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Japan's solar subsidies could fuel $9.6B in new installations

Japan's solar subsidies could fuel $9.6B in new installations

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Japan's solar incentive program could fuel at least $9.6 billion in installations with 3.2 gigawatts of capacity. Some solar panel makers are well-poised to reap the rewards.

Japan's plan to cut its dependence on nuclear energy in the wake of the Fukushima nuclear meltdown has prompted the government there to establish a generous solar incentive program that could fuel at least $9.6 billion in installations with 3.2 gigawatts of capacity, according to a Bloomberg New Energy Finance report.

New Energy Finance forecast Japan will install three times more solar capacity in 2013 than the 1.3 gigawatts in new installations it added in 2011, Bloomberg reported.  If that forecast pans out, Japan could overtake Italy to become the second-biggest market for solar in the world.

Japan's Ministry of Economy, Trade and Industry approved this week the introduction of a feed-in tariff program, which requires Japanese utilities to buy electricity from renewable energy sources at pre-set prices. The incentive program, scheduled to begin July 1, pays homeowners and businesses for the electricity they generate with solar panels.

The price for solar energy will be 42 yen, or $0.53 U.S. cents, per kilowatt hour for 20 years. That's almost twice the rate in Germany, which has long been the world leader in producing solar electricity. Within the G20 nations, Germany had the largest amount of its electricity produced from renewable energy in 2011, according to a Natural Resource Defense Council report released last week.

The feed-in tariff (FiT) program will be paid for via surcharges, which means higher electricity bills for customers. It will, however, provide a considerable boost to some solar panel manufacturers, especially those companies like China's Suntech Power that have ramped up their presence in Japan.

It's hard not to notice the painful consolidation currently underway in the solar industry. Panel makers, pressured by falling prices, a supply glut and falling demand in some European countries, have filed for bankruptcy or sold off to larger energy companies.

The solar panel makers that have survived are now looking to Japan. But not all will reap the benefits of the FiT program there. Suntech, Kyocera Corp. and Panasonic Corp., are well-poised to benefit in Japan. Suntech said in June 2011 it expected to double its market share in Japan to at least 10 percent in 2012, helped largely by the expected adoption of a FiT scheme.

Photo: Suntech Power

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Kirsten Korosec

Contributing Editor

Kirsten Korosec has written for Technology Review, Marketing News, The Hill, BNET and Bloomberg News. She holds a degree from Northwestern University's Medill School of Journalism. She is based in Tucson, Arizona. Follow her on Twitter. Disclosure