PV production: Japan or the U.S.?

Solar electricity (PV) is one of the world’s fastest growing industries, increasing 40 percent annually over the past five years. Three years ago, the United States led the world. Today, it has fallen behind Japan and Europe in both production and sales.

Roughly two-thirds of the world’s manufacturing capacity is now owned by Japan. The PV Status Report 2003 documents how Japan has become the world’s leader in an industry created by the United States with the help of taxpayer money.

Over the past 10 years, aggressive government programs have enabled Japan to overtake the United States as the world’s leading producer and consumer of PV. Their support of PV is driven by three considerations.

First is the desire to have a secure source of energy. They are similar to Iceland in that they import 100 percent of their oil and have a strong desire to break that dependence, while U.S. government policy increases our dependence on imported oil.

Second is that they consider PV a promising area of economic growth and are developing a 30-year plan to ensure they are competitive in the expanding PV marketplace. To build a national market, their government recently implemented a renewable portfolio standard mandating a percentage of electrical production from renewable energy. Efforts to implement both Illinois and national renewable energy portfolio standards have been unsuccessful.

Third is that they have made a commitment to curtail their release of global warming gases as a signatory to the Kyoto Accord. The United States government has refused to sign and is openly questioning the reality of global warming.

Additional factors support Japan’s expanding use of PV. The government’s ultimate goal is for PV to become a global mass market product competitive with conventional sources of energy. Japanese hold high environmental values and are willing to pay the additional costs of PV systems.

The average price of electricity is 24 yen/kilowatt for residential use. This relatively high cost means that a relatively low level of subsidy is needed for homeowners to have PV systems installed.

Initial subsidies paid 50 percent of the cost, similar to those paid in Illinois. Assurance of long-term government subsidies for residential PV has stimulated housing manufacturers to integrate it into new homes. High land prices and limited building space also encourage the integration of PV systems into new buildings.

Prefabricated homes are offered with PV roofing, lowering installed cost. Systems are integrated into home mortgages, lowering the high up-front costs still faced by U.S. citizens. Over the life of a system, home owners can expect eight years of free electricity.

As global oil and natural gas supplies decline and prices rise, PV continues to gain market share while prices decline. An early Shell Oil energy scenario projected that 25 percent of the world’s energy supplies could come from renewables by 2025. Japan is well positioned to profit from such growth while reaping environmental benefits.

Long-term government plans can work. Japan’s recent emergence as the world’s dominant producer of PV is a direct result of having met the deadlines of a previous plan covering 1994 through 2002. Long-term government plans in Iceland led to substituting geothermal heat and electricity for oil between 1940 and 1970. Iceland’s current research and development ensure that hydrogen will replace oil for transportation over the next 30 years.

With the importance of energy to the economic and environmental health of a country and the long timelines needed for essential research and development of new energy sources, roadmaps to guide technological developments with firm deadlines and adequate, predictable funding are crucial. Our existing and pending federal energy policies have squandered our global lead in the PV marketplace and must be re-designed to put our economy on an economically and environmentally sustainable path.

Billions for Mars? A fantasy flight. This planet needs our billions now!

Source: The PV Status Report 2003, published by the European Commission, September 2003.

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