Renewable energy to push Japan's installed capacity to 390GW by 2025

These sources will more than double by then.

Japan’s cumulative installed capacity will rise from 317.5 Gigawatts (GW) in 2014 to an estimated 389.8 GW by 2025, representing a moderate Compound Annual Growth Rate (CAGR) of 1.9%, according to research and consulting firm GlobalData.

The company’s latest report states that while thermal sources will contribute the majority of installed capacity, with an expected overall share of 54.7%, other renewable sources (excluding hydropower) will more than double by the end of the forecast period.

Renewable installed capacity will increase from 37.8 GW in 2015 to 83.3 GW by 2025, rising at a CAGR of 8.2%, representing the largest growth in Japan’s energy sector.

Chiradeep Chatterjee, GlobalData’s Senior Analyst covering Power, says: “Despite the new Japanese government’s rethink on the decision to phase out nuclear power after the Fukushima disaster, there is still a focus on promoting renewable power, not only to reduce reliance on the nuclear sector but also to tackle the huge cost of importing natural gas and oil.

“A new feed-in tariff system introduced in July 2012 will drive renewable installed capacity growth, as utility companies must purchase power from renewable energy sources, including solar, wind, small hydro, geothermal and biomass, at pre-set premiums for up to 20 years.”

The analyst adds that, as a consequence, higher rates for renewable power are being passed on in the form of inflated power bills, which adds extra burden to the consumer.

By contrast, thermal power will continue to be a major contributor to Japan’s power mix, with installed thermal capacity forecast to reach 213 GW by 2025, according to GlobalData.

“While gas will be the dominant thermal source, contributing 36% of thermal capacity by 2025, coal is expected to witness the highest capacity growth after 2020, increasing at a CAGR of 4% between 2021 and 2025,” the analyst concludes.