Is the future bright for solar energy in Japan?
The key difference between FiTs and the new agreements, the specialist explained, is the contract length. Whereas the former involves fixed rates for longer lengths, the PPAs and FiPs will be “a temporary contract, at least a three-years or five-years contract”.
With shorter agreements, it could be harder for solar projects to obtain financing. Although the shift in agreements is a positive long-term move for this industry, “[investors] don’t know how to explain that, so they have a hard time”.
In the long term, however, there shouldn’t be any impact on the cost of financing, as “the bank is very much positive on the solar business because the cash flow is very steady”.
CAPEX and pricing trends were also discussed. Some hardware pieces are recording delines, including panels, while some construction costs – such as civil work and design – are also going down. The specialist also included estimates for how much the price is changing for panels, as well as their share of the total cost.
The conversation turned to grid connections, which are “a big headache”. “In the case of a medium-sized power plant, it still is going to take at least half a year to get the grid connection confirmed.” The Interview also explored the steps taken during this process, including managing the uncertainties.
To access all the human insights from Third Bridge Forum’s Japanese Solar Energy Sector – Cash Flow Mapping & Project Execution Risk Interview, click here to view the full transcript.
The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
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