Up to 100 solar PV firms in Japan could face bankruptcy this year, with more than double the number of firms going bust in the first half of this year than the same period in 2016.
According to corporate credit research company Teikoku Databank, which surveys companies across various industries and has produced its third report on solar PV company bankruptcies, 50 companies in Japan’s solar sector have already gone out of business in the first six months of 2017.
While the market overall has rapidly expanded from the launch of the feed-in tariff (FiT) in July 2012, Teikoku Databank acknowledged that there has been a slowdown in deployment in the past couple of years as the government successively made cuts of 10% or more on an annual basis to the premium prices paid for solar energy fed into the grid.
The credit agency said “bankruptcy of solar-related contractors is rapidly increasing”, with solar panel manufacturers also affected. In the first half of 2016, just 23 companies went bankrupt, with this year’s first half’s showing of 50 bankruptcies representing a 2.2x increase. Teikoku Databank forecast that 100 firms in total could go under during 2017.
Another research firm, Tokyo Shoko Research, quoted in Japan Today in 2016, gave a slightly higher figure, 31, for the number of H1 2016 bankruptcies.
Consolidation of the Japanese solar PV market has been predicted by numerous industry figures and experts, since it has been known for some time that the government intends to remove the FiT altogether in the early 2020s. Many bigger players have told PV Tech in the past that they expected their smaller rivals to go out of business as those FiT reductions began to bite and suitable land and grid connection for large-scale solar farms became more difficult to find. Also likely to have a big effect on the downstream sector in particular was the stripping of FiT approval for large numbers of ground mounted solar projects that were never built as the introduction of the first FiT (as much as ¥42 per kWh for some installations) brought speculators and new entrants into the industry.
Teikoku Databank confirmed that for the most part, it was smaller companies – with assets or value of less than ¥500 million (US$4.46 million) that were going out of business, counting for more than 80% of the total. Indeed firms with less than ¥50 million in capital made up nearly 90% of total bankruptcies in the period surveyed. However, the company said, “relatively large bankruptcies are also increasing”.
Teikoku Databank looked back as far as January 2006 and found that between then and June 2017, there were 251 solar bankruptcies.