Maintenance is the latest battlefield in Japan's solar industry
Failure to monitor and repair panels leading to lost capacity, revenue
TOKYO -- With declining energy purchase prices discouraging construction of new solar farms in Japan, companies are finding new business opportunities in maintenance, aided in part by new legal requirements.
MS&AD Insurance Group units Mitsui Sumitomo Insurance Group and Aioi Nissay Dowa Insurance will partner with electronics maker Omron, NTT Facilities and Goldman Sachs-affiliated Smart Energy to bundle insurance policies with maintenance services.
While the MS&AD camp will offer policies covering damage to power generation facilities, its partners will remotely monitor the plants and perform repairs when trouble occurs.
MS&AD has about 20,000 solar insurance contracts, controlling half of the domestic industry with sales of about 5 billion yen ($44.1 million). Further growth is expected since the uninsured rate is more than 50%. The company hopes to maintain its share by offering insurance policies along with maintenance services.
Japanese electronics maker Ricoh has expanded its solar power maintenance offices from just two in Tokyo and Osaka to six throughout Japan, including the Tohoku region and Kyushu. The company also built up its dedicated repair staff sixfold to about 30 people.
Ricoh already performs maintenance on 250 plants throughout Japan, but the bulk of such work is outsourced by panel makers or construction companies. Going forward, the company will use its own salespeople to directly market throughout the country, targeting a 10% share of the market.
Some panel makers offer maintenance to solar power plants that employ their products. But electronics giant Sharp has begun to perform repairs at facilities that use rival products in a bid to expand its own business turf.
Five years have passed since Japan began its feed-in-tariff system, a program that encourages renewable energy production by fixing the price at which such power is purchased by utilities. Solar power facilities now dot the country's landscape. Initially, solar power was said to be maintenance-free, but some facilities have lost more than 10% of their capacity by failing to monitor and repair defective panels.
Revisions to Japan's renewable energy law in April now make maintenance mandatory. Those that do not comply could lose permission to sell energy back to the grid. Japan's 30 billion yen solar power maintenance industry is expanding every year and is expected to reach 100 billion yen by fiscal 2030, according to market research firm Fuji Keizai.
Meanwhile, the price at which electricity is sold back to the grid has nearly halved over the last five years, making the construction of new power plants a less profitable prospect. As fewer new plants are built, solar power companies will likely put greater effort into ensuring stable revenue by avoiding lost capacity at excising facilities.