How sustainable it is, nobody knows, but Japan’s feed-in tariff is doing what it was meant to do: inspiring solar power installations.

You might remember that last June, Japan finalized its feed-in tariff rates, and the story was, “Japan Sets Itself Up For A Solar Boom.” Now the talk is of Japan overtaking Germany and the United States as the hottest solar market in the world – and of what might come after.

Industry analyst IHS said last week that Japan is on track to install “more than 5 gigawatts of new capacity” in 2013. To give you an idea of how that compares, Germany installed around 7.6 GW in 2012 (after ringing up 7.5 GW in 2011), while the U.S. installed around 3.3 GW. Declining FIT rates tamped down growth late in the year in Germany, however, and most forecasters see the country likely coming in at no more than 4 GW this year. The recent SEIA/GTM annual report put the U.S. forecast for 2013 at 4.3 GW of PV and nearly 1 GW of concentrating solar.

“At ¥42 Japan’s FIT is by far the most attractive globally – overly generous perhaps, which could lead to overheating of the market,” Ash Sharma, senior director of solar research at IHS, said in a statement.

“And while a 10 percent reduction in tariffs is widely expected by industry players (by April 1), this will have little effect on both internal rates of return and market demand. Furthermore, many systems that have already applied for the higher FIT are able to benefit from this rate of ¥42 even if they are installed after April 1.”

IHS said the FIT has been “a lifeline for struggling Japanese companies that are able to sell both modules and inverters at high margins,” and news from Panasonic seems to confirm that. Bloomberg, citing an interview with the head of the company’s solar operations, said Panasonic expects its PV business to remain profitable even as companies around the world – like Suntech – struggle to stay in the game.

Of course, anything pumped up like Japan’s solar market these days is going to have to eventually let some air out and the speculation as to how that will go with Japan is already beginning; witness Renewable Energy World, in detailing the Japanese situation, musing upon “whether the nation, like others before it (think Spain) is overheating.”

by Pete Danko

Comments