Solar PV Market Outlook for 2020 (1)

Market scale, policy, trends in business models

2020/01/11 16:31
Kenji Kaneko, editor in chief, Mega Solar Business (Nikkei BP Intelligence Group, CleanTech Labo)
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Taking next step in preparation for end of 'FIT'

The solar power generation industry began to seriously search for business models that do not rely on the feed-in tariff (FIT) sheme in 2019. The industry will take the next step by deciding the "next solar power business" in 2020.

Following the drop in the purchase price and the upper limit bid price for solar power for business use to 14 yen/kWh in fiscal 2019, self-consumption models are becoming more economical than the models for sale under the FIT scheme for both household equipment and business-use equipment. Self-consumption projects are also developed actively in the field of business-use solar power plants connected to high-voltage transmission lines.

Furthermore, discussion of a "drastic review of the FIT scheme" began and the systems for purchase prices based on the market (feed-in premium = FIP) and working out power generation plans by signing contracts with power purchasers are taking shape. It has become apparent that a wider range of knowledge and knowhow will be required under the framework of government support after the end of the FIT scheme, compared with current models in which power producers "can sell the power only if they construct plants and connect the plants to the grids."

Meanwhile, a policy was announced to continue support by the FIT scheme if the requirements for "power supply for local use" including power supply during power failures are satisfied. The policy will be applied ahead of schedule from fiscal 2020 to low-voltage solar power plants for business use. The "requirements for local use" will be specified for solar power plants connected to high-voltage transmission lines in fiscal 2020.

The application of the FIP system to large-scale solar power plants is expected to start from fiscal 2021 at the earliest. Solar power developers will be searching for the "next" development methods, considering whether they should sell the power generated by large-scale projects by the "FIP system" or they should sell the power by the "corporate PPA (power purchase agreement)" system without relying on political support, in respect to field power plants for sale of all the power, while developing self-consumption-type power plants, as well as considering the possibility of incorporating the "local use power supply" specifications and selling excess power under the FIT scheme in respect to small projects.

The local use requirements will be applied to low-voltage solar power plants for business use from as early as fiscal 2020, and the plants will be shifted to the system to sell excess power under the FIT scheme by satisfying the requirements for a "30% or more self-consumption rate" and the function of independent operation during power failures or the system to sell all the power under the FIT scheme by a combination of solar sharing and independent operation during power failures. The support by the government for field solar power plants that sell all the power will be discontinued for projects certified after fiscal 2020.

Low-voltage field solar power plants account for 30% of solar power plants for business use in terms of the certified capacity and about 90% in terms of the number of projects. They have been leading the domestic solar power market since the start of the FIT scheme. However, the Ministry of Economy, Trade and Industry (METI) is concerned about consistency and operational reliability after the end of the FIT period in respect to solar power plants of this level and decided to provide "no support" to the plants. This is one of the largest changes made to the FIT scheme since its start.

"Developers of low-voltage projects" that developed small solar power plants of less than 50kW in output throughout Japan by inviting investors will have no more new projects after completion of projects that were certified by fiscal 2019. They will be required to make a move for the shift to next business models including self-consumption models and high-voltage models in 2020.