Japan's Solar Incentives Focus On the Residential Market

In 1994, Japan initiated a federal-level solar rebate program, providing incentives of $9.00 per Watt. Average system prices were about $20.00 per Watt. The rebates declined annually over the next ten years; the 2004 rebate was about $0.45 per Watt. The program has grown to approve over 70,000 applications in 2004, which added about 300 MW of solar capacity in that year.

Figure 3 shows the average system price, rebate level and number of applications since 1994.

Figure 3 - Japanese Program Rebates and Participation

1994-2004

Participation increased gradually, system prices in Japan declined substantially, and the net cost to the customer remained about the same. Today, the average installed system price is $6.12/watt.

In 2006, federal rebates in Japan are scheduled to sunset, although some local governments and entities will continue to support projects with local incentives. The significance of the local incentives is not clear at this time. Annual federal program funding peaked at about $250 million in 1999, and is currently declining with the level of incentives, even with increased applications, and has exceeded $150 million in four out of eleven years. The eleven-year program budget exceeds one and a half billion dollars.