Another Green Flop: Japan’s Solar Boom Is Beginning To Falter

Japan’s solar boom is beginning to falter while solar power-related bankruptcies are increasing.

Until recently, the resource-poor nation has been one of the leading markets for photovoltaics, helping to prop up an industry hurt by falling prices for the technology and policy changes. But four years after the introduction of generous incentives to promote clean energy in the wake of the Fukushima atomic meltdown, data show the boom is losing steam.

The slowdown — after several years of rapid growth — threatens to undermine the government’s push to find a clean alternative to nuclear power and dims what has been a bright spot for the global photovoltaic industry.

“As the declining volume of PV module shipments shows, the market is shrinking,” said Takehiro Kawahara, an analyst for Bloomberg New Energy Finance.

Repeated tariff cuts and difficulty securing land and grid connections are among some of the reasons that have led to a drop in new applications to develop solar, Kawahara said.

For Japanese panel makers such as Sharp Corp. and Kyocera Corp., “the shrinking domestic market forces them to lower costs to remain in competition with international players or consider exiting the segment,” he said.

More Bankruptcies

Solar power-related bankruptcies are increasing, according to Teikoku Databank Ltd. The number of companies that went bust rose to 36 in 2015, from 17 in 2013 and 21 in 2014. Bankruptcies continue to accelerate, with 17 seen in just the first five months of 2016, Teikoku said.

Some question what has Japan got for all the money spent on promoting clean energy. While more solar energy is being produced, it still comprises a fraction of the nation’s power generation mix.

The following chart shows solar’s contribution to Japan’s power mix as measured by what is purchased and produced by the nation’s 10 regional utilities. The data, drawn from government and industry sources, show the percentage has gone from about 0.4 percent in 2012 to about 3.4 percent in 2015.

Solar has grabbed the lion’s share of what’s known as feed-in tariffs — above market rates awarded to producers of clean energy. With available land for solar in short supply and some utilities saying they can’t accept more intermittent solar power, that’s a worry for some. Moreover, only about a third of the solar projects awarded the preferred rates have actually begun producing power.

Full post