The Japan government is likely to reduce the feed-in tariff (FIT) rate for solar PV system installations from JPY42 (US$0.50)/kWh currently to either JPY36/kWh or JPY32/kWh in March or July 2013, according to Taiwan-based makers. The total installation capacity for residential solar PV systems in Japan in 2012 is estimated at 1.5GW, and 500MW for non-residential solar PV systems, the sources said.
Japan began providing solar FIT in July 2012. With the subsidy, especially for ground-mount systems, international firms have been eager to enter the market. In addition, the FIT of JPY42/kWh means the internal rate of return (IRR) is quite high.
According to Japan Photovoltaic Energy Association (JPEA), the current subsidy allows projects to have IRR above 6%.
Japan's government announced solar related data in mid-December. Since April 2012, the accumulated solar PV system installations in Japan reached 1.4GW. In particular, residential installations were 1.027GW and non-residential installations were 371MW. Since the FIT program began in July, solar PV system demand has been rising and the government expects Japan's residential solar PV system installations in 2012 to reach 1.5GW and non-residential installations to reach 500MW. This means the total installations in Japan will likely reach 2GW in 2012.
Solar makers believe there is a big chance for Japan to cut FIT rate in second-half 2013 due to government budget and falling installation costs in 2012.
If the FIT rate decreases to JPY36/kWh, international firms will continue to invest in the market because the rate is still relatively attractive compared to Europe markets.
Solar makers added that the new prime minister's attitude towards non-nuclear policy will be crucial.
