Even as Japan begins cranking up its nuclear reactors again, Tokyo has launched a scheme it hopes will spark a green-energy revolution and put the country at the leading edge of renewables.
New rules oblige utilities to buy all electricity produced from renewable sources, including solar, wind and geothermal power, at above-market rates for the next two decades, in a bid to stoke “green” power investment.
Advocates say the rush by suppliers to capitalize on the scheme could nearly double demand for solar cells this year alone, spurring economies of scale for panel producers and ultimately bringing down the cost of renewable energy.
The so-called feed-in tariff could spur a 85 percent rise in solar cell demand in Japan this year alone, according to Nomura Securities, and “trigger a full-scale launch of large solar farms in Japan.”
“New solar cell installation could expand further if the uptake of inexpensive, Chinese-made solar cells accelerates,” Nomura analyst Kyoichiro Yokoyama said in a research note.
The amount of new solar power capacity that Nomura predicts for Japan this year is equal to about two nuclear reactors.
Some Japanese firms have already made their move, including electronics giant Toshiba, which said it would build a huge solar plant on the country’s disaster-struck northeastern coastline.
Rival Panasonic said it expected a boost in its solar-power system sales on the back of the new program, which puts Japan on track to leapfrog Italy as the world’s fourth-largest solar market by 2014, behind China, the US and India, according to Nomura.
Mobile phone operator Softbank opened a plant in Kyoto over the weekend and has plans to build Japan’s biggest solar plant — in the northern island of Hokkaido.
“If we keep building solar panels and invest in solar energy, within 20 years it will not only become the safest and the cleanest source of electricity, but also the cheapest,” Softbank chief Masayoshi Son told reporters.
Under the scheme, premiums for different forms of renewable energy vary, but utilities must pay ￥42 (US$0.53) per kilowatt hour for solar power, over twice the rate paid to operators in Germany, with generation costs in Japan less than ￥30 per kilowatt hour, Nomura said.
Those costs are at least three times those of nuclear and fossil-fuel energy, according to government estimates.
Critics of the scheme, which came into effect on Sunday, say it is too expensive, with most of the extra costs heaped on businesses and households.
They say the new contracts are too generous and benefit a small number of green power operators, with few guarantees that they can make it a profitable enterprise and usher in a massive shift for Japan’s energy mix.
“The 20-year guarantee seems a bit too sweet a deal,” said Yasuchika Hasegawa, chairman of the Japan Association of Corporate Executives.