Japan Poised to Become Second-Biggest Market for Solar Power TOYKO - Japan is poised to overtake Italy and become the world's second-biggest market for solar power, as incentives starting July 1 propel sales. It could eventually top Germany, which holds the No. 1 spot. Industry Minister Yukio Edano on Monday set a price for solar electricity that is about triple what industrial users now pay for conventional power. That may drive at least $9.6 billion in new installations with 3.2 gigawatts of capacity, Bloomberg New Energy Finance forecast. That is about equal to the output of three atomic reactors. "The tariff is very attractive," said Mina Sekiguchi, associate partner and head of energy and infrastructure at KPMG in Japan. The rate reflects the government's intention to set up many solar power stations very quickly. Prime Minister Yoshihiko Noda's effort to cut dependence on atomic energy, which provided about 30 percent of Japan's power before the Fukushima nuclear meltdown in 2011, will help a solar industry suffering from incentive cuts across Europe. Under the new program, utilities will buy solar, biomass, wind, geothermal and hydro power. All costs will be passed on to consumers in surcharges, which the government estimates will average about ¥100 a month. The measures beginning in July expand on a program started in November 2009 that requires utilities to buy unused solar power. That expanded the market for rooftop residential panels. The five largest Japanese solar projects planned or under consideration were all announced between October and April, as the government worked out details of the feed-in tariff program, according to New Energy Finance. Dozens of companies have announced plans to take advantage of the subsidies. Yingli, a solar energy company based in Baoding, China, has set up a unit in Japan. "Being closer to the customers is extremely important for Yingli," Masaki Mizuta, managing director of Yingli Japan, said May 4. We also believe that this is a key success factor in Japan. Kyocera is "aggressively" expanding its solar division, said Sanae Iwasaki, a spokeswoman for the company, which is in Kyoto, Japan. "More players will enter the market for investment purposes," Ms. Iwasaki said. There will be more importance on the quality. We will pursue cost-cutting by producing panels with higher conversion efficiency. But the push is also raising concern among Japanese business groups that aid for clean power will raise bills and slow the Japanese economic recovery. "This is a mechanism with a high degree of market intervention, by setting tariffs artificially high and making users shoulder the cost," said Masami Hasegawa, senior manager of the environmental policy bureau of Keidanren, the most powerful Japanese business lobby, which counts Toyota Motor and Nippon Steel as members. We question the effectiveness of such a scheme. Utilities will pay ¥42, or about 53 cents, per kilowatt-hour for 20 years to solar power producers, almost twice the rate in Germany, the world's biggest market by number of installations. The solar tariff was among incentive rates for clean energy announced Monday by the Ministry of Economy, Trade and Industry. Developers are counting on the subsidies and have accelerated construction plans this year for solar parks. "We hear every day a new announcement of a megawatt-scale project," Izumi Kaizuka, a solar industry analyst at RTS, said in Munich, referring to projects of one megawatt or bigger. Japan ranked sixth worldwide by new installations last year, when it added 1.3 gigawatts of solar to raise its installed base to 5 gigawatts. Next year, builders will construct roughly triple that level, or another 3.2 gigawatts to 4.7 gigawatts, New Energy Finance forecasts. A gigawatt is enough to supply about 243,000 homes in Japan. Only China will exceed Japan in terms of solar capacity growth, New Energy Finance estimates. Japanese companies like Kyocera and Sharp, which kept the photovoltaic industry alive when the United States scrapped investments in the 1990s, are gearing up to supply their home market.