No. 70: Prospect of natural energy in Japan – Photovoltaic generation (June 30, 2011)

The revival of the nation’s subsidy system in 2009 stimulated the market of photovoltaic generation that had been stagnant after 2006. Domestic shipments in terms of generating capacity increased 70% over the previous year to about 1.1 million kW in 2010, exceeded 1 million kW for the first time. The government is discussing the system of purchasing all renewable energy, and this policy is expected to activate the business further should it be enacted.

The subsidy system plays the major role to spread photovoltaic generation because its generation cost is 37-46 yen per kW, higher than the generation cost of wind generation. However, the generation cost of photovoltaic generation has been decreasing worldwide because the bubble burst of the photovoltaic cell business in Spain and because increasing presence of new photovoltaic cell makers from the U.S. and China that are increasing sales by virtue of mass production and competitive prices. The grid parity – the point at which alternative means of generating electricity is at least as cheap as grid power – becomes more likely thanks to the decreasing generation cost. According to European Photovoltaic Industry Association (EPIA), South Europe blessed with sunshine is nearing the grid parity.

Home electric utility rate is 23 yen per kW in Japan, and this is the target of photovoltaic generation for the time being. Japanese makers of photovoltaic cells are competing with foreign makers by increasing the conversion efficiency with such technology as monocrystalline silicon, multicrystalline silicon, thin silicon, and copper indium gallium DiSelenide (CIGS). In fact, Japanese makers are the front runners in the performance competition. In the immediate future, they have to achieve an electric utility rate less than the industrial rate of 14 yen per kW. New Energy and Industrial Technology Development Organization (NEDO) plans to achieve the 14 yen per kW in 2020 and 7 yen per KW in 2030.

In June this year, NEDO set up a joint project with EPIA to develop the concentrator photovoltaic system (CPV) with a conversion efficiency of more than 45%. The leading Japanese researcher of this project insists that the progress of CPV makes it possible to reduce the generating cost to less than 8 yen per kW before 2030. The current administration plans to reduce the generation cost of photovoltaic generation to one third in 2020 and one sixth in 2030.