Japan, which had been powering ahead in terms of renewable energy capacity addition since the earthquake and tsunami in 2012, is apparently losing steam in the current year.
Research and consultancy firm Globaldata in a report published recently moved Japan down from the second to the third rank in solar capacity addition. The US replaced Japan in the ranking.
For the land of the rising sun, it is a slide after two years of impressive growth. Japan had been attracting big investment in solar photovoltaic installations since 2012 owing to supportive policies of the government.
In 2014, the annual installed solar PV capacity of the nation reached 8–9 GW, the highest ever for the country in a single year, the Globaldata report says.
So, what has caused Japan’s drop in the ranking? According to Ankit Mathur, the Project Head for Power, GlobalData, one of the factors is the expected rush in the US renewable energy market to take advantage of investment tax credit which will be in effect till the end of 2016. “Solar additions in 2015 are expected to hit 7–8 GW, largely due to continued policy support,” Mathur says.
Although both the US and Japan are likely to add about 8 GW of solar power capacity in 2015, the US “might pip Japan with a slight advantage” owing to the expected rush.
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Several internal factors are also pulling Japan back. The country, Mathur says, has reduced Feed-in Tariffs (FIT) and is cancelling projects subscribed under the FIT program due to insufficient grid.
“The end of subsidies for residential PV, shortages in module supply, the increase in system prices due to higher prices on imported components because of the devaluation of the yen, and the increased cost of installation are factors expected to impact the market in a negative way,” Mathur adds.
One other factor that Mathur believes will affect Japan’s renewable energy market is the delay in the completion of approved projects, which will thereby attract the risk of the disqualification of subsidies in the current year.
“Against this backdrop, it is expected that Japan will have a lower annual capacity addition compared with last year,” he says.
Ajith Kumar S