TOKYO/PALO ALTO, US -- Having already built up a reputation as an emerging disrupter in the global energy industry, Tesla may be about to shake up Japan's stagnant solar power market, which has been hamstrung by an unwieldy tariff system.
The U.S. electric carmaker stole the show at this year's PV Japan, the country's largest photovoltaic technology exhibition, which opened in Yokohama on Wednesday. Visitors flocked to the Tesla booth at the center of the venue, where one of the company's cars was on display surrounded by crowds.
The biggest surprise, commented a representative from a major electronics company, was the price of a Tesla domestic storage cell. The company has yet to decide when to roll out the battery in Japan, but plans to sell it for around 700,000 yen ($6,194), about a quarter of the price of what is currently available in the country.
Solar panels, of course, only work during the day. With storage cells, however, power can be supplied any time of day or night and whatever the weather. "Japan will start using solar power for local consumption and at homes," said a Tesla employee.
The company is increasing its presence in the energy industry its home country. Last year it acquired panel maker SolarCity and has launched into sales of panels, storage cells and electric vehicles bundled into a set.
Tesla believes storage cells can reduce the risk of electricity shortages, which could result from too many people trying to charge their vehicles at peak times.
What makes the company unique is that it sells all three items directly to customers at its own auto shops. By having SolarCity employees install the panels, Tesla has slashed costs and can undercut rival makers by more than 50%.
It takes about 10 years to recoup the cost of a solar panel, but that has not stopped preorders from piling up and customers ordering today can expect delivery in 2018 or even later.
Unlike the U.S. market, which is led by demand from individual consumers, the Japanese market is shackled by a feed-in tariff system whereby utility companies are obliged to purchase renewable energy at fixed prices.
When the program was introduced in 2012, the high price for solar power prompted a surge in the number of huge solar plants hoping to take advantage. The solar panel market expanded but demand failed to grow among individual users such as homes, factories and building operators.
The fixed price has since come down amid much criticism, and requirements for setting up a new solar power plant have been tightened, cooling the industry.
Last year, Japan was the only major economy in the world where the industry shrank year on year, while the U.S., China and major European countries saw an expansion. "The downward trend will continue until around 2020," said Takeaki Masukawa, head of the Japan Photovoltaic Energy Association's secretariat.
With shops in just six cities across Japan, Tesla has nowhere near enough sales capacity to really push its storage cells and solar panels. Yet if the company does have a serious crack at the market, it will almost certainly help revive the whole industry. Japan, for its part, needs to prepare an environment that does is not bound by feed-in tariffs.