Jason Irwin dot Net

Japan’s Solar Subsidy Set to Return This Month

January 2, 2009 Japan, Politics, Technology

In the final weeks of 2008, Japan’s government put quite a bit of legislation through the house, one of which involves billions of tax dollars in the form of subsidies for solar panel installation in the coming year. This “Solar Subsidy” comes less than three years after a similar program was cancelled by the Koizumi administration but, thanks in part to the current economic situation, the size of the subsidy is quite a bit larger. Yet despite the seemingly generous 70,000円 per Kilowatt being offered for equipment installed in the 2009 year, this might be yet another classic case of “too little, too late.”

Before the previous subsidy program was axed, Japanese solar manufacturing firms held a huge portion of the market. That said, once the domestic market lost their tiny rebate, the sheer costs of installing a simple solar panel seemed too great for the average consumer. Thanks to falling demand, the two major manufacturers, Sharp and Kyocera, were unable to secure enough silicone, which then capped their continued growth due to the booming demand for the substance.

The New Plan

It’s with this incentive package that the Japanese government hopes to cut the price of residential solar panels by as much as 50% in the next three to five years, but how many people will be willing to invest such a large amount of money into a product that is expected to come down in price by such a large margin?

As of last month, the average consumer could purchase a 3 kilowatt solar power collector for about 2,300,000円. The government subsidy is good for 70,000円 per kilowatt, so that means a return of 210,000円. While the 9% discount is nice, it’s still priced way too high for most homes. On top of this, the amount of money that a family would earn back from the local electricity company for such a contraption would not amount to any significant savings. Depending on what prefecture a person lives in, a 3 kilowatt solar panel could require upwards of 580 years of continuous operation to pay for itself!

Who can afford this at a time when all the big manufacturers are crying over the rapid contraction of the nation’s exports and the soaring value of the Yen?

Curbing Enthusiasm

Before getting too much farther, I don’t want to sound too critical of the government’s plan to subsidize the installation of solar equipment in this country. It is really a great idea, and market surveys have found that over 35,000 buildings may be outfitted just this year alone. That should help companies like Sharp and Kyocera maintain some of their employees, while also giving the installers some work. All in all, the package is estimated to be worth approximately 9-billion Yen, and there could be more when the next federal budget is tabled in April of this year.

Emissions reached record levels last year and, according to some incredible numbers published by the people in Tokyo, they hope to have Japan’s CO2 emissions back down to Meiji-Era (Early 20th Century) levels by 2050. While this might seem like a pipe dream, it is certainly possible given the amount of engineering prowess some of the geniuses at Honda, Toyota, Sharp, Sony, and Mitsubishi have. As a result, the government has also mandated that over 70% of all newly built houses will have at least some solar power collection in place by 2020. Add this to the number of auto manufacturers that are producing electric-only vehicles in the next five years and the government might just be lucky enough to have corporations and citizens performing most of the hard work to reach the lofty goals set by old men in high-carbon outputting buildings.

The Right Direction?

There’s no denying that Sharp and Kyocera have hit some pretty hard times due to the lack of domestic investment in their solar products, but is the government’s decision to boost seemingly ecologically friendly power generation through the use of subsidies the right answer? If people are receiving money for installing solar panels, should the government also start rewarding people who drive “Kei Plate” cars or avoid owning a car altogether?

Changing a nation like Japan from an over-industrious nation into a substantially reduced emission’s-producing country is not going to be easy feat, and regardless of whether global warming is a result of humankind’s endless streams of carbon going into the atmosphere or the currently super-active Sun, we certainly need to do something to reduce the chemical stew that is clogging the air. Whether the subsidy will have any positive effect or not on the green-ness of Japan remains to be seen, however, with a few more promotional programs put forward by both the government and corporations, residents in Japan may be more willing to invest in the cleaner technologies to make up for the last few centuries of industrial excess.

Do you think this subsidy will have any effect on people’s willingness to drop 2.3-million Yen into solar panels for their home? Would you invest in the technology if you knew similar or superior panels would be available within a few years for almost half the price? I’d love to know your thoughts on the matter.

Tags: energy, Japan, Kyocera, Sharp, solar