Market turbulence in Japan’s solar panel market

With promises of government subsidies and power utilities slated to buy excess power from customers at relatively high prices in fiscal 2010, demand for solar panels is expected to climb in Japan — but domestic solar cell producers are facing intense competition from other sectors and foreign entrants, reports the Nikkei Business Daily.

With promises of government subsidies and power utilities slated to buy excess power from customers at relatively high prices in fiscal 2010, demand for solar panels is expected to climb in Japan — but domestic solar cell producers are facing intense competition from other sectors and foreign entrants, reports the Nikkei Business Daily.

Sharp Corp., Kyocera Corp., and other major Japanese solar cell manufacturers will likely face more intense competition as domestic chemical companies, as well as Chinese, Taiwanese and other foreign solar cell makers, gear up to enter the market. And a strong yen is making things even tougher for domestic suppliers to fend them off.

Foreign competition

Solar cell manufacturers from around the world showed off their cutting-edge technologies at the recent 2nd International Photovoltaic Power Generation Expo. Taiwan’s Sun Well Solar Corp. plans to start selling its thin-film solar cells in Japan through a major trading firm as early as this year. Its production capacity is slated to rise by 350% to 45,000kW this year.

Chinalight Solar Co., which manufacturers and sells machinery, intends to start selling its solar cells in Japan through its machinery sales network. Many Chinese and Taiwanese solar cell makers have been selling most of their output in Europe, but sales there have been hit by the economic downturn.

Domestic competition

Some Japanese chemical companies are also making forays into the solar cell business, the Nikkei Business Daily notes. Mitsubishi Chemical Corp. is working on an organic thin-film solar cell with a goal of developing building materials with built-in solar cells. Fujikura Ltd. displayed pigment-sensitized solar cells at the Expo.

Meanwhile, major Japanese solar cell makers’ expo exhibitions are focused on products offering higher energy conversion rates. Kyocera displayed a new type of solar module that it plans to begin mass-producing in fiscal 2009. This polysilicon module features a type of cell that maximizes the light-capturing area by placing the electrodes on its back.

Mitsubishi Electric Corp. is promoting a polysilicon solar cell that utilizes infrared rays more efficiently than existing products. Sharp is planning to raise the suggested per-kilowatt retail prices of its mainstay models by about ¥20,000, citing an improvement in efficiency. Sharp’s booth at the expo displayed a solar module that requires an installation space of ~13 sq. m.

Home-use solar power systems

In the Japanese market for home-use solar power systems, numerous low-price overseas makers are establishing their presence, especially in light of new government subsidies.

In January, the Japanese government began accepting applications for subsidies for the installation of household solar power systems; the program will resume in fiscal 2009 after a hiatus. To be eligible, models must be priced at <¥700,000/kW, including installation costs. However, the current typical price of solar devices is around ¥800,000/kW.

Thus, in January, Ecosystem Japan which sells 50,000 solar power systems annually, lowered prices so that all products are priced at no more than ¥700,000/kW. Given that wholesale prices remain unchanged and Sharp’s prices are lowest, selling Sanyo and Kyocera products is now less appealing to the firm.

Sharp’s price advantage over other domestic firms, however, does not guarantee success because of foreign competition. For instance, Ecosystem Japan has been receiving numerous supply proposals from Chinese and Taiwanese manufacturers.

West Holdings Corp., a home improvement firm that sells solar power systems at Yamada Denki Co. outlets, recently switched its main supplier from Sanyo Electric Co. to China’s Suntech Power Holdings Co. to save money. The company is also receiving further offers from other Chinese and European firms.

The strong yen is making it difficult for domestic players to hold off the foreign onslaught. “As competition intensifies, solar cell makers cannot sell at their ideal prices,” said a West Holdings executive. “Sales companies are carefully selecting their suppliers.”

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