On July 1, one of the world's most aggressive examples of a feed-in tariff (FIT) -- a key government incentive for renewable energy -- took effect in Japan. A FIT essentially requires utilities to buy kilowatt-hours of electricity from clean, renewable sources like solar, wind, and geothermal at a rate prescribed by the government. Such policies have been behind the rapid growth of solar energy in countries like Spain, Italy, and Germany. No one thinks of Germany for its sunshine, but it's actually the largest solar energy market in the world, with 25 gigawatts of solar capacity installed (output comparable to about 20 large nuclear reactors) at the end of 2011.
Japan has set the FIT at an extremely generous -- some would say inflated -- 40 yen (about 50 cents) per kilowatt-hour, or about triple the nation's average electricity price. With the costs of solar cells at historically low levels, that has developers drooling at the business prospects. And the gold rush is on. Solar manufacturers and developers from China to Canada to Arizona are jumping into this new potential boom market. And so are Japan's own top solar players like Sharp, Panasonic, Kyocera, and Mitsubishi, who in the past decade have focused most of their efforts on exports. Investment in all clean-energy sectors (solar, wind, and geothermal) in Japan is expected to double this year to $17.1 billion, according to Bloomberg New Energy Finance.
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