Japanese Government Policy Sets Solar On Fire

As the years go on, more and more people are looking at alternative energy to be the wave of the future. While fossil fuels have long dominated the global energy space, the past few decades have seen major strides to bring other methods to the forefront. Solar energy has been among the most popular, as the industry has harnessed the sun’s power, utilizing photovoltaic modules that seem to get more efficient by the year. And now, the Japanese government is encouraging domestic businesses to ramp up their use of this renewable resource [for more solar news and analysis subscribe to our free newsletter].

A Favorable Policy

Last July, the Japanese government implemented a policy known as a “Feed-in Tariff Scheme.” Admittedly, the term “scheme” does not sound quite as appealing on the surface, but the program is making great strides to increase the prevalence of green technologies. “Electric utilities will be obliged to purchase electricity generated from renewable energy sources such as solar PV and wind power on a fixed – period contract at a fixed price” notes the policy. The costs are then transferred onto the customers who pay a surcharge for their proportionate usage.

Solar EnergyWith guaranteed demand, a number of companies have hopped on the bandwagon and increased their solar presence.  Japan’s solar capacity was 7.4 gigawatts at the end of 2012 and is expected to double to nearly 15 gigawatts by the end of 2013. One gigawatt can supply power for approximately 225,000 homes, meaning that Japan’s solar industry should be able to provide electricity for more than 3.3 million homes by the end of this year. Renewables account for about 10% of Japan’s current energy usage, but the new tariff system looks to double that by 2020 [see also Why Alternative Energy Will Never Become Widespread (In Our Lifetime)].

Renewable Energy and Fukushima

Prior to 2011′s Fukushima meltdown, Japan had relied a great deal on nuclear energy to power the country. At one point, the nation predicted that nuclear energy would provide 50% of power usage by 2030, but it seems those days are long gone. After the accident, the nation shuttered 50 reactors, of which only two have been restarted. Citizens remain largely opposed to nuclear energy, but are more open to alternate forms, like those that the new tariff supports.

It seems that consumers are still in favor of supporting cleaner technologies even if it means monthly bills will be slightly higher. It should be noted that Japan is forced to import a number of fossil fuels already, meaning that electricity costs are already higher than a nation that is able to produce those resources themselves. The jump in clean technologies will hopefully be a money-saver in the long-term, but it does pose one tough question for the nation [see also First Solar (FSLR) Helps Industry Skyrocket].

Japan’s economy has been struggling for several decades now and taking more money from the pocket of consumers may damage recovery efforts. Either way, solar energy (among others) is slated for a major boost in Japan and figures to be an integral part of the country’s energy makeup over the next decade.

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Disclosure: No positions at time of writing.

This entry was posted in Alternative Energy, News and Current Events, Solar and tagged , . Bookmark the permalink.

Commodity HQ is not an investment advisor, and any content published by Commodity HQ does not constitute individual investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities or investment assets. Read the full disclaimer here.

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