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Japan

Overview

Japan’s energy transition started with solar PV policies in the 1990s, making Japan the lead market world-wide at the time. Later, the establishment of feed-in tariffs in 2011 triggered a new wave of deployments, especially for solar PV. Other renewable energy technologies, namely onshore wind, geothermal and biomass have very low deployment levels. Over the past decades, a complex policy framework for the promotion of wind, solar PV and other renewables was established. Today, the Green Transformation (GX) Strategy serves as Japan’s flagship policy package aimed at climate neutrality, including carbon pricing and green investments. However, the RE deployment levels and RE targets are still much lower than in other industrialized countries. In order to grow wind and solar deployment to levels consistent with net zero pathway by 2050 target, the following barriers need to be overcome:

Key barriers and solutions

The lack of economic dispatch and the lack of available grid capacity leads to high curtailment rates for solar PV (and wind energy), reducing the bankability of these projects. Key solutions are modifications to the dispatch regulation, namely accelerating the establishment of economic dispatch under electricity market reforms and curtailing solar PV and wind energy only after nuclear and other technologies have been reduced/curtailed. In order to increase the incentive to expand the distribution and transmission grid more rapidly, the grid connection charging methodology could be changed from a deep connection charging approach towards a shallow connection charging approach, meaning that the TSO or DSO should pay for all costs related to grid upgrades.

Complex and costly land acquisition, land-use conflicts and complex permitting processes lead to long project planning periods and renewable energy production at relatively high costs (compared with other countries). Prioritizing RE projects in spatial planning at the national level and streamlining permitting process (based on one-stop-shop agencies) could lead to important cost reductions and a fast uptake of RE projects.

The Japanese net zero strategy has relatively unambitious targets for renewable energies. The government is targeting 40-50% of renewables in the electricity sector by 2040 (a share already achieved in most European countries today). Targets can be increased considerably, acknowledging falling costs of PV and system integration solutions via continued investments in low cost (battery) storage. The role of hydrogen and ammonia in net zero strategy seems to be exaggerated (and economically not viable due to high costs), underestimating the role of direct electrification based on nationally available wind and solar resources. At the same time, concrete phase-out dates for unabated coal and gas need to be established. As of 2025, the government supports restarting and even extending lifespans of existing nuclear power plants.

Assessment Results

Legend: Low Barriers Medium Barriers High Barriers