Raw Materials Price Inflation Dampens Japan’s New Focus on Renewables

October 26, 2021|Renewables; raw materials

Polysilicon prices from Bloomberg and PVInfoLink

Japan’s effort to boost renewables capacity over the course of this decade is falling prey to inflation. Energy and commodity prices have surged this year on the back of spending by many governments to alleviate the effects of the pandemic, as well logistical bottlenecks and power shortages.

The rise in raw materials prices is starting to filter into the cost of solar in Japan after a substantial jump in panel prices recently, according to government officials that oversee renewable energy development. Solar polysilicon prices jumped to the highest in a decade last week.

The increase comes at a time when solar development in Japan is at a crossroad. The government’s latest energy vision places a big bet on solar power in part due to its short installation time and a record of falling costs over the prior decade. But central government plans have bumped against increasing local opposition, that, among other factors, centers on perceived space constraints. 

Evidence of rising costs for solar and wind developments is also a political concern. Newly anointed Prime Minister Kishida Fumio is leading the ruling party to a general election on Oct. 31 with promises that include a greater eye on affordability and wealth redistribution.

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