According to a new Industry Trend Analysis that was published by US credit, macro, and industry solutions firm Fitch Solutions Macro Research, the solar power sector's growth in Japan is going to be slowing down in the next decade. However, before it slows down, the industry is planning on adding 17 gigawatts worth of new solar capacity by the end of 2020.
In the analysis that was published, it was stated that the slow down of the solar power sector in Japan is due to the company transitioning to competitive auctions for the utility-scale solar power capacities that happened last year. However, there's one more thing that adds to this equation, which is the latest announcement from the Government in Japan. In September, the Japanese Government announced that the country's feed-in tariffs for all the solar installations for the company and the household levels are going to be halved by the mid-2020s.
Both of the actions, the transition from the feed-in tariffs to competitive auctions, along with the feed-in tariff reductions are meant to address all of the incredibly high costs of subsidizing Japan's solar power industry. Even though the country's solar sector has been seeing an explosive growth in the last few years, going from 13.6 gigawatts in 2013, all the way to 48.6 gigawatts at the end of last year. These numbers have also made Japan out to be one of the fastest growing solar sectors in the entire world.
However, due to the expectation of having successful and attractive feed-in tariffs, the long-term outlook on the Japanese solar sector is going to be slowing down, at least for the time being. So far, there have been two competitive auctions that the Japanese government has organized, in order to begin the process of transitioning to competitive auctions for the utility-scale procurement. But, the second one didn't attract a lot of successful bidders, but they are expecting things to improve in the third auction, which is scheduled for the second half of 2018.