Japanese Solar Market Bears Brunt Of COVID-19

GlobalData: Coal & Gas May Score Brownie Points In Japan As COVID-19 Related Chinese Solar PV Supply Chain Disruption May Negatively Impact Solar PV Sector
07:40 AM (Beijing Time) - 09. June 2020
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COVID-19’s has a negative impact on the Japanese solar industry, according to GlobalData, which believes a delay in supply of PV products from China will impact project delays in Japan while giving a boost to coal and gas generation. Pictured is Mount Fuji in Japan. (Photo Credit: www.goodfreephotos.com)

Key Takeaways

  • GlobalData’s analysts believe COVID-19 is likely to leave its impact on the Japanese solar industry
  • Delay in Chinese solar PV shipment to the country and drop in electricity requirements are to play a role in bringing down solar PV deployments
  • Winners in this situation are coal and gas power generation to support baseload power requirements

The Japanese solar market is likely to witness a decline in deployments due to the COVID-19 triggered economic slowdown, slowing down activities in the space at at time coal and gas step in to support baseload power requirement. GlobalData says solar is to suffer from delays in PV shipments from China due to the pandemic compounded by a drop in electricity requirements in the country.

“Japan, in its quest to meet the target of having 24% of its energy use from renewables by 2030, made investments in the solar and offshore wind a priority. However, these efforts are expected to experience a setback due to the COVID-19 outbreak,” said GlobalData’s Senior Power Analyst Somik Das.

GlobalData points out that before the pandemic outbreak, the increase in solar power generation was acting as a trigger to bring down wholesale electricity prices even though revisions in the tariff structure and grid interconnection issues were expected to negatively impact the growth of solar in the country.

Now, the pandemic has brought new solar power construction activity to a stop as a result of the government’s efforts to curb the spread of the disease. This is going to upset completion timelines of newer solar projects. Nuclear power is not widely available in the country anymore post the Fukushima disaster.

The beneficiary of this situation turns out to be polluting coal as is clear from the fact that Japan increased its Q1/2020 coal imports by 3.4% on annual basis, according to GlobalData. On the other hand, the government has included solar in its COVID-19 recovery package.

“As per the last amendments to Renewable Energy Act, solar projects have to meet strict deadlines to reach commercial operation, the government has released an aid to help the projects bound by power purchase agreements (PPAs),” said Das, adding, “In the $1.1 trillion stimulus package, the government has made provisions of $1 billion for the development of onsite renewables which are expected to support corporate PPA under their commitment to the RE100 initiative.”

Anu Bhambhani

Anu Bhambhani is the Senior News Editor of TaiyangNews

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Anu Bhambhani