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Rooftops, Empty Lots Offer Japan Space for Solar Panels

Rooftops, Empty Lots Offer Japan Space for Solar Panels

Developers of solar projects in Japan are looking to rooftops, empty lots and industrial parks in response to constraints limiting connections to the grid and difficulties finding suitable land.

Government approvals for smaller-sized projects of less than 1 megawatt have outnumbered larger projects every month since May 2013, according to data compiled by Bloomberg New Energy Finance based on official figures.

The pattern of approvals reverses the trend set when Japan first began offering incentives for clean-energy in July 2012. Developers initially favored “mega” projects built on large patches of open land.

“This was somewhat expected as less land is becoming available for large-scale projects,” said Takehiro Kawahara, a Tokyo-based analyst for BNEF. “There are also grid connection issues,” he said, referring to some areas in Japan where congestion on electric transmission lines is forcing developers to review plans.

From May 2013 through January — the latest available figures provided by the government — Japan approved 6,500 megawatts of solar projects in the 10-kilowatt to 1-megawatt category. That’s double the approvals for larger projects. A solar plant with 1 megawatt of capacity can generate enough electricity for about 316 typical Japanese homes.

Projects of less than 1 megawatt are usually found on rooftops, unused land, or in industrial areas, the Institute for Sustainable Energy Policies said in a report in March. The segment accounted for about a half of Japan’s solar capacity added after the introduction of inducements designed to boost clean-energy development, according to the report.

Small-Scale Solar

“Solar projects in this criteria used to be for corporate social responsibility purposes,” the Tokyo-based group said. “After the incentive program began, various types of businesses and groups entered the market as the awareness for clean energy grew and projects offer economic incentives.”

Japan’s government began the renewables program in July 2012 following the March 2011 Fukushima disaster. The program requires utilities to buy power from clean-energy providers at premium prices under so-called feed-in tariffs.

Japan was the third-largest market for renewable energy in 2013 when measured by annual installations, according to research from London-based BNEF.

A new long-term energy plan approved by Japan’s cabinet this month suggests solar is good for mid- and small-scale power generation. Such projects can be built close to consumers, saving on the costs associated with connecting them to the transmission grid.

Government Support

“Solar is suitable for self-consumption at homes and also suitable for distributed power generation,” the energy plan said. “The use of middle- and small-sized solar power is spreading on idled land and rooftops of schools and factories, and the government will continue to support such efforts.”

Nevertheless, costs remain a hurdle. Small solar projects typically cost more for equipment and construction, while operating and maintenance cost tends to be lower than for larger-sized projects, according to a report released in March by a committee at the trade ministry that’s responsible for an annual review of government clean-energy incentives.

The panel has discussed whether Japan should set a separate rate for solar projects smaller than 0.5 megawatts, since the average cost of those systems tends to be more expensive. The committee decided not to introduce such a rate this year and will continue to examine the matter.

The condition of Japan’s buildings may also be a concern for some developers.

“Buildings need to be strong as panels will be too heavy for old ones,” Eiichiro Gotoh, president of Ichigo Eco Energy Co. (2337), a Tokyo-based solar-project developer, said in an interview. “You won’t be able to repair those buildings” once panels are installed, he said.

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