Solar PV Market Outlook for 2020 (2) (page 2)

Market scale, policy, trends in business models

2020/01/19 16:58
Kenji Kaneko, editor in chief, Mega Solar Business (Nikkei BP Intelligence Group, CleanTech Labo)
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New development projects may decline to 3 to 4GW

As for the estimated solar power market in and after 2022, the household solar power market and the self-consumption solar power market for business use will remain steady and the scale may reach 2 to 3GW in total for the two markets. However, if the development of new field models to sell all the generated power slows down, significant shrinkage of the domestic market is unavoidable.

The amount of newly certified solar power plants for business use was approximately 4.8GW in fiscal 2018. It is likely that the amount will be about the same or less in fiscal 2019.

Projects certified by bids targeting projects that are 500kW or more in the first half of fiscal 2019 amounted to 195MW while projects with a total capacity of 324MW obtained qualification for bidding in the second half of the fiscal year. Even if all of the projects win the bids and obtain certification, the total amount will be only 519MW. Even if 1 to 2GW of low-voltage projects for business use, 1GW of household solar power generation projects and 1GW of self-consumption projects are added to the above, new projects throughout Japan will remain low at 4 to 5GW.

It is almost certain that the number of new development projects will decrease more substantially because low-voltage projects for business use will disappear in fiscal 2020, with a possibility of shrinkage to about 3 to 4GW.

The market for the introduction of new solar power equipment may decline to around 4GW in the years from fiscal 2022, following completion of large-scale projects under the FIT scheme and stagnation in new development from fiscal 2020.

The future market scale will depend on the scale of the development of field solar power projects for sale of all the power by the FIP system, which will start in fiscal 2021, the FIT scheme for power supply for local use and the "corporate PPA (Power Purchase Agreement)" system by private companies.

The market scale will be significantly affected by the degree of political support provided under the FIP system and the FIT scheme intended for power supplies for local use, which will be actualized in the future. If the supporting measures are not attractive enough, actions to establish "corporate PPA" schemes in collaboration with RE100 declaration companies may be in the mainstream.

In western countries, some people say that "the business risk is smaller when the power is sold for a fixed price for a long term under the corporate PPA systems established with blue-chip companies" rather than operating renewable energy businesses under the FIP system, which poses risks of purchase price fluctuation and change in the system" and introduction of PPA systems established by private corporations is being accelerated.

However, it is difficult to replace the electrical charges for industries with power supplied by corporate PPA systems, and it is possible that solar power projects that can sign contracts with blue-chip companies that can provide financing and can be developed at low cost may be limited.