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Japan to become world’s largest solar market after China

Solar boom heads to Japan creating USD 9.6bn market in solar power

Japan is set to become the world’s second-biggest market for solar power

Japan is to overtake Germany and Italy to become the world’s second-biggest market for solar power. The country is poised to overtake the two EU countries to become the largest market for solar power after the world leader, China, according to reports.

Industry Minister Yukio Edano set today a premium price for solar electricity that’s about triple what industrial users now pay for conventional power. That may spur at least USD 9.6bn in new installations with 3.2 GW of capacity, Bloomberg New Energy Finance forecast.

“The tariff is very attractive,” said Mina Sekiguchi, associate partner and head of energy and infrastructure at KPMG in Japan. “The rate reflects the government’s intention to set up many solar power stations very quickly.”

Prime Minister Yoshihiko Noda’s effort to cut dependence on atomic energy that provided about 30 per cent of Japan’s power before the Fukushima nuclear meltdown in 2011 will help a solar industry suffering incentive cuts across Europe. It’s also raising concern among Japanese business groups that clean power aid will raise bills and slow Japan’s economic recovery.

“This is a mechanism with a high degree of market intervention by setting tariffs artificially high and making users shoulder the cost,” said Masami Hasegawa, senior manager of the environmental policy bureau of Keidanren, Japan’s most powerful business lobby, which counts Toyota Motor Corporation and Nippon Steel Corporation among its members. “We question the effectiveness of such a scheme.”

Developers are counting on subsidies and have accelerated solar-park construction plans this year.

“We hear every day a new announcement of a megawatt-scale project,” Izumi Kaizuka, a solar industry analyst at RTS Corp., said in Munich, referring to projects 1 MW or bigger.

Japan ranked sixth worldwide by new installations last year, when it added 1.3 GW of solar to bring its installed base to 5 GW. Next year builders will erect roughly triple that level, or another 3.2 GW to 4.7 GW, New Energy Finance forecasts.

Only China will exceed Japan in terms of solar capacity growth as it supplants Italy and Germany, which held the top two positions in 2010 and 2011, London-based New Energy Finance estimates.

Japanese companies such as Kyocera and Sharp Corporation that kept the photovoltaic industry alive when the US scrapped investments in the 1990s are gearing up to supply their home market, as the government converts a pilot program into one aimed at large, commercial solar farms, Bloomberg reported.

“We no longer have enough electricity, especially during the day, and that is when solar power can help,” said Mikio Katayama, chairman of the electronics manufacturer Sharp Corporation and the Japan Photovoltaic Energy Association. “This is a very good rate to promote investment and mega solars.”