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The Environment Ministry plans to abolish subsidies for solar panels under its financial aid program for facilitating the introduction of photovoltaic power generation systems, sources have said.
Behind the move are falling prices of solar panels. Subsidies will not be paid for solar panels to be newly purchased in fiscal 2027 and beyond while installation costs will remain eligible for the aid in principle, according to sources familiar with the matter.
Subsidies will also continue to be available for projects that are under way.
The ministry plans to shift its focus to the promotion of next-generation perovskite solar cells, key materials for which can be sourced domestically, as a part of efforts to strengthen industrial competitiveness. It is expected to request ¥28 billion in related funds under the government’s budget for fiscal 2027, which starts next April, roughly four times the amount under the fiscal 2026 budget.
Currently, the ministry provides businesses that install solar power generation equipment at places such as parking lots and farmland with subsidies at fixed amounts or at certain rates to help them cover purchase, installation and labor costs.
But many of the public comments sought for a review of the support program said that benefits of the aid for solar panels to domestic industries are limited.
China controls over 80% of the global market for conventional solar panels, and Japan relies on imports for most of its procurement for domestic supply.
Prices of conventional panels have fallen about 50% from their peak level due to mass production around the world.
Meanwhile, Japan ranks second in the world in the production of iodine, a key material for perovskite solar cells.
The government hopes that power generation by perovskite solar cells in 2040 will reach 20 gigawatts, equivalent to the output by 40 nuclear reactors.
As problems have been reported from many large-scale solar power projects, the ministry aims to promote renewable energy-based power generation systems that do not cause environmental damage, are less vulnerable to natural disasters and can better coexist with local communities.
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