How high feed-in tariffs impacted the capital cost of solar PV in Japan
Journal article, 2025

This study investigates the impact of feed-in tariffs (FITs) on the capital expenditures (CAPEX) of solar photo-voltaics (PV) projects in Japan. In 2012, Japan introduced a FIT scheme with the highest tariff levels in theworld. Tariffs for a project were set at the time when the project obtained a qualification, but early projects hadno deadline for starting operations, and many where not built until many years later. The installed capacity ofsolar PV in Japan surged under the scheme. However, Japan has suffered from high costs of solar PV compared tothe global level. Using survey data from Japanese solar PV projects, and econometric modelling we leverage thefact that projects qualified at different points in time, with different FIT levels, have subsequently been builtsimultaneously. We find that higher FIT levels are correlated with increased CAPEX, where a 1 JPY/kWh increasein the FIT level is linked to a 3.31 JPY/W rise in CAPEX. This may be due to that developers with guaranteed hightariffs have weaker incentives to reduce costs and/or to strategic pricing by suppliers. Our findings indicate thatpoorly designed support schemes can counteract the policy goal of reducing renewable energy costs.

Renewable energy policy

Solar PV cost

Japan energy policy

Feed-in tariff

Author

Keiji Kimura

Osaka Sangyo University

Liv Lundberg

RISE Research Institutes of Sweden

Tomas Kåberger

Chalmers, Technology Management and Economics, Environmental Systems Analysis

Renewable Energy

0960-1481 (ISSN) 18790682 (eISSN)

Vol. 244 122685

Driving Forces

Sustainable development

Innovation and entrepreneurship

Subject Categories (SSIF 2025)

Economics

Electrical Engineering, Electronic Engineering, Information Engineering

Areas of Advance

Energy

DOI

10.1016/j.renene.2025.122685

More information

Latest update

3/18/2025