TOKYO -- Foreign energy companies are pouring into Japan for a slice of its solar power market, drawn by the high prices offered under the country's feed-in-tariff renewable energy program.
Even though the Japanese government is lowering solar power prices under the program, they are still higher than in other countries.
Thai state-owned oil and gas company PTT will set up a 25,000kW solar power plant in the Iwate Prefecture city of Ichinoseki via a group company, seeking to launch operations in the winter of 2017.
U.S. energy company GSSG Solar will build a 47,000kW solar power plant in Suwa, Nagano Prefecture. The plan is to have a joint venture with a local company operate the plant starting in November 2017. The project's cost is estimated at 10 billion yen to 20 billion yen ($93 million to $186 million), the bulk of which will be financed by borrowings from Shinsei Bank.
French oil giant Total is to construct a 26,000kW solar power plant in Nanao, Ishikawa Prefecture, aiming to kick off operations in 2017. U.S. company First Solar has already built a 1,300kW solar power plant, which has been operating in Fukuoka Prefecture since 2014.
Foreign energy companies plan to take advantage of Japan's feed-in tariff program introduced in fiscal 2012. The program requires utilities to buy clean electricity from suppliers at a fixed price for a certain number of years, with the cost passed on to households and companies.
Initially, power generated by a megasolar plant would fetch 40 yen per kilowatt-hour for 20 years. The price has dropped to 24 yen per kilowatt-hour by fiscal 2016, but this is still about double the price offered under similar programs in Germany and France.
Japan's industry ministry plans to lower the price by more than 20% by around fiscal 2019 to alleviate the financial burden on consumers. With the market outlook dimming, many Japanese companies are giving up their rights to sell electricity under the program, citing maintenance difficulties and other reasons.
Meanwhile, foreign companies -- sometimes with more experience in solar power than Japanese counterparts -- are going on the offensive. An influx of foreign players may spur competition and lower costs, benefiting consumers.