Japan Solar Energy Market Size, Share and Forecast, 2032
Japan solar energy market is projected to witness a CAGR of 8.05% during the forecast period FY2025-FY2032, growing from USD 10.58 billion in FY2024 to USD 19.66 billion in FY2032. Japan solar energy market is expected to experience robust growth due to a combination of factors, such as government initiatives aimed at achieving carbon neutrality by 2050, advancements in solar technology, and increasing public awareness of environmental issues. The Japanese government also encourages the integration of solar energy through several incentives for installations and campaigns aimed at raising public awareness, further propelling the expansion of the solar market in Japan.
For example, in Japan, METI- the government’s Ministry of Economy, Trade, and Industry, represents an important supporting factor for implementing solar energy systems and efforts toward a significant share of renewable energy sources in the country’s energy mix.
Additionally, technological advancements have introduced newer solar solutions that are more flexible, efficient, and cost-effective compared to traditional models. The manufacturing cost for photovoltaic components has declined, while electricity prices in Japan are rising; the commingling of these factors also contributes to rapid market growth.
Moreover, continuous advancements in energy storage technologies are addressing the intermittent nature of solar power, making it a more reliable source of energy. Innovations in energy storage systems will also drive the growth of the Japanese solar energy market in the forecasted years.
For instance, in February 2022, JERA Co., Inc. and West Holdings Corporation entered into a head of agreement on a business alliance to develop solar power generation projects in Japan. This collaboration came amid increasing calls for energy decarbonization to achieve a sustainable society by 2050, with solar energy being recognized as a key near-term option due to its established technology and relatively short construction timelines.
Advancement in Solar Photovoltaics Technology Pushes the Market Towards Growth
Advancements in technology are significantly enhancing the efficiency, affordability, and flexibility of solar solutions. Innovations in photovoltaic (PV) technology have transformed the development of new, efficient solar panels, with some models achieving an efficiency of up to 22%. These improvements have increased users’ ability to generate greater amounts of electricity while boosting the productivity of solar installations.
Moreover, the cost of solar technology has decreased over time. The price of solar panels has dropped by nearly 80%. This price reduction enables the use of solar energy in both residential and commercial sectors. For example, between 2010 and 2024, the cost of solar installation decreased to about USD 4.50 per watt from USD 1.00 per watt. Coupled with increased electricity prices in Japan, this has made solar power a viable option for households and businesses.
Additionally, the development of energy storage systems has enhanced the viability of solar energy systems. With advancements in battery storage technologies, the residential sector can now store excess energy generated during the day, addressing one of the primary challenges associated with the intermittent nature of solar energy.
For instance, in July 2024, Enfinity Global, a United States-based renewable energy company, acquired a USD 164 million utility-scale solar photovoltaic (PV) power portfolio in Japan. The portfolio includes a total of 250 MW of solar capacity, supported by Japan’s Feed-in Tariff (FiT), which provides financial incentives for renewable energy projects.
Government Policies Fuel the Market Growth
Government policies and incentives are the driving forces behind the growth of solar power in Japan. In response to concerns over energy security and commitments toward climate change, the Japanese government has begun several initiatives to promote heightened adoption of renewable energy sources, including solar power.
The introduction of the Feed-in Tariff or FiT program is one of the significant renewable energy initiatives introduced in the country as it provides solar energy producers with guaranteed payment for the electricity they generate and supply to the power grid.
Furthermore, the FiT has drawn robust financing, resulting in making solar available for the commercial and residential sectors. The government also offers other measures beyond the FiT, which include other forms of subsidies and tax credits to promote solar installations. For example, the residential sector receives financial support for purchasing solar panels, which lowers the initial investment barrier and increases the installation of solar panels. Moreover, the government also aims to increase the share of renewables in its energy mix to 36-38% by 2030, further emphasizing its commitment to sustainable energy.
Additionally, public awareness programs have been initiated to educate people about the benefits of solar energy and build a sustainable culture. Due to such policies and incentives, Japan’s solar market will expand in the coming years.
For instance, in April 2022, the Japanese government announced a change in the subsidy system for renewable energy, transitioning from a Feed-in Tariff (FiT) to a Feed-in Premium (FiP). The new program enabled renewable energy producers to sell electricity in the spot market at prices above the wholesale rates.
Solar Photovoltaics Segment Dominates Japan Solar Energy Market Share
The rising electricity price in Japan, coupled with growing awareness of environmental issues, have propelled the demand for sustainable energy solutions, and the flexibility of photovoltaics (PV) systems allows for a wide range of installation options, from residential rooftops to large-scale solar farms which cater to diverse consumer needs.
Additionally, technological advancements in solar photovoltaics have increased efficiency, reaching above 22% efficiency levels. The cost of solar photovoltaics has been reduced over the years, further making solar photovoltaics a feasible solution for the domestic and commercial sectors.
Moreover, the FiT policy also has resulted in investment in installing solar photovoltaic systems. This policy guarantees fixed payments for solar energy producers and has led to remarkable increases in capacity. Therefore, solar PV systems form the base of renewable energy for Japan.
For instance, in February 2022, X-Elio concluded a financing agreement with Societe Generale and ING for its Sodegaura solar photovoltaic (PV) plant in Japan. The funds were used to build, operate, and maintain the 16 MW Sodegaura solar PV facility in the Chiba prefecture near Tokyo Bay.
Central Region Leads the Japan Solar Energy Market Share
The Kanto region is recognized as Japan’s leading area and is widely regarded as the country’s strongest in the solar market owing to its high concentration on an economic self-sustaining function and large population density. This region incorporates the Tokyo area, which accounts for about 45% of Japan’s GDP, and is bound to be an essential center of economic activities and innovation of renewable energy sources in the country’s regions.
Tokyo, being the administrative capital and one of the highly populated urban centers, necessitates the need for energy including solar power. As these areas are densely populated, there is a huge demand for residential homes to have solar energy systems installed. In addition, the people in the Kanto area have benefited from attractive government incentives for the use of renewable energy such as the FiT scheme.
Moreover, advancements in technology and an increasing awareness of environmental issues among residents have accelerated the growth of solar photovoltaics (PV) in this region. These combined factors have led to an increasing rate of solar installations in Japan, thus making the Kanto area the leader in transitioning towards sustainable energy.
For instance, in October 2023, Sekisui Chemical Co., Ltd. made a significant advancement in solar technology by installing film-type perovskite solar cells on the exterior walls of the Dojima Kanden Building in Osaka. This marks the first permanent installation of such solar cells on a building’s exterior in Japan.
Future Market Scenario (FY2025 – FY2032F)
- The Japanese government continues to support the growth of the solar energy sector through incentives and policies aimed at increasing renewable energy adoption. The government is aiming to increase the share of renewable energy to 36-38% by 2030, which will drive further investments in solar energy.
- Increasing electricity prices in Japan will further incentivize households and businesses to adopt solar power as a cost-saving measure.
- Growing environmental awareness among the public is driving demand for sustainable energy solutions, pushing more consumers towards solar energy adoption.
- Continuous advancements in solar technology, including higher efficiency panels and improved energy storage solutions, are expected to enhance the viability and attractiveness of solar installations.
Report Scope
“Japan Solar Energy Market Assessment, Opportunities and Forecast, FY2018-FY2032F”, is a comprehensive report by Markets and Data, providing in-depth analysis and qualitative and quantitative assessment of the current state of Japan solar energy market, industry dynamics, and challenges. The report includes market size, segmental shares, growth trends, opportunities, and forecast between FY2025 and FY2032. Additionally, the report profiles the leading players in the industry, mentioning their respective market share, business models, competitive intelligence, etc.
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