by Junko Movellan, Senior Analyst
The much-anticipated feed-in tariff (FIT) to be launched in Japan on July 1st, with the goal of accelerating the non-residential (including power generators) segment that previously represented just 10% of the Japanese PV market.
The new FIT rates are as follows:
The Japanese government has decided to implement attractive rates for the first three years of the program, providing a strong return-on-investment (ROI) in order to encourage investments in the domestic market. Based on government calculations, the new rate of ¥42/kWh (for the non-residential segment) is intended to provide a pre-tax internal-rate-of-return (IRR) of 6%, with the residential segment offering an IRR of 3.2%.
The residential segment is set to offer a lower IRR because this segment still qualifies for an up-front ‘capacity-based’ incentive at the federal level. In fact, this legacy program was historically a critical driver behind the growth of the residential segment in Japan.
By the end of March 2012, the program provided one rate based on an up-front, capacity-based rebate. For example, during FY’2011 (April 2011 through March 2012), the program provided ¥48/watt for residential PV systems, if the total installed system cost was less than ¥600/watt.
For FY’2012 (April 2012 through March 2013), the program now offers two rates to further stimulate system cost reductions
- ¥35/watt if the installed system cost is less than ¥475/watt
- ¥30/watt for systems whose installed cost is below ¥550/watt
Under this program, the lower the installed system cost, the higher the rebate rate provided.
The FIT portion (production based incentive) has prompted investors and potential PV owners to consider PV systems that optimize and maximize electricity production. Therefore, domestic module providers have started to offer more efficient modules. These ultimately produce more electricity than ‘standard’ rated PV modules and require less space for installation.
For example, Sharp and Mitsubishi Electric are offering mono cell based c-Si modules, specifically targeted at the domestic ‘FIT’-specific segment. Sharp started mass production of high efficiency mono c-Si modules during 2010 and now promotes this type of c-Si module for residential applications. Mitsubishi Electric recently announced an intention to produce only mono c-Si modules and to terminate production of multi cell based c-Si modules.
Canadian Solar has also unveiled a higher-efficiency module offering to the Japanese market from July. This module is based on their (metal wrap-through) ‘ELPS’ c-Si cell technology. Moreover, Canadian Solar has also announced plans to build a manufacturing plant in Japan as early as FY’2013, potentially becoming the first foreign manufacturer to produce solar panels domestically.
Finally, Panasonic Corp. – whose (formerly Sanyo-branded) modules are acknowledged as among the most efficient mono-based module types – is set to promote the “HIT Double” heterojunction-based modules for the non-residential segment from August. These products, already sold into the European and US markets, are capable of generating electricity simultaneously on the front and back surfaces.
The adoption of mono-based modules can be seen clearly in the breakdown of mono vs. multi module types. As recently as Q1’10, multi c-Si modules accounted for over 70% of domestic c-Si module shipments; by Q1’12. this ratio had effectively been ‘reversed’, with mono c-Si modules making up almost 70% of c-Si demand. Currently, domestic module makers are producing more mono c-Si modules than multi-based variants, with Japan also importing more mono than multi products.
While process-cost reduction is currently a key driver for c-Si manufacturers globally, Japan represents one region where new technology and product innovation is now being prioritized. With limited ground space and high electricity consumption (ranked at number 4 globally), high-efficiency modules are expected to continue gaining significant market-share gains over the traditional multi-based c-Si cell technologies in the Japanese market.
