Solar Snippet; Japan Market Update
• Bottom line. METI announced plans to introduce subsidies for renewable energy including solar. While this program is not yet
approved, if approved will be positive for SPWR, STP and Q-cells.
• Japan Ministry proposes Yen 23.8bb ($217mm) solar subsidy: The Ministry of Economy, Trade and Industry (METI) in Japan
has proposed a budget of Yen 131.7bb ($1.2bb) in FY09, up 50% from 2008, to speed up alternative energy use (Solar, Wind,
Biomass and Clean cars) as Japan falls behind its Kyoto Protocol commitments to cut greenhouse gas emissions. Of the total
budget, METI proposes residential solar subsidies allocation of Yen 23.8bb ($217mm). Japan had earlier scrapped residential
solar subsidies in March 2006. Media reports suggest that Japanese government plans to spend ~Yen 1 trillion over the next
10 years to reduce green house gas emissions. While the current proposal is yet to be approved by the government, METI's
proposal is widely expected to stand following Prime Minister's pledge in June to install solar panels in 70% of new built
homes by 2020.
• Solar demand in Japan: While Japan accounted for ~20% of global solar demand in CY05 at 292MW, demand in Japan
stagnated following the removal of subsidy in March 2006. Cumulatively, ~1.9GW of PV systems have been installed in
Japan, mainly on residential homes by the end of 2009. In 2007, Spain replaced Japan as the second largest market for solar,
as Japan's market share decline to ~11% of global solar demand at ~292MW. We are currently modeling demand from
Japan at ~365MW/420MW which represents ~8%/5% of global solar demand in CY08 and CY09 respectively. Our prior
estimate was predicated upon price reductions driving demand elasticity; with these subsidies, there should be some upside.
At this point we are not revising our CY09 demand estimate of 420MW for Japan until program is formally approved by
Japanese government
• Energy market in Japan: The total electricity generation in Japan was ~990bb kwh in 2007 of which ~50% came from thermal
(oil, coal and gas) plants, ~30% from nuclear and ~7% from hydroelectric dams. Electricity rates are also among the highest in
Japan and vary significantly with time of the day. While standard rates vary from ~15c to 20c per Kwh in Tokyo, Peak rates
are as high as 29c/kwh in summer months and 24c/kwh in non-summer. The Japan PV market is primarily a residential
market with ~86% of installations in residential segment. With a solar insolation of ~1400kwh/kw/year, renewed solar subsidy
program, government goal to install 4.8GW of PV by FY10 and Kyoto Protocol obligation to reduce green house gas emission
by 6% from 1990 baseline levels by 2012, we believe there is potential upside to demand from Japan in CY09. |
