Japan Witnessing Solar Energy Investment Boom

Recent change in policies and a new feed in tariff structure have again pointed towards a greater interest in solar energy development.

Release Date: 03-Dec-2012

Solar energy is certainly ruling the roost for renewable energy in Japan after hydroelectricity. Other than hydro and solar, wind and geothermal are the other sources which have been considerably developed in the country for power generation. Of these varied sources, solar energy seems to be at the top priority of the government’s renewable energy development agenda. The country has significant solar energy reserves which are being tapped for power generation. New policies and tariff structures have also encouraged solar development over other renewable sources of energy.

Japan has three major renewable source of energy currently being used for power generation apart from hydroelectricity, viz. wind, geothermal and solar. The total geothermal installed capacity in the country in 2010 was 536 MW with electricity generation at 3.5 TWh per year. With this capacity it ranks 8th in the world’s top ten geothermal power generating countries. Japan started building its geothermal resources in the 1960s but has been able to put together a humble installed capacity.

The recent change in policies and a new feed in tariff structure have again pointed towards a greater interest in solar energy development as opposed to wind or geothermal. Wind energy development has further been discouraged due to increasingly stringent environment impact assessment procedures. A new structure with minimum price rules are likely to encourage investments in the fledgling solar power generation sector helping the government reach its targets and also compensating for the closed down nuclear power generators in the public interest. The power generation from nuclear plants not happening anymore, it does pose a problem for the government and solar energy development certainly provides with the solution.

Under the new structure and scheme the electricity utilities will have to buy electricity generated from solar and wind power plants as part of their repertoire for selling power to the consumers. The utilities will have to pay a certain amount for the purchase of this power which will be given to the generators as an incentive for investing into the unconventional form of power generation. Solar power will be sold at JPY 42/ kWh or USD 0.5 and wind at JPY 23/ kWh or USD 0.29, a difference that tells how solar is being given preference over wind.

For more information visit “Japan Solar Power Sector Analysis”

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