revealed that by February of this year, Japan had 12.2 GW of new solar installations in the pipeline, including a 400 MW solar power park approved for installation on a remote Japanese island located off the southern coast. Again in May, the Deutsche Bank noted that the Japanese market could reach an annual “run rate” of 7 to 9 GW.
Japanese Solar in the Future
Looking forward, new figures from the Mercom Capital Group reiterate their earlier estimations of a global installation forecast for solar PV of approximately 38 GW by the end of the year, including 8.5 GW installed in China, 7 in Japan, and another 4.5 in the US.
“After years of overcapacity, bankruptcies and record low prices we are now seeing price stabilization, higher capacity utilization rates and a move towards supply-demand equilibrium,” explained Mercom Capital Co-Founder and CEO Raj Prabhu in a blog post. “Market conditions for solar look much better than they did just three months ago and we are reiterating our global installation forecast of ~38 GW for 2013. One of the big overhangs, the China-EU trade case, has been settled, which could have otherwise set off an all-out trade war. This brings some sorely needed certainty to the market.”
A Challenging Future
Both NPD Solarbuzz and Mercom are predicting challenges ahead for Japan, however, with module supply shortages, grid connection issues, and overcapacity concerns. Mercom note that there are reports suggesting “some of the PV project [applications] are getting rejected citing overcapacity and grid stability issues” — adding that the Ministry of Economy, Trade, and Industry have admitted that “some of the facilities approved have not begun construction and they are conducting a survey to find reasons behind the delays including whether there is a shortage of materials.”
All in all, Japan’s solar industry is heading in a good direction, and minus a few bumps along the way, it will be no real surprise to see Japan at the top of solar PV tables for years to come.
Joshua S Hill I’m a Christian, a nerd, a geek, a liberal left-winger, and believe that we’re pretty quickly directing planet-Earth into hell in a handbasket! I work as Associate Editor for the Important Media Network and write for CleanTechnica and Planetsave. I also write for Fantasy Book Review (.co.uk), Amazing Stories, the Stabley Times and Medium. I love words with a passion, both creating them and reading them.