The Japanese Solar PV market is expected to continue its high growth trajectory and fare significantly well in 2011 because of the continued support from the government in the form of incentives, achievable numerical RE targets, and launch of industry specific programs.
According to Frost & Sullivan’s Asia Pacific Program Manager for the Energy & Power Systems Practice, Suchitra Sriram, the primary drivers for the aggressive adoption of Renewable Energy (RE) technologies in Japan is the strong government commitment towards ensuring energy supply security, mitigating the impact of Greenhouse Gas (GHG) emissions, and identifying its key role in industry policy. Hence, from time to time, RE policies and targets are revised to facilitate ease of doing business as well as to assertively stimulate growth.
She adds, “The Japanese government has put forth high targets for the RE industry which include a 25.0% reduction of GHG emission by 2020 based on 1990 levels, an introduction of a Feed-in Tariff (FiT) for projects of all capacities and types of RE, and an increasing the percentage of RE in the primary energy source to 10.0% by 2020.”
In terms of industry specifics, investments in onshore wind power market which was centered on Japan has been declining over the last 3 years not only because of the introduction of new rules in 2007 that mandated wind turbines to get all clearances that were applicable to tall buildings but also due to high wind potential areas being affected by typhoons and grid interconnection issues.
“Hence, in 2011, market opportunities for this technology look bleak in Japan. As a result, domestic wind turbine manufacturing companies will see little growth opportunities in this saturated market and will be expanding their footprint in lucrative overseas markets like Thailand and Vietnam,” Suchitra says.
Likewise, the solar power market in Japan witnessed slow growth between 2006 and early 2009 due to the discontinuation of subsidies for households in 2005. However, the Japanese government re-introduced its FiT policy in 2009 to spur the domestic market.
“Japan’s FiT policy in 2009 resulted in a strong growth in solar panel shipment during the end of 2009 that continued into 2010. Almost 1 GW of solar PV was installed in Japan during 2010 and the market outlook looks very positive. Japan is expected to post another 1 GW in 2011,” Suchitra says.
As a result, Japan’s solar PV market size is expected to swell from US$7.3 billion in 2010 to nearly US$9.0 billion in 2011, making it one of the largest markets in Asia Pacific. Japan’s dominance in the Asia Pacific solar PV power market will continue in 2011.
Suchitra adds, “This modular technology continues to hold household owners’ interest as Japan is one of the countries where electricity tariff charged by utilities for residential customers is the highest in the world. The country is also home to several of the world’s leading solar cell and module manufacturers who invest significantly in R&D to improve product efficiency. Besides, accelerating global demand from both established and emerging markets have forced them to ramp up their production capacities and set up new plants and sales offices globally.”
Besides solar PV power, the growth rate of the other RE technologies such as geothermal and small hydropower has been very low during 2010 and is expected to remain subdued in 2011, too. In 2009, few geothermal projects were started but none of them are expected to come online during 2011. As there is a proposal to apply FiT to these technologies, its uptake is likely to gain momentum from 2012 onwards.
The bioenergy market fared well in 2010 and was estimated at US$700-750 million and is expected to grow between 12.0 and 15.0% in 2011 largely driven by paper mills, and wood processing industries.
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