While most PV systems installed in Japan have previously been supported by the FIT program, new business models and services have been launched. A third-party ownership model is being operated by electric utilities, which install residential panels and energy storage systems for no upfront cost. Efforts to promote net-zero-energy housing are also progressing.
Solar arrays are being installed on the roofs of factories and logistics facilities under the PPA business model for commercial customers and public bodies. Solar carports at stores are also gaining a foothold in the nation.
Businesses motivated by environmental, social, and corporate governance policies are driving deployment of off-site, PPA-backed renewables sites, chiefly among members of the international RE100 clean energy initiative.
As in other major markets, conventional energy companies are making large scale investments in clean energy. Power prices have risen since Russia’s invasion of Ukraine and nonprofit industry body the Japan Electric Power Information Center reports the average, pre-surcharge electricity FIT has risen from JPY 15.80 ($0.12)/kWh in January 2021 to JPY 24.19/kWh in October 2022. Solar is a popular solution for companies seeking to avoid further price rises and volatility, whether consumed on-site or procured via corporate PPA.
With PPA-backed solar sites on the rise, new business models are also emerging between the clean energy developers – including engineering, procurement, and construction services providers – who used to bank FITs, and the power utilities and electricity trading companies. As the backlog of FIT-backed renewables plants winds down, developers are looking for new ways to operate.
METI is set to launch a new FIT and FIP program to bolster the deployment of rooftop solar in the new fiscal year. The new prices, which are already applicable, will pay more per kilowatt-hour than ground-mounted projects.
In brief: Key PV industry developments in Japan 2022
| Policy | A basic policy for GX was decided to expand PV introduction to public facilities, housing, factories, warehouses, airports, railways, etc, as well as renewable energy introduction led by local communities. |
| METI started new programs such as the FIP, formulated plans to introduce PV in harmony with local communities, responded to grid constraints, and enhanced the improvement of the dissemination environment though changes to regulations for introduction. | |
| The MoE selected 46 municipalities as leading areas of decarbonization to start regional intensive introduction of PV by municipalities. | |
| The Ministry of Land, Infrastructure, and Transport enacted the Revised Building Energy Efficiency Act, mandating energy conservation standards, and will promote PV installation on roads, railway facilities, and airports. | |
| Municipalities | Many municipalities started to expand the introduction of renewable energy, such as setting installation targets and areas to promote renewable energy introduction, introducing PV to municipal facilities, and funding subsidies for installation. |
| TMG mandates PV installations in newly built houses from fiscal year 2025. | |
| Market | The domestic PV installed capacity is estimated to be 6.5 GW, flat from the previous year, and cumulative installed capacity reached 84.9 GW. |
| The average winning bid of PV projects dropped to JPY 9.70/kWh in the FIT tender, and JPY 9.73/kWh in the FIP tender, dropping below JPY 10 for the first time. | |
| Industry | Business models utilizing both off and on-site corporate PPA schemes began to develop. |
| Business models have emerged to enhance PV power generation through collaboration between PV and the conventional energy industry, trading houses, and financial institutions, etc. |
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