Japan Could Cut Solar FiT, Taiwan Benefits from Chinese Solar Duties

Less than a year after Japan’s historic feed-in law took effect (July 1), the government could already cut it back.

A committee of experts is advising the government to reduce solar tariffs because prices on solar systems are dropping so quickly. They are recommending a 10% cut for solar on April 1,  but tariffs for wind, geothermal, small hydro and biomass would remain the same.

Over the past year, prices for silicon-based solar panels are down another 20%, says Bloomberg, as growth in solar proceeds at a frantic pace, with everyone from oil companies to banks rushing to participate.

Part of the urgency comes from uncertainty over whether rates for the feed-in tariff will be cut. When the law passed with such incredibly generous rates, officials intimated they could well be cut after getting the market off the ground.

Japan is expected to jump to the world’s third biggest solar market this year, placing it right behind China and either the US or Italy. Japan’s FiT is so generous that it gives power producers triple the revenue as does Germany’s.

From April through November of 2012, Japan’s solar capacity rose 29%, adding 1.4 gigawatts in just 8 months.

Officials believe the market is so strong that cutting the tariff will not impinge on solar development.

Taiwan Gets Big Solar Boost

Meanwhile, the US tariffs slapped on solar imports from China last year are operating as many expected.

Because those tariffs had a gaping loophole – they only apply to finished solar panels – Chinese manufacturers can avoid paying them if they buy components elsewhere. 

Although imports to the US are significantly down from China, that’s because many manufacturers are buying solar cells in Taiwan, thus avoiding 34%-250% on tariffs (depending on the company). 

Outsourcing component manufacturing or assemby to Taiwan raises their costs 10-12%, but it’s a boon for Taiwan’s solar manufactuers, which have been struggling. That will be especially true if the European Union imposes the same tariffs, as anticipated by July.

Chinese solar panel suppliers supplied about 55% of the 4 gigawatt US market in 2012, and 90% of those panels contain solar cells made in Taiwan, Glenn Gu of market research firm IHS told Reuters.

Companies benefiting include Neo Solar Power (3576.TW), Motech Industries (6244.TWO), Gintech Energy (3514.TW), Solartech Energy Corp (3561.TW) and E-Ton Solar (3452.TWO).

But Chinese solar-makers are still suffering, with shares falling and accumulated losses, such as Canadian Solar (CSIQ) and Trina Solar (TSL).  If they can raise the money, Chinese suppliers may begin making their own cells in Taiwan.  

Here’s our background on the Chinese solar tariffs.

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