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More precisely, that's one main purpose of the high rates for the first three years. And in three years, I don't expect more than a blunt (that is much less than say 60 GW of solar and 40 GW of wind): the growth speed of an industry and the amount of capital that can be drawn isn't infinite even if profitability will be stellar.

I'll be honest, I haven't taken the time to read through the law in detail.  I was only responding to usurious solar FiT rates.  Good FiT policy should be designed to foster economies of scale. The problem with solar PV is that it doesn't exhibit these.  The net effect of growth is mathematical not geometrical. Doubling the manufacturing capacity of a panel plant doubles the output of the end product.  Money poured into wind turbine production will help fuel increases in the size of wind turbines, mathematical increases in their radius result in geometric increases in their swept area, and electrical generation.

Your word choice makes me curious: by the "FiT regime" that may be harmed, do you mean the institutional framework or the plants working under the FiT taken together, or the whole renewables sector (including suppliers)? Either way IMO the danger is in the collapse of the manufacturing and installation industry if degression sets in too hard. But I don't think enough renewables will be installed in three years to seriously impact electricity prices and thus give a valid justification to destroy the institutional framework; and the way the rates are set, producers who install their plants in the next three years will be unaffected by future degression, not to mention conventional fuel competition.

I'd repeat Thomas's comments below, with a caveat.  In the short term, given the tremendous expense of natural gas in Japan, this program probably will help to drive down consumer prices. Again, I haven't taken the time to read the law in detail, so I am interested in what you have to say about the rates being high for three years.  The question I'd ask is how this plays out.  First, what is the rate after the three years?  Second, will panels installed in the first three years receive the full rate for the 20 year term?

As Germany and Spain have shown, two to three years of mania can produced a PV solar sector dominated by rooftop installations which consume the majority of FiT budgets while producing a small fraction of the renewable power in a country. Japanese interest rates are extremely low, which suggests that you're going to have a repeat of what happened in Europe.

Finally, you talk about the manufacturing and installation industry.  This is really quite simple. There will be no manufacturing industry in Japan spurred on by this policy, instead what will happen is that Japan will suck up the excess capacity of Chinese suppliers for a few years. PV solar production is driven by the cost, not the quality, of labor. Moreover, the 2015-2020 period is likely to be one in which natural gas prices in Japan plummet as LNG imports from the US resume, at much increased scale, and China/India experiment with shale gas. It won't last, but that won't matter.

FiTs are a poor fit for solar PV.  Panels can make sense for individual consumption, but they simply aren't efficient enough to warrant their integration into the grid. As such, policies targeting their installation should focus on financing instead of production incentives. Moreover, as a matter of decreasing CO2 emissions, and creating fuel price declines, support for solar water heaters is probably a much better choice.  

PS, thanks for the link to more recent IEA stats.

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Sun Jun 24th, 2012 at 01:11:08 AM EST
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