Rumors have it that the Ministry of Economy, Trade, and Industry of Japan (METI) is considering revising PV subsidy downward to JPY34/kWh in 2014 and JPY30/kWh in 2015. According to EnergyTrend, whether Japan's subsidy cut will come true or not, it is projected that Japan's market demand in both 2014 and 2015 will remain strong. However, if the rumor turns out to be true, the amount of PV system installation is likely to increase substantially in Japan and in turn benefit Taiwan makers.
Japan may revise PV subsidies downward by around 10% in 2014 and 2015, which is within the range estimated by the industry, EnergyTrend said. Thus, it will still bring a certain level of profit and return on investment (ROI) to the makers. EnergyTrend projected that Japan's ROI will be around 17% if calculating based on the subsidy rate in 2015 while taking relevant cost changes into consideration. In contrast to other countries, Japan remains a region with a lot of profit in the global PV market.
With the Heisei 25 fiscal year entering into the second half and the weather being increasingly less suitable for construction, EnergyTrend said it believes that PV system installations in Japan will increase significantly by the end of March 31, 2014. Furthermore, although 19GW demand awaits Japan in 2014, the growth of the grid cannot seem to catch up with that of PV system installations. Hence, PV demand is likely to grow steadily starting from 2015.
In terms of the industrial side, EnergyTrend added that Taiwan makers will be in good shape due to OEM demand from Japan. Because Japan-based clients put most focus on systems, they normally choose to outsource modules and cells, which benefits Taiwan and China makers. Taiwan makers, in particular, tend to work closely with makers in Japan on systems and outsourcing opportunities, as the partnership between Inventec and Toshiba shows. Meanwhile, the business model of using cells from Taiwan and modules from China is continuing to be implemented. By coming up with better value, they are hoping to create more demand. In fourth-quarter 2013, Taiwan makers will be more aggressive towards module capacity expansion. Apart from obtaining outsourcing opportunities from Japan-based makers, they are also considering the options of producing cells and modules in Taiwan, and establishing a possible brand in China.
