The anti-nuclear movement got a real boost following the Fukushima crisis. There's no doubt about that. And as a result, renewable energy was once again paraded around as one of the many forms of clean energy that could be used to displace any nuclear power that would be phased out in Japan...Especially solar.
A few months ago, Prime Minister Naoto Kan announced a plan that would put solar panels on about 10 million roofs by 2030. Of course, he gave little details on how such a plan would be funded. But since the announcement, a number of high-level government officials have called for a solar feed-in tariff similar to that of Germany's.
University of Tokyo professor Ryoichi Komiyama recently offered his analysis of the effects of such a tariff, and noted that in a scenario where the country would seek 30 gigawatts of solar, a $261 billion market for solar panel production and installation would be created.
In the case of utility-scale solar, Komiyama added that developers would potentially have to spend an additional $25 billion for about 8 gigawatts of batteries.
As you know, we've long been bullish on utility-scale batteries, particularly in the case of solar. I would even argue that if Japan were to go full force on a solar feed-in tariff, it would be the utility-scale battery players providing the biggest pay day for investors.
You see, of the top five solar panel producers in Japan, only one is a pure play. And that's Suntech Power (NYSE: STP), which is actually the world's largest solar panel producer. If Japan were to implement this feed-in tariff, Suntech would get a huge boost.
Also benefiting from the tariff will be Sharp (PINK SHEETS: SHCAY), Kyocera (NYSE: KYO), Panasonic Corp (NYSE: PC), and Mitsubishi Electric Corp (PINK SHEETS: MIELY).
A Solar Market on Steroids
If Japan were to implement this feed-in tariff, we'll also see an even quicker drop in production costs. As my colleague Nick Hodge pointed out last week, for every doubling of solar manufacturing capacity, production costs fall about 20 percent.
With a Japanese feed-in tariff implemented, you can be sure that solar manufacturing would kick into overdrive with a serious shot of steroids. And consider Japan's energy demands as the world's third largest economy. They're talking about 30 gigawatts of installed solar, or 75 percent of what the entire world installed from 2000 to 2010. This is a very big deal.
To take it one step further, Japan's environment ministry indicated the potential for commercial solar projects could theoretically reach 150 gigawatts. That's about ten times the capacity of Germany, currently the world's largest solar market.
Of course, it all comes down to how aggressive the Japanese want to be. While there have been dozens of polls showing Japanese consumers want to transition to cleaner forms of power generation, the question is, Will they be willing to pay for it?
I can't imagine Japan's total installed solar reaching 150 gigawatts anytime within the next 20 to 30 years. I just don't think there would be enough political support for it. And I'm pretty sure no matter how much the Japanese despise nuclear right now, they're probably not going to be too willing to pony up any significant increases in their utility bills in order to pay for the integration of 150 gigawatts of solar...
Article by Jeff Siegel June 27, 2011
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