Japan's high solar subsidy has attracted many Japan-based firms to enter the market. In addition, international firms have been hoping to enter the market as well. However, Japan has certain entry barriers as citizens often prefer to use domestic brands.
Japan-based brands such as Softbank, Toshiba, Sharp, Panasonic and Kyocera have been eager to develop the domestic solar market. The size of solar projects has been growing due to high demand and strong investment.
For international firms, investing into solar PV systems or power plants is a way to obtain subsidies from the government. Production costs, revenues, profits, and subsidies are factors that affect the internal rate of return (IRR) of the projects.
Solar makers noted that Japan is considered a developed solar market but complexity remains high. On the other hand, once projects are constructed, operations are relatively stable, therefore, international firms have been interested in investing in solar PV systems in Japan due to the relatively low risks.
Despite the fact that solar incentives in some developing countries are high, problems such as long application processes and delayed subsidy payments have been seen as risks by international investors.
Solar makers added that it is quite difficult for international firms to invest in Japan if they do not have a relationship with local firms and sufficient cash flow . These factors are important especially for firms that hope to obtain construction sites, system certification, and financing from banks in Japan. Many Taiwan-based firms have turned to investing in solar PV systems, not projects.
