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issue: May 2009 APPLIANCE Magazine

International Report - Japan
Buy-Back Tariffs to Spur Home Solar

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Wasaku Ishida, Japan correspondent, and president, JARN (Japan Air Conditioning, Heating & Refrigeration News)

Homeowners with photovoltaic solar power generation in Japan can sell their surplus power back to the utilities—and get twice the usual price.

Japan has put a lot of muscle behind growing its photovoltaic (PV) cell industry. Despite year-after-year increases in the scale of PV production and corresponding price decreases, the cost to install a residential system is still quite high. However, a new program is in place to help make PV systems more attractive to homeowners. On Feb. 24, 2009, the Minister of Economy, Trade, and Industry Toshihiro Nikai told members of press that the Japanese government will introduce new legislation obligating electric utilities to purchase surplus electricity from household power generation at prices twice as high as “usual” prices. Japan’s system is modeled on Germany’s system of feed-in tariffs.

The Ministry of Economy, Trade, and Industry (METI) intends to have the new system in place by 2010 at the latest and plans to raise the purchase price for home-generated power from its current ¥23 (about US 23 cents) per kWh to about ¥50 (about 50 cents). To cover the utilities’ costs, the average monthly household electric bill in Japan could go up by as much as ¥100 (about US$1).

In Japan, the installation cost of a photovoltaic home power generation system is about ¥2.5 million (approx. $25,000). It is estimated that, utilizing the central or local government subsidy system and selling surplus electricity back to the utility companies, a homeowner in Japan can recover the installation cost in 15 years. Purchases of surplus electricity from those specializing in photovoltaic power generation will be excluded.

METI intends to submit a bill to the current Diet that will create a more sophisticated energy supply structure, imposing specific goals for new energy introduction upon gas and electric utilities as well as other industries. METI will incorporate a provision into the bill to obligate electric companies to purchase surplus electricity from home power generation systems.

On March 18, 2009, METI released a report from its Study Group on PV System Industry Strategy. The group is assembled from representatives of Japan’s Commerce and Information Policy Bureau and the Agency for Natural Resources and Energy. The group’s aim is to strengthen the competitiveness of Japan’s solar power generation–related industries. The study summarized future directions of development for these industries, in terms of both industrial policy and energy policy. By March 18, this group had already met six times.

The group aims to reduce power generation costs in solar power generation systems to about half the current level by implementing supply-side efforts, demand-side efforts, and efforts to improve the institutional environment. These are expected to result in economies of mass production and technological innovation in the short term.

In the medium to long term, the report forecasts that, by increasing Japan’s share of the worldwide solar cell production from the current level of around a quarter to over one-third by 2020, solar power generation–related industries will create an economic effect worth up to about ¥10 trillion (approx. $100 billion) and provide employment for up to about 110,000 people.

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Prior to the February 2009 announcement of new buy-back price incentives, Japan offered (January 2009) to subsidize new PV installations at $700 per kWh of equipment.
The response was underwhelming. Read more:


Read more on Japan’s PV ambitions:

November 2008: Japan Grows Solar




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