PART THREE: THE <strong>SOLAR</strong> RACE Japan’s national programmes for renewables during 2004 include: • RPS Law (2003) obliges electric utilities to achieve a target for 1.35% of their electricity supply to come from renewable energy sources, including solar, by 2010. • The Regional New Energy Introduction Project aims to accelerate the introduction of new energy (renewable) technologies by supporting regional government projects. Half of system installation costs are subsidised. • The Subsidy Programme for New Energy Industrialists supports businesses which plan to introduce new energy, including PV. • The programme for development of regional new energy visions helps local government and related bodies to create visions for facilitating promotion of renewable energy at local levels. ECONOMICS Japan has had an aggressive PV R&D programme since the late 1970s, with virtually all funds directed at developing an industry capable of competing in the world market, and with cost reductions that would also serve the domestic market. In the past five years PV system costs have reduced by another 33%. In the future it is expected that the average price of a residential PV system will fall even further, to below $ 4,000/ kWp. Even so, the cost of PV electricity is still presently more than twice the price of conventional domestic power, which is exceptionally expensive in Japan. If the added value of solar systems in environmental terms was monetised for customers, however, PV would be able to compete much earlier than expected. One other factor is the introduction of premium green pricing for renewable electricity. All ten Japanese regional power utilities introduced a “Green Power Fund” at a monthly rate of $ 1-4 from October 2000, with the companies matching this amount towards the installation of new renewable plants. Most electric utilities also have net metering systems by which they buy PV electricity from individual customers. As a result of the RPS law, however, some utilities have refused to buy at the same price level when they cannot use credits from the PV electricity put into the grid by individual customers for achieving their respective RPS targets. In these cases, the purchase price has fallen dramatically to 3-5 cents per kWh. NATIONAL TARGETS Following the climate change summit at Kyoto in 1997, Japan announced (in 2001) an accelerated target to install 4,820 MW of PV by 2010. Projections by the Japan Photovoltaic Energy Association (JPEA) show that annual installations could reach 1,230 MWp by 2010, with a corresponding market size of $ 4.5 billion. Looking further ahead, the goal set by JPEA is to increase the annual market to 4,300 MWp by 2020, with a total capacity of 28,700 MWp installed. For 2030 the goal is to reach an annual market of 10,000 MWp, with a cumulative installed capacity of 82,800 MWp. By then the PV industry in Japan would have created 300,000 jobs, the PV installation rate would be at 45% for detached houses and the price for a kWp PV system would have fallen below $ 2,000. The total future potential for PV power generation in Japan is as much as 173 GW, according to calculations made by the government agency METI in 2000. Prime Power PV has been installed on a new building at the official residence of the Japanese Prime Minister, a symbol that solar power is central to the country’s future energy regime. 28
PART FOUR THE <strong>SOLAR</strong> FUTURE