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Government actively promotes B2B PPA for RE installations and market perception raises

Japan’s Energy Sector Overview

  • Renewable Energy Sources targets: 22% to 24% renewables share target by 2030 – PV capacity should hit 64 GW, set by METI in 2015.
  • Under the Strategic Energy Plan of Japan, 10% of the primary energy is expected from renewables by 2020
  • Carbon reduction target: reduce GHG emissions by 26% by 2030 compared with 2013, including 35% in the power sector

  • Average electricity price (C&I MV users) currently goes rather stable at around ¥15/kWh price level since deregulation in 2016
  • Grid electricity users shall bear additional cost for RE surcharge, which is ¥2.98/kWh @FY2020. RE surcharge is increasing at CAGR38%
  • C&I solar LCOE (levelized cost of electricity) goes below average electricity price plus the RE surcharge (grid parity) in Japan

Regulation

Government Lead Initiatives:

  • Japanese government adopted 6 Strategic Energy Plan aiming at carbon neutrality by the end of 2050 while enhancing energy security. The plan also presents roadmap toward 2030 to achieve 46% carbon emission reduction against 2013.
  • One of primal action plans for the 2030 carbon reduction is promoting renewable energy installation, looking at 22~23% of total power consumptions (864TWh) in 2030.
  • Japanese government actively promote subsidies for on-site solar and off-site solar physical PPAs.

Implementation

  • Japanese solar market size became around 6.5GWp in 2021. About 3GWp was for non consumption use was implemented with B2B PPA FIT self consumption use, and about 10% of the self scheme.
  • Current power price hike allows a power user to realize cutting cost and carbon simultaneously even without subsidies.