TOKYO -- A government-policy-driven solar power investment boom in Japan has given way to a bust, tipping panel shipments into decline for the first time in eight years, with no sign of a turnaround.

A feed-in tariff -- in essence, a guaranteed purchase price for output -- for solar power has been cut each year since it was introduced in fiscal 2012 as an incentive for renewable energy investment. It worked too well, fostering an oversupply of generating capacity. Now, panel makers are at a loss for ways to revive demand.

Kandenko, a provider of electrical work, says it has received many inquiries since August from parties interested in selling out of solar projects not yet under construction. The company has announced plans to turn this into a new business targeting large-scale planned installations together with Mitsubishi Research Institute. Banks and builders have taken notice.

Some 80% of Japan's "megasolar" projects, so called because their scale is measured in megawatts, do not produce a single watt of power (1 megawatt equals 1,000kW). Poor planning is to blame for many of these failed starts. Kandenko and Mitsubishi Research Institute have developed a system for projecting solar farm earnings, which the partners believe will help them spot potential winners to buy.

Second-hand solar

Solar power provider West Holdings recently auctioned off a partially complete 500kW installation for 178 million yen ($1.72 million) -- more than the estimated 150 million yen cost of constructing a new one of that size. Located in Hiroshima Prefecture, this solar farm is scheduled to begin operation in November.

"We thought the bidding would last a week, but it was a done deal after a single day," a manager overseeing the auction said.

That old can fetch a premium over new in solar farms attests to a distorted market. When Japan introduced feed-in tariffs in July 2012, enthusiasm over renewable energy was running high following the previous year's Fukushima nuclear disaster. Domestic solar panel shipments, which had been struggling to break even 2,000 megawatts a year, took off on the incentive and kept climbing until fiscal 2014.

But the bubble did not last long. Japan's electric grid, designed to handle predictable, steady-going power sources like coal or nuclear plants, could not handle the rapid increase in solar power feeding into the system. The big regional utilities began putting power purchasing contracts on hold.

Meanwhile, the government revised the solar tariff downward each year. This fiscal year, output from solar installations of 10kW or more fetches 24 yen per kilowatt-hour -- 40% less than in fiscal 2012.

Faced with a less-inviting market, newcomers have rapidly dwindled. Panel shipments dropped 23% on the year in fiscal 2015, to the equivalent of 7,140 megawatts. This marked the first decline since fiscal 2007. The drop continued in the April-June quarter of fiscal 2016, quickening to 26% year on year.

Solar farms built in the boom years enjoy higher locked-in prices per kilowatt-hour.

"Rather than build new at 20-something yen, we are hunting for the many existing projects with outstanding contracts at the 30- and 40-yen levels," says an executive at a major power provider.

Green acres

Efforts are being made to stir up fresh demand. In a field in the northern city of Osaki, inland from some of the coastal areas hit hardest by the March 2011 tsunami, an experiment is underway to test whether a solar farm can double as a real farm.

Concrete panels and steel pipe stand in place of actual solar panels in a corner of a 4-hectare farm. A lush carpet of grass is growing under this setup.

"We're studying how well crops can grow in shady conditions," explained Keji Yasuoka, president of the Japanese unit of Spain-based renewable energy group X-Elio.

The company is looking to place solar installations -- measuring in the tens of megawatts -- on working farms in the Tohoku region of northern Japan. "The advantage of using farmland is that it doesn't entail landscaping costs," Yasuoka said.

Lowering start-up investment offers a way to keep the momentum for solar projects going despite the lower feed-in tariff. With many prime locations already taken by projects stuck on the drawing board, some players are looking beyond farms to more unusual sites. Kyocera and others are working on floating solar farms on a dam reservoir in Chiba Prefecture, outside of Tokyo. The cooling effect of the water helps maintain the panels' conversion efficiency.

Many expect another double-digit decline in panel shipments this fiscal year. The secretary-general of the Japan Photovoltaic Energy Association, Masaaki Kameda, understands the severity of the downturn and said the group favors a shakeout of plans not in operation with little commercial viability.

Meanwhile, Japan is seeing an increase in new construction in wind power, and long-idle nuclear reactors are coming back onstream. But the country cannot achieve the government's goal of increasing the share of electricity generated from renewable sources without continuing to expand solar capacity. For solar, it may be darkest before dawn.