Solar energy to gain cost advantage in Japan

  • Market: Electricity
  • 13/07/21

Solar power energy in Japan is expected to gain a competitive edge against thermal and nuclear power sources by 2030, as solar generation costs is forecast to fall further with rising production of solar cell module at lower costs.

A working group to discuss power generation costs, which was created under the trade and industry ministry (Meti), has provisionally estimated output costs for solar power for business use in the low-¥8s/kWh to high-¥11s/kWh in 2030, compared with high-¥12s/kWh in 2020, based on capacity of 250kW. The 2030 price outlook was also lowered from the previous forecast of ¥12.70-15.60/kWh made in 2015 considering 2,000kW.

Solar power output costs in the household sector are forecast at the high-¥9s/kWh to low-¥14s/kWh in 2030, down from high-¥17s/kWh in 2020, based on the 5kW scale.

The costs for solar output would fall below those for thermal power units in 2030, as costs derived from lower utilisation of thermal units, amid expanding renewable power supplies, are likely to increase. Generation costs for coal-fired units in 2030 are estimated in the high-¥13s/kWh to low-¥22s/kWh, while those for LNG are predicted in the high-¥10s/kWh to low-¥14s/kWh. Costs for oil-fed units would be much higher at high-¥24s/kWh to high-¥27s/kWh.

The 2030 output costs for solar would be also competing with those for nuclear at high-¥11s/kWh, the working group said. Nuclear costs for 2030 were revised up from the 2015 estimate at ¥10.30/kWh, as more costs for safety measures are incorporated in the latest forecast.

Meti has so far confirmed that Japan could increase solar power capacity to 87.6GW by the April 2030-March 2031 fiscal year, by continuing current efforts. This is higher by around 57pc from 55.8GW in 2019-20. The environment ministry separately plans to add 20.1GW of solar capacity by 2030-31, while the ministry of land, infrastructure, transport and tourism is mulling the installation of 2.3GW of solar capacity at the country's air ports.

Generation costs for offshore wind power supplies, whose demand is also set to increase further, are predicted to fall to low-¥26s/kWh in 2030 from low-¥30s/kWh in 2020. But the costs are relatively high compared with other power sources. Japan aims to develop 10GW of offshore wind power capacity by 2030.

The draft generation costs were based on costs to build and operate a new power plant. This may be changing in accordance with update in assumptions, including fuel costs, operating period of a power plant, utilisation rates and volumes of solar power capacity, the working group noted.

The cost estimation will be reflected in discussion to update the 2030 energy mix, as a material to consider which power sources Japan should focus on. It is still unclear when Tokyo will announce the new energy mix goal, although this is widely expected to be drafted soon.

Japanese premier Yoshihide Suga pledged in April that the country will achieve a 46pc cut in the country's 2030-31 GHG emissions from 2013-14 levels, in line with the 2050 decarbonisation goal. This was revised up from the 26pc reduction target in the similar comparison.


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