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Japanese Solar Market Shifts to Cost Saving
By Brad Frischkorn

A peak in Japan's solar energy market is putting the squeeze on both would-be investors and installers. More than ever, cost-saving measures are now the focus.

Japan's nationwide photovoltaic (PV) rollout has experienced explosive growth, especially following the 2014 introduction of the government's sweeping alternative energy program, in which the renewed FIT (Feed-In-Tariff) scheme set generous electricity prices for solar producers to sell energy to local utilities. There's no argument that it's been a success; more than 1.5 million households now have solar power, while solar farms are now a common sight in many of Japan's rural areas.

Japan is now on track to generate perhaps 25% of its power from renewable energy sources by fiscal 2030, with 7% coming from PV.

But the FIT rates, which hold for 10-20 years, depending on the type of renewable system, have been falling. For fiscal 2016 (which began April 1), utilities will pay just 24 yen per kilowatt-hour (kWh) for power coming from solar systems with 10kW or higher output capacities - down over 1/3 from their peak. The rate for systems with less than 10kW output -- typical for home rooftop solar systems -- is now between 31 yen and 33 yen. The Ministry of Economy, Trade and Industry (METI) says it aims to further reduce the FIT for all solar systems by 2-3 yen per year through fiscal 2019.

The policy is leading many experts to predict the end of the country's solar boom. A recent report by Bloomberg News Energy Finance (BNEF) put new PV installations for 2016 at 14 gigawatts (GW), up from 12GW in 2015, but thereafter sees a dramatic falloff, with perhaps no more than 1.7GW in 2018. Market intelligence provider Mercom Capital is less optimistic; it estimates that just 9GW will come on line this year.

In February, Panasonic, a global leader in high-efficiency PV modules, reported a 3% fall in sales and a 27% drop in profits at its Eco Solutions division through the first nine months of the last fiscal year, citing reduced solar project incentives. Rival Kyocera confirmed similar financial results.

Reduced profitability naturally filters down to PV system installers such as RBI Solar International, a leading turn-key solution provider for solar mounting systems. The U.S. firm has been operating in Japan from its Tokyo office since 2013.

One of the keys to RBI's success is its employment of heavy-duty structural I-beam supports in its ground-mounted installations. The beams use a specialized ramming machine to drive them deeper than more conventional installers.

"A more robust structure allows for better resilience in the face of heavy snow, rain, and high winds, and allows us to use fewer mounts over wider areas, cutting both hardware and labor costs," says RBI representative John Taylor at a recent renewable energy expo in Tokyo.

The company also makes use of a girder system that allows for a contour-following panel array. The technique flies in the face of typical Japanese installation practices, which call for grading the ground on panel sites to uniform flatness and employs liberal amounts of concrete to anchor the hardware.

RBI's methods enable large multi-megawatt solar farms to be completed four to six months faster and a total cost savings of up to 30%, Mr. Taylor says. RBI also touts its roof-mounted racks as featuring faster install times and less invasive mounting systems.

While falling FIT rates and the repeal of tax incentives have taken some of the fat out of profit margins, RBI and many other installers remain upbeat about the future prospects for more PV projects in Japan. Data show that while Japan has approved more than 80GW of solar projects under its FIT program, only about 25% have been installed. Proposed rule changes at METI are expected to prompt developers to complete their projects as quickly as possible, or face re-application for approval or perhaps even outright cancellation of the FIT guarantee.

Domestic home builders are also rushing to embrace the government's goal for all newly-constructed public buildings to be zero-energy by 2020, and all newly-built houses to be zero-energy by 2030. A zero energy house (ZEH) consumes less energy than it produces on a net annual basis by creating renewable energy, usually through roof-mounted solar panels.

Japan's 10 major homebuilders sold between 10,000 and 20,000 zero-energy houses in fiscal 2014, a number is expected to rise to more than 50,000 by fiscal 2020, according to a Nikkei Asian Review report.

Many builders have set aggressive targets for themselves; Sekisui House had set a 70% goal for all the new houses it sold as zero-energy houses by fiscal 2016. Panasonic unit PanaHome aims for an 85% ZEH rate by fiscal 2018. Owners can sell any unused energy back to the grid and pocket the profit.

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RBI Solar

"A more robust structure allows for better resilience in the face of heavy snow, rain, and high winds, and allows us to use fewer mounts over wider areas." -- John Taylor

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