Japan’s Solar Industry Faces Massive Bust After Subsidy Cuts

(REUTERS/Carlos Barria)

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Andrew Follett Energy and Science Reporter
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Japan’s booming solar industry may be going bust due to subsidy cuts and power grid issues that have prompted 91 different solar power bankruptcies since 2013, according to an article published Wednesday in Bloomberg.

Japan’s attempts to subsidize solar power haven’t gone well. The country still imports $40 billion worth of oil, coal and natural gas annually and the solar industry appears set to collapse.

“As the declining volume of PV module shipments shows, the market is shrinking,” Takehiro Kawahara, an analyst for Bloomberg New Energy Finance, said Wednesday. “[T]he shrinking domestic market forces them to lower costs to remain in competition with international players or consider exiting the segment.”

Nuclear power provided 29 percent of Japan’s total power output before 2011, but will decline to 13.6 percent by 2023 and 1.2 percent by 2040, according to reports. Japan got 24 percent of its electricity from coal in 2010 and the country plans to get more than a third of its power from coal by 2040. Japan previously shut down all of its nuclear reactors in the aftermath of the 2011 magnitude 9.0 earthquake, which triggered the Fukushima disaster. The country has since transitioned away from nuclear power, but its latest policy pronouncements see nuclear accounting for as much as 22 percent of Japan’s power mix by 2030.

Solar power provided less than 3.5 percent of all electricity generated in Japan in 2015.

Japanese Prime Minister Shinzo Abe previously stated he supports increasing the amount of solar power used, but nuclear and coal power will have continued roles.

Despite lucrative subsidies, mandates and tax incentives from numerous countries that have financially supported the solar industry since the mid-2000s, the global cost of installing solar panels has actually risen from $2,291 in January to $2,759 per kilowatt of, according to data published by Great Britain’s Department of Energy and Climate Change.

Solar power gets 326 times more in subsidies than coal, oil, and natural gas per amount of energy generated, according to 2013 Department of Energy data collected by Forbes. Solar power accounted for 0.6 percent of all electricity generated in America in 2015, according to data from the U.S. Energy Information Administration (EIA.)

Green energy in the U.S. got $13 billion in subsidies during 2013, compared to $3.4 billion in subsidies for conventional sources and $1.7 billion for nuclear, according to data to the EIA.

Most solar subsidies go to residential installations and includes a 30 percent federal tax credit, while wind is usually industrial scale and is thus somewhat more efficient per dollar spent. Solar-leasing companies install rooftop systems, which cost a minimum of $10,000, at no upfront cost to the consumer. Companies do this because the state and federal subsidies are so massive that such behavior is actually profitable. Solar companies simply cannot compete without government support.

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