Japan has one of the most liberalized power markets in the Asia Pacific and has implemented multiple revenue streams to promote renewables
Japan’s Energy Sector Overview
Installed Power Capacity (2021)
- Renewable Energy Sources targets: 36% to 38% renewables share target by 2030 – PV capacity should hit 104 to 118 GW, set by METI in 2021
- Under the Strategic Energy Mix Plan of Japan, 14% to 16% of the primary energy is expected from PV by 2030
- Carbon reduction target: reduce GHG emissions by 46% by 2030 compared with 2013, including 53% in the power sector
Average Electricity Prices (C&I MV Users)
- Average electricity price (C&I MV users) currently goes over ¥15/kWh price since Ukraine Crisis in 2022
- Grid electricity users shall bear additional cost for RE surcharge, which is ¥3.45/kWh @FY2022. RE surcharge is increasing at CAGR34%
- C&I solar LCOE (levelized cost of electricity) goes below average electricity price plus the RE surcharge (grid parity) in Japan
Government Lead Initiatives:
- Japanese government adopted 6th 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.
- Japanese solar market size became around 3.9GWp in 2022. Overall solar will grow at 5.4% per year on average over the next 10 years, with distributed solar accounting for about 90% of the growth from 2021 to 2050
- Current power price hike allows a power user to realize cutting cost and carbon simultaneously even without subsidies.