Market Overview

In FY2025, the estimated domestic installed solar power capacity reached 4,585 MW (in alternating current [AC]). From the 2010s to the beginning of the 2020s, Japan has strived to develop and spread renewable energy sources, including photovoltaic power by implementing the feed-in tariff (FIT) program.
However, FIT-based solar power installation capacity continued to decrease due to declining electricity selling prices.
Meanwhile, power purchase agreement (PPA) *1-based installations that do not rely on FIT programs have increased.
The decarbonation trend and rising electricity costs have driven the implementation of onsite power purchase agreement (PPA), which led the non-residential, onsite PPA installation capacity to reach 1,050 MW (projection). This is estimated to account for approximately 23% of the total capacity.
Offsite PPA capacity has also increased, as more energy consumers prioritize environmental values. The capacity of non-residential offsite PPA installations is projected to reach 638 MW, accounting for approximately 14% of the total.

*1) A Power Purchase Agreement (PPA) is a program in which a PPA provider uses its own funds to build a renewable energy facility. The provider then owns, operates and maintains the installation and supplies the generated power to demanders at a long-term fixed price. Since the power system is owned by a third party rather than the demanders, this model is called the third-party ownership. Many PPAs due long-term such as 20 years, during which demanders pay for electricity and environmental value at fixed price.

Noteworthy Topics

Shrinkage of Large-Scale Grounded Solar Power Installations and Expansion of Rooftop Installations

In Japan, the environment for newly introduced large-scale ground-based solar power plants is becoming severer than ever, due to stricter legislation for facility development and municipal ordinance enactments.
Building solar power plants in newly developed forests is extremely difficult. Future installations will likely occur on former golf course sites or other lands that require minimal additional development.
Meanwhile, the government is encouraging installations that can easily be integrated into communities, such as rooftop installations.
The seventh Strategic Energy Plan, determined by the Cabinet, outlines policies for actively utilizing the potential of rooftop installations.
Rooftop installations are expected to increase due to reduced installation costs and municipal mandates for these installations on new buildings.

Future Outlook

The domestic installed solar power capacity is forecast to reach 6,570 MW by FY2040, in alternating current (AC). Total installation capacity is expected to upturn in FY2026 and beyond, as the installations that do not rely on the FIT scheme, such as onsite and offsite PPAs, are likely to grow.
The full introduction of perovskite solar cells in the 2030s will drive the entire market.
Conversely, FIT-based solar power capacity is expected to decline. By FY2040, FIT- and FIP-based solar power installations, regardless of residential or commercial, will have a capacity of 405 MW. This accounts for approximately 6% of the total capacity.

Research Outline