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HOME > Monthly Perspective > Year 2022 heads for novel dissemination and the PV industry will shift to a sustainable business structure

Year 2022 heads for novel dissemination and the PV industry will shift to a sustainable business structure

2022.02.22

Year 2022 has begun as an important year for the full-scale development of PV power generation both in Japan and overseas. Following the agreement reached at COP26 in 2021, the world, both developed and developing countries, are expected to further accelerate the introduction of PV power generation, making 2022 a historic year in which the annual installed capacity would reach 200 GW and the cumulative installed capacity would exceed 1 TW. In Japan, a new introduction system and introduction expansion are expected to start to achieve the ambitious target amount of PV power generation, and it will be a year when the transition from the relatively calm business environment to self-sustaining development based on the principle of market competition will begin. Until now, Japan has been able to introduce less than 60 GW of PV systems over nine years since 2012 supported by the Feed-in Tariff (FIT) program, but it is estimated that the dissemination structure of PV power generation in Japan will change significantly as shown in Figure 1 with the development of new introduction. The dissemination structure solely depending on the FIT program, which is financed by the burden on the public, will end, and it will shift to a new dissemination structure that makes full use of a variety of players and methods, such as relevant ministries and agencies, local governments, regulatory reforms, business models, consumer participation, technology development, etc.

 

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Figure 1  Dissemination structure for 2022 onward

 

Specifically, the following changes are expected to begin in the dissemination structure of PV power generation from 2022. In the enforcement of the Acts for Establishing Resilient and Sustainable Electricity Supply Systems, instead of the current FIT program, a market-linked Feed-in Premium (FIP) program, a system to accumulate funds to cover the disposal cost of PV modules, an approval cancellation system, a push-type transmission grid enhancement, and the introduction of licenses to distribution operators and specified wholesalers (aggregators) will be started, under the Renewable Energy Promotion Act and the Electricity Business Act. In the enforcement of the revised Law Concerning the Promotion of the Measures to Cope with Global Warming, the introduction of PV systems will begin to expand with the target amount of renewable energy introduction by local governments and the setting of areas for promoting the dissemination of renewable energy. The policy measures based on the Sixth Strategic Energy Plan will further strengthen the activities including the following toward achieving the maximum introduction of renewable energy: securing suitable locations; strengthening business disciplines; reducing costs; integrating into the power market; overcoming grid constraints, streamlining regulations, and promoting technological development. In the introduction expansion by responsible ministries and agencies, the GW-scale introduction will be promoted in the fields of public facilities, housing, industrial facilities, farmland, etc., by fully mobilizing laws, schemes, policy measures, budgets, and regulatory reforms under the respective jurisdiction of the Ministry of Economy, Trade and Industry (METI), the Ministry of the Environment (MoE), the Ministry of Land, Infrastructure, Transport and Tourism (MLIT), and the Ministry of Agriculture, Forestry and Fisheries (MAFF). In the regulatory reform, based on the Implementation Plan for Regulatory Reform in FY 2021, regulatory reforms that will lead to expanding the introduction of PV power generation will continue by thoroughly examining regulations and obstacles across relevant ministries and agencies and local governments. In the introduction expansion by local governments, based on the regional decarbonization roadmap and the setting of the target installed capacity, the introduction of PV systems for local production and local consumption will be fully expanded in the communities while using subsidies for the introduction of renewable energy grants, etc. Furthermore, in the business model for expanding introduction, the introduction of the PPA scheme that does not incur installation costs using a third-party ownership (TPO) model, and by promoting a business model for expanding the dissemination, the dissemination of the system that does not require government support will progress. In the enhancement of  shifting to the renewable energy business by conventional energy industries, the companies will be able to secure stable supply of energy and gain the public trust in the renewable energy industry by becoming renewable energy suppliers. In the acceleration of conversion to renewable energy electricity by electricity consumers, investment in the development of renewable energy power supply will advance, and the demand side will take the lead in expanding dissemination. In the acceleration of technology development, it will be possible to introduce PV power generation in fields where it has not been introduced much so far, and the fields of introduction will expand with the creation of new markets.

 

The above-mentioned factors for dissemination alone are not enough to significantly expand dissemination, but by combining and bundling the factors, a new dissemination structure that did not exist under the FIT program is assumed to emerge. As if aggregating distributed power sources to make virtual power plants, it is necessary to create a new dissemination structure equivalent to the FIT program by aggregating several dissemination factors that will contribute to the dissemination hereafter. On the other hand, the PV industry is responsible for introducing more than 50 GW in the future in order to achieve the new introduction target in 2030. The PV industry must move away from the conventional business structure based on the FIT program and proceed with the transition (PV transition or PVX) to a sustainable business structure of PV with new recognition and determination, despite the mixture of the severe phase of drastic change in the business environment and the phase of the rising expectations. In 2022, the government will strongly promote the expansion of renewable energy introduction from planning to implementation, including the formulation of the Clean Energy Strategy under the direct control of Prime Minister Fumio Kishida and the revision of Acts such as the Electricity Business Act, the Energy Conservation Act, the Law Concerning the Promotion of the Measures to Cope with Global Warming, and the Building Energy Efficiency Act. The PV industry, together with the government, should position 2022 as the “starting year of the second phase of introduction expansion” following the FIT program, and continue to expand dissemination. Let us move away from depending on the “revenue from selling electricity” that has been the purpose of introduction so far, change “economic superiority through self-consumption” to a new introduction purpose, and aim to create a decarbonized economic society that can be built up together with electricity consumers.

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