According to International Energy Agency (IEA) website publication on Renewables 2022 Analysis and forecast to 2027 report:
Solar PV remains the main source of renewable energy growth, but smooth transition to a feed-in premium is crucial to accelerate expansion
Renewable capacity in Japan is expected to increase 44 GW (+30%) over 2022- 2027 in the main case, led by solar PV and wind. The forecast has been revised down slightly (-2%) from last year, mainly because the commissioning of projects previously approved under the FIT scheme has been slower than expected. Uncertainty about capacity awarded under the newly introduced FIP also affects the forecast. Regardless of the challenges, however, the pace of growth expected over 2022-2027 indicates that the country is on track to reach its 2030 renewable generation targets (36-38% of electricity generation) introduced in 2021.
Annual solar PV capacity growth is forecast to be slower over the forecast period than in the previous five years, with projects approved under the FIT scheme (16 GW as of June 2022) remaining the primary source of expansion. Japan’s goal in transitioning from FITs to FIPs is to improve the market integration of renewables and spur utility-scale PV growth. Meanwhile, policy improvements to identify preferential areas, including public buildings and agricultural land, and to promote corporate PPAs, are expected to foster distributed solar PV development.
While these policy measures are making the outlook for new projects more optimistic, fewer FIT approvals (an 70% decline for non-residential PV in the past five years) due to lower land availability for large-scale solar PV projects negatively affects the forecast.
Japan’s wind forecast remains mostly unchanged from last year, with grid connection and environmental permitting difficulties remaining key impediments to faster wind energy uptake. Capacity additions come mainly from projects previously approved under the FIT scheme (11 GW as of June 2022 – double the 2019 level).
In 2021, the government raised the environmental impact assessment threshold for onshore wind from 10 MW to 50 MW. This policy change could lead to faster commissioning of projects already in the onshore wind pipeline, as half of the FITapproved projects are below 50 MW.
Meanwhile, offshore wind expansion accelerates during 2022-2027 with over 0.5 GW of capacity commissioned. The Japanese government’s policy changes for offshore wind include a FIT, sea area designation and improved community engagement. However, while these policies will promote growth, they will not affect the present forecast because their impact will be pertinent only after 2027, according to current project development timelines. This year’s forecast also assumes that some projects will be commissioned before the government-set benchmark dates, thanks to the new auction rule incentivising early commissioning.
In the accelerated case, Japan’s renewable capacity growth is 22% higher than in the main case. For solar PV, realising the upside potential depends on further approval of projects under the FIT scheme. In addition, smooth transition to the FIP for utility-scale PV projects and the wider use of PPAs could accelerate growth. For onshore wind, greater permitting and grid connection efficiency as well as higher completion of approved FIT projects could enable faster expansion.
