Japan to become largest solar market after China

Japan will probably become the largest solar market in the world after China this year, boosted by an incentive program that offers above-market rates for energy from renewable sources.

Commercial and utility-scale projects will boost solar installations to a range of 6.1 gigawatts to 9.4 gigawatts in 2013, exceeding an earlier forecast of 3.2 gigawatts to 4 gigawatts, Bloomberg New Energy Finance said in a research note.

“The upward revision was done because of the rapid increase in shipments seen last quarter as well as the fact that the pipeline of projects is even stronger than previously expected,” BNEF said in a report released March 29.

The forecast reflects the push by Japan to find alternative sources of energy following the Fukushima earthquake and tsunami in March 2011, which prompted the closure of all but two of the nation’s nuclear reactors. Japan in July began offering incentives through feed-in tariffs to encourage investments in energy sources such as wind and solar.

Solar Plans

Lawson Inc. (2651), a Japanese operator of convenience stores, installed solar panels on rooftops of 1,000 shops by the end of February and plans to set up systems for another 1,000 outlets, Yuuki Takemoto, a company spokesman, said today by phone. The company uses panels by Solar Frontier K.K. and Panasonic Corp. (6752)

Lawson sells electricity generated from solar panels to utilities and plans to use the income for energy saving equipment, the spokesman said.

Other companies that stand to benefit include Kyocera Corp. (6971), Sharp Corp. and Suntech Power Japan Corp., all of which make and sell solar panels for residential and industrial use.

“The feed-in tariff has been successful in sparking interest and potential for unprecedented growth in solar,” Travis Woodward, a Tokyo-based solar analyst at BNEF, said in an e-mailed message. “This large introduction of solar is significant enough to compliment other strategies to alleviate power demand issues from idling almost all nuclear plants in Japan. Solar system prices will need to come down closer to global average, however, to make a sustainable market.”

Market Drivers

The commercial segment — projects of 10 kilowatts to 1,000 kilowatts on industrial rooftops and on idled land — is primarily behind the increase in the forecast, according to London-based BNEF.

The revision puts Japan ahead of the U.S. and possibly ahead of China, BNEF said. China is estimated to add 6.2 gigawatts to 10.5 gigawatts while additions in the U.S. may total 3.3 gigawatts to 3.9 gigawatts.

The most installations in any one year was in Italy in 2011 when that country added 7.9 gigawatts, according to BNEF.

Potential barriers include system costs in Japan that remain high by international standards and a lack of trained workers to install systems, BNEF said.

Japan’s domestic shipments of solar cells and modules more than doubled to 1,003 megawatts in the three months to Dec. 31 compared with the same quarter the previous year, the Japan Photovoltaic Energy Association said Feb. 26.