Feed in tariff Japan for renewable energy are about three times higher than in Germany. Approvals peaked in just before reduction in March 2013.

Feed in tariff Japan for renewable energy: approvals drying up?

Feed in tariff Japan for renewable energy are about three times higher than in Germany

Approvals peaked just before the latest feed in tariff reduction

The figures below show an overview of renewable energy sources currently installed and operational in Japan (the majority of which is water power), and also renewable energy projects approved by Japan’s industry ministry METI under the renewable energy feed-in-tariff (FIT) law, which started in July 2012.

Approvals peaked just before March 31, 2013

The figures below clearly show that approvals peaked in March 2013, and dropped off dramatically from April 2013. The reason is most likely the decrease of FIT-tariffs from April 1, 2013: it seems that many applications were rushed in order to take advantage of the higher FIT-tariffs for projects approved up and until March 31, 2013.

Renewable energy capacity approved so far under the FIT-law will increase renewable energy capacity in Japan approximately by 70%, including water power. 94% of renewable energy projects approved under Japan’s feed-in-tariff programs are for solar energy generation (see our past blog analyzing FIT approvals).

The figures below show, that almost no fresh generation capacity was approved during March, April and May 2013: the approval of new renewable energy capacity is drying up.

Thus, companies seeking to build solar power stations in Japan based on pref-approved METI-projects, are faced with a fixed pool of approved projects, with almost no additional projects being added until May 2013.

More details in the latest 6th edition of our Renewable Energy Report.

Feed in tariff Japan for renewable energy: Approvals for renewable energy projects under the feed-in tariff law until May 2013 in comparison with installed renewable energy in Japan
Accumulated total generation capacity of approvals for renewable energy projects under the feed-in tariff law until May 2013 in comparison with installed renewable energy in Japan. Approvals seem to have dried up: almost no new capacity has been approved during March-May 2013.
Feed in tariff Japan for renewable energy: Figure shows solar energy projects approved by Japan's Industry Ministry METI under the renewable energy FIT law.
Figure shows the accumulated generation capacity of solar energy projects approved by Japan’s Industry Ministry METI under the renewable energy FIT law. Approvals seem to have dried up: almost no new capacity has been approved during March-May 2013.
Feed in tariff Japan for renewable energy: Approvals under Japan's renewable energy feed-in-tariff law per month
Approvals under Japan’s renewable energy feed-in-tariff law per month. Figure shows that approved generation capacity drops to a low level after March 2013 – the most likely explanation for the dramatic drop of approvals after March 2013 is the reduction of FIT-tariffs from April 1, 2013: it looks likely that many applications were rushed to meet with the higher FIT tariffs available for projects granted at the higher rates up to March 31, 2013 (42 yen/kWh in case of large scale solar)

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  • Karl-Friedrich Lenz

    Thank you for your comment at my blog.

    I would like to take the opportunity to ask a related question.

    I recently did a post on what stocks I would buy with global warming in mind. There I discussed if there is any stock you could buy to take a piece of the action in Japan’s solar installation market, which pays very attractive feed-in tariffs right now.

    The best I came up with was buying Softbank stock, because Softbank owns SB Energy. Are you aware of any better alternative?

    • g_fasol

      Thank you for your interest, Mr Lenz. Our company and also our blogs/news focus more on business development, and major changes and opportunities in industries, however: great question.

      Regarding global warming, in Japan thats secondary at the moment, the most important issue is securing energy and electricity supply! There have been black-outs, and there are mandatory orders by the Government to large users to reduce electricity consumption, and prices are being increased. In addition, there are large LNG imports (read here: http://www.eurotechnology.com/2013/07/23/record-liquid-natural-gas-costs-77-5-increase/) which create big costs in Japan’s balance of payments. At the moment that has much higher priority than global warming issues in people’s minds. We explain Japan’s energy and electricity situation in our reports:
      Japan’s Energy Sector (pdf-file) (this report includes also some analysis of most major Japanese corporation in the electricity and gas industry, and we are planning to include also other companies in the energy field, such as oil.
      http://www.eurotechnology.com/store/j_renewable/ (in that report we also discuss several Japanese companies in the renewable energy field).

      Softbank (you can read about Softbank in our report: http://www.eurotechnology.com/store/softbank/, is at the moment predominantly a Telecom operator and media company. They have one of the largest mobile and fixed line telecom operations in Japan, where they are growing rapidly via acquisitions, and the have just acquired SPRINT in USA, they also own part of Japan’s YAHOO KK and other media companies. Softbank’s energy business is in the early beginning.

      As I said we don’t directly comment on “stocks to buy”, thats not what we do, but there are quite a number of energy related companies in Japan, some of them own and operate renewable energy plants (solar, wind etc), and others make panels and installations. e.g. SHARP and Kyocera and others make panels, install solar plants and even seem to construct and operate their own solar plants now. You can read about Japan’s electronics companies in our report: http://www.eurotechnology.com/store/j_electric/. These large electronics companies, however are in many other business fields as well, e.g. Kyocera’s core business is ceramics, and SHARP is currently under business reconstruction, one of their main business fields currently are liquid crystal panels, TVs and many other types of electronics goods.