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Japan

Overview

Japan’s energy transition started with the implementation of solar policies in the 1990s, making Japan the world’s lead market at the time (Japan for Sustainability, 2008). Later, the establishment of FITs in 2012 triggered a new wave of deployments, especially for solar (Wen et al., 2021). Other renewable energy technologies, namely onshore wind, geothermal and biomass, have very low deployment levels (Renewable Energy Institute, 2023). Over the past decades, a complex policy framework to promote wind, solar and other renewables has been established. Today, the Green Transformation (GX) Policy serves as Japan’s flagship policy package aimed at climate neutrality and includes carbon pricing and green investments (IEA, 2024). However, RE deployment levels and RE targets are still much lower than in other industrialised countries. In order to bring wind and solar deployment to levels consistent with the target of net zero by 2050, the following barriers need to be overcome.

Key barriers and solutions

The lack of economic dispatch and available grid capacity leads to high curtailment rates for solar (and wind power), reducing the bankability of these projects. Key solutions involve modifying dispatch regulations to more quickly establish economic dispatch by implementing electricity market reforms and curtailing solar and wind power 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 to a shallow connection charging approach, meaning that the Transmission System Operator (TSO) or Distribution System Operator (DSO) would have to pay for all costs related to grid upgrades. This is compounded by Japan’s grid cost framework which creates a disproportionate burden on renewable energy developers and regions, in the absence of national cost-sharing reforms (IEEFA, 2025). Complex and costly land acquisition, land-use conflicts and complicated permitting processes lead to long project planning periods and renewable energy being produced at relatively high costs (compared with other countries). Prioritising RE projects in spatial planning at the national level and streamlining permitting processes (based on one-stop-shop agencies) could bring about significant cost reductions and faster uptake of RE projects. Japan's government recently passed the EEZ law in June 2025, which increases the territorial limits for offshore wind projects by enabling their installation in Japan's exclusive economic zone (EEZ) (Renewable Energy Institute, 2025). The Japanese net-zero strategy has relatively unambitious targets for renewable energies. The government is targeting 40–50 percent of renewables in the electricity sector by 2040 (a share that most European countries have already achieved) (Renewable Energy Institute, 2025). Targets could be increased considerably, acknowledging the falling costs of solar and system integration solutions via continued investments in low cost (battery) storage. The role that hydrogen and ammonia are expected to play in Japan's net-zero strategy appears overstated, given their high costs and limited economic viability at scale; these commodities should be prioritized for hard-to-abate sectors such as heavy industry where few alternative decarbonization options exist, with direct electrification powered by renewables better placed to drive decarbonization in the power sector. At the same time, concrete phase-out dates for unabated coal and gas need to be established. As of 2026, the government is in favour of restarting existing nuclear power plants and even extending their lifespans (Renewable Energy Institute, 2026).

Assessment Results

Legend: Low Barriers Medium Barriers High Barriers