Japan’s solar market poised for growth in 2012 – SPVI review

Though Japan too is affected by the global solar module and polysilicon price fall, the mature Japanese solar market is grappling with slightly different market forces

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Japan is a long time consumer of solar energy and has a very mature solar market ecosystem. In the mid-1990’s, Japan sought to secure its energy future by a building solar energy generation model. It introduced incentives to optimize solar energy usage across the nation. This led to Japanese conglomerates, called Zaibatsus, receiving governmental subsidies to promote solar energy generation through roof top installations.  By early 2000, Japanese solar energy sector thrived with innovative solar technologies. It eventually led to the country building expansive solar PV technology expertise and becoming the global solar PV manufacturing hub.

Sharp, Panasonic-Sanyo, Mitsubishi, Kyocera are some of the top solar module manufacturers in the Japan, who once held market leadership globally as well.

Post 2004, however, China’s rapid growth as a manufacturer in the solar energy sector largely morphed Japanese solar module companies’ global aspirations, even as the Japanese government dropped subsidizing solar panels.  As many China-based solar manufacturers flushed global markets with – cheap equipment for commercial and large-scale installations, the global markets reached over supply.  Alongside this factor, several traditional, massive solar consumer markets like Germany reached saturation.  The dizzy growth momentum in global solar energy sector finally ended with the industry going into a tail-spin by end of 2011. 

Though Japan too is affected by the global solar module and polysilicon price fall, the mature Japanese solar market is grappling with slightly different market forces.

First, in Japan ‘quality and performance’ are market drivers, in a largely domestic consumption scenario as against the massive large-scale installations in most global markets. Secondly, Japanese manufacturers’ reputation on both market drivers of – quality and performance - ensure that they enjoy consumer loyalty within the country. However, Japan too like other solar module manufacturers has had to follow market pressures and install production capacities in Malaysia and other labor-competitive manufacturing locations.

Like Chinese consortiums- SunOasis, GoldPoly and CTDC, which are backed by large China Development Bank- around 20 Japanese firms are have formed small groups of three to nine companies working as a consortium to integrate their solar value supply chain and capture projects in Indonesia (Panasonic Corp, JGC Corp, Mitsui &Co.) , Thailand, Mongolia, Middle East, Latin America and North Africa ( Yokogawa Electric Corp sources its solar cells from Sharp Corp, JX Nippon Oil & Energy Corp, Kaneka Corp).

Leading Japanese Solar Companies include the following-

Sharp, a Zaibatsu from the electronics domain, it is sixth in the world solar module revenue line-up.  In the Crystalline Solar (C-Si) segment, despite Sharp’s superior quality, it products are found to be 30-percent more expensive than China-made C-Si. Gradually Sharp has lost much of the market share to American First Solar, which makes thin films.

Sanyo-Panasonic: Sanyo was an erstwhile mediocre electronic-industry company, with proprietary HIT technology used in lithium batteries and solar panels was acquired by Panasonic, and now as a conglomerate the brand positions itself as a very major player in Green Player segment.  From Solar powered buildings, LED integrated lighting, energy storage, which are soon to become the future of environment sustainability, are some of the Green products that Sanyo-Panasonic is investing heavily in and diversifying its energy products portfolio. It is likely to invest close to $15 million in the European market.

To remain competitive, Sanyo has announced the closure of its Californian production unit, which was begun in 2003, and has moved its manufacturing base to hubs in Asia. It has already closed its Japanese factory to other manufacturing hubs much earlier.

Kyocera has a reputation of being a slow-mover but has managed to capture substantial solar market segment in Thailand.

Mitsui, Toshiba, Mitsubishi, Toshiba – has a substantial market share in solar EPC with a Bulgarian plant of 10MW likely to achieve full production by 2015. Solar Frontier is another Japanese player, who as a Showa Shell Sekiyu, has three plants in Miyazaki producing Ci-S modules that show 14% efficiency.

 

Suntech is one of the largest panel makers in the world and is Chinese. It is looking to capture at least ten percent of the Japanese market segment as Sharp, Kyocera Corp, Panasonic Corp as well as Mitsubishi Electric Corp continue to hold sway over the domestic market.

Suntech made a foray into Japan in 2006, by acquiring Japanese solar panel manufacturer MSK. Suntech supplies Fuji Electric Co., Toshiba Corp (also in deal with Sunpower)., and Hitachi Ltd with solar modules in a bid to capture Japanese market share.

Even as Japanese conglomerates Mitsubishi, Panasonic, Sharp and others come to terms with passive growth factors in 2011, 2012 will begin with three retarding forces - High growth of Yen; the aftermath of the nuclear plant leak following earthquake and irreplaceable damage caused due to massive flooding in Thailand, where most of Japanese manufacturing happens.

Some of the smaller Japanese companies, like Sumco, have not been able to stand the competition and have closed shop. Sumco found the intense over-supply conditions and fall of prices by 70-percent in less than a year too intense to survive. As the second largest company in semiconductor wafer production, it will now close down two solar wafer units and let go of nearly thousand employees. Almost all smaller players in the Solar Wafer segment have had to close due to the abrupt fall in prices leaving behind only very large-scale players like GCL Poly, LDK solar and Renesola.

Global transition in solar technologies: 2011 to 2012

With companies going bankrupt has been a phenomenon especially in the past six months- Solyndra in August; latest companies in the red include German major Q-cells, Miasole and Nanosolar which were once seen as fast-growing companies and are today fighting to survive post the 2011 market crash. Meanwhile, Ascent Solar is yet in talks with an Asian acquirer. Analysts believe that ‘crystalline silicon solar panel technology’ will survive the overhaul across 2012 when thin film thermal and solar thermal technologies are likely to fade out.

Survival of most solar module manufacturers, in the past year has followed a simple path: moving manufacturing to labor-competitive markets. This includes Sunpower and First Solar moving to Malaysia and Philippines; Q-cells moving to Malaysia and REC shift to Singapore.

Japanese Solar market in 2012

The positive aspect of Japanese solar market is that the solar cell prices here are nearly 70-percent higher than global prices. This has led to several of the foreign investors moving towards Japanese market. In fact government-sponsored Japanese ‘buyback program’ continues to attract global players like Canadian Solar Inc, which has a Chinese manufacturing base as well as Suntech Power Holdings Co., which is already building its capabilities here.

Some of the Japanese companies like Solar Frontier are maintaining a good balance in domestic market, having recently supplied 10MW thin-film CIS solar modules to Japan’s largest solar power plant.

Japan, caught in an energy crisis following the nuclear power plant leaks in Fukushima in 2011 and the tsunami earlier has moving quickly towards safe renewable energy resources. The government is now refocusing on solar energy - as a renewable secure energy alternative for the country. In order to revive the floundering solar industry in the country, the government has now decided to reintroduce Feed-in Tariff (FiT) and bring in stability in the sector.

Japan FiT to help global players stabilize

Analysts expect Japan’s FiT, effective from July 1, 2012, will be in the region of 50 cents for kilowatt-hour for solar PV generated electricity and about 25cents per kilowatt-hour for electricity from wind energy. Apparently, MEMC’s downstream SunEdison, the second most prominent polysilicon manufacturer, is likely to enter Japan if the FiT and other government largesse are clearly announced. While there is a controversy over SunEdison’s debut in Japanese markets, it is likely to produce 1-gigwatt at Japanese prefectures- Niigata and Fukuoka, if and when it does enter the market.

Japan Photovoltaic Energy Association data also reveals some interesting data- that solar cell sales in Japan rose by 30.4% in October-December, showing 13.5-percent increase to 321.3MW.

Japan continues to realign its energy generation matrices as the country will see a massive energy shortage due to delays in approval for starting the 54 active nuclear reactors again. As public opinion is not positive about energy generation from nuclear resources, Japan has drawn a long-term plan for energy generation from renewable energy resources.

With the right incentives in place, Japan could  not only have green energy but also become the centre of some massive solar activity as most of the global players are waiting to get a piece of the more stable-priced Japanese solar market.