This is an extract from a recent report “Global Perspectives on Rooftop Solar Energy: A Deep Dive on How Leading Economies Advance Rooftop Solar Energy Adoption” by CEEW. In this extract, we specifically focus on China and Japan.

China

China has been pioneering the rooftop solar revolution. The country possesses a technical solar potential of 2,070 GW. The cumulative solar installations in China had reached 609 GW by the end of 2023. The country is expected to achieve 1 TW solar PV capacity by 2026, with the distributed solar segment expected to account for nearly 50 per cent of the total installation.

Ambitious Golden Sun Programme for domestic solar market creation (2009–2011): China has been a leader in deploying utility-scale projects and continues to lead, with a total installed capacity of 384 GW in 2023. Initially, the focus was on large-scale solar; however, with the rollout of the Golden Sun Programme over the last decade, the distributed PV segment has also grown significantly. The programme aimed to improve electricity access, particularly in rural areas, through distributed solar systems with limited or no grid connectivity. Additionally, it aimed to create solar PV projects exceeding 300 kW in grid-connected areas (Ministry of Finance and Ministry of Science and Technology, National Energy Administration 2009). This initiative aimed to demonstrate PV technologies, boost domestic solar demand, and industrialise PV technologies nationwide. The policy supported both distributed (less than 6 MW) and utility-scale projects, offering a 70 per cent capital subsidy for rural projects lacking power supply and a 50 per cent subsidy for grid-connected projects exceeding 300 KW, with a cap of CNY 100 million per project.

Solar Energy for Poverty Alleviation Programme (SEPAP) (2014–2020): Following the Golden Sun Programme, China launched the Solar Energy for Poverty Alleviation Programme (SEPAP), aimed at benefiting 2 million people across 35,000 rural villages by installing 10 GW of distributed solar capacity. The projects were divided into three categories: village-level arrays (for projects with a capacity of no more than 300 kW), village-level joint construction arrays (for projects with a capacity of no more than 6,000 kW), and rooftop installations targeted towards poor villagers (typically with a capacity of 3 kW). The National Energy Administration and the State Council’s Leading Group Office of Poverty Alleviation and Development coordinated the programme at the central and provincial levels. The programme offered various enabling provisions, such as 100 per cent subsidies for low-income families and zero or low-cost financing options, with the opportunity to repay the loan by selling surplus electricity to the grid. The policy, which was estimated to provide each beneficiary with an annual income of CNY 3,000–3,500, benefited 4.18 million impoverished households by adding roughly 26 GW of solar power capacity by 2020, exceeding the initial target of 10 GW.

Whole County PV Programme: China launched the Whole County PV Programme in 2021 to accelerate distributed solar deployment. The programme aimed to reduce capital investment in transmission infrastructure and enhance grid stability by locating renewable units near load centers. Under the programme, the government set a target to build RTS systems on at least 50 per cent of government buildings, 40 per cent of public buildings (including schools and hospitals), 30 per cent of commercial buildings, and 20 per cent of rural homes. The programme addresses implementation challenges from the earlier Golden Sun Programme. A single bidder is selected as the investment company for each county to provide economies of scale and reduce the soft costs related to customer acquisition and contracting. Under the programme, the investment company builds the project under the Renewable Energy Service Commission (RESCO) model by generating revenue from power sold to building owners and the grid. The programme benefits 140 million people in 676 counties and has significantly increased distributed capacity in China, with 87.4 GW added in 2022, 50 per cent of which is in rural areas. Additionally, over the years, the falling costs of PV modules and capital expenditure have significantly boosted RTS adoption in China.

Future outlook for RTS sector in China: China is investing CNY 500 billion (approximately USD 70 billion) in infrastructure upgrades to support distributed solar grid integration and is installing battery and pumped hydro storage facilities for grid balancing. In December 2023, Chongqing municipality installed a 1 GW pumped storage plant, which serves as a ‘superpower bank’ for the southwest power grid (The State Council 2023). The country is also extending green certificates to distributed solar generators.

Japan

Japan has been a consistent performer in rooftop solar deployment. The country has consistently led in distributed solar deployment, with a 39 per cent contribution to the total installed renewable capacity as of April 2024. It achieved 1 GW of RTS deployment within the residential sector in 2022, following the success of its FiT scheme.

Japan has long been a pioneer in the renewable energy sector, particularly in PV technology. From the 1990s to the early 2000s, Japan was the global leader in PV installation and manufacturing, with companies such as Sharp and Kyocera at the forefront. Furthermore, the Fukushima nuclear disaster in 2011 significantly impacted Japan’s energy policies, driving a shift towards renewable energy to address the country’s power system vulnerabilities. Consequently, Japan introduced a comprehensive FiT scheme in July 2012 to promote renewable energy diffusion. 

Three major policy and regulatory developments boosted the solar PV segment:

● 1994–2005: Residential Solar PV Development Schemes: Japan launched the scheme targeting residential households in 1994 under the Sunshine Project to ensure a reliable energy supply following the impact of the oil shock in the 1970s. The programme offered a capital subsidy equivalent to one-third of the installation cost and a maximum of JPY 340,000/kW  for system sizes up to 4 kW. The programme resulted in a tenfold increase in installations. However, following the programme’s discontinuation, annual installation capacity declined from 260 MW in 2005 to 180 MW in 2007, indicating that the deployment was driven by subsidies.

● 2009–2012: Buyback Programme for Photovoltaic Generation: To revitalise its growth and respond to increasing renewable energy commitments after the Kyoto Protocol, Japan introduced the Buyback Programme for Photovoltaic Generation on 1 November 2009. The programme aimed to purchase the excess power supplied by PV systems at a fixed price for ten years. The initial purchase price was set at JPY 48/kWh for households (less than 10 kW) and JPY 24/kWh for others. For private power generators, the prices were JPY 39/kWh and JPY 20/kWh, respectively.The declining PV system also supported the programme’s success costs over the years.

2012–2019: Feed-in tariff scheme: FiT scheme was announced in 2012 as part of the Act on Purchase of Renewable Energy Sourced Electricity by Electric Utilities to accelerate the deployment of renewables. Under the scheme, the FiT was fixed for systems less than 10 kW for ten years and systems greater than 10 kW for 20 years. FiT of JPY 42/kWh was offered to residential households, whereas JPY 40/kWh was provided to non-residential households. The purchase cost was passed on to all consumers, except large electricity consumers and those impacted by the earthquake. The favorable FiTs helped reduce PV system costs. During this period, increasing domestic demand and high module costs of Japanese manufacturers led to the entry of international companies from China and Taiwan to cater to the domestic market, particularly for large-scale PV.

Domestic manufacturers still serve the residential segment due to the high quality and easy financing options available for Japanese systems. In 2015, Japan set a target to achieve 80 GW of cumulative installed PV capacity by 2030. However, the target was revised upwards to 147 GW by 2030. Japan witnessed a record addition of 10.8 GW in 2015 but showed a downward trend with declining FiTs – the rates decreased over the years to JPY 24/kWh for systems less than 10 kW and JPY 14/kWh in 2019. FiTs are funded through a surcharge on electricity paid by all consumers. A high FiT exerted upward pressure on the surcharge and increased retail power prices, impacting the financial stability of utilities as well. As a result, the FiT programme was phased out in 2019.

● Transition to feed-in premium: Feed-in premium (FiP) aims to provide a more market-oriented approach to renewables support, fostering competition and efficiency while promoting deployment of RTS installations. FiP was introduced in April 2022 with an option for solar power producers to sell their electricity directly on the wholesale market or through bilateral contracts rather than at a fixed FiT rate. The scheme aims to ensure that solar producers are more responsive to market signals and integrate better into the overall energy market. The government provides a premium on top of the market price of electricity. This premium ensures that the total revenue (market price + premium) meets a predetermined level that makes solar investments viable. The market premium stabilises the revenue for the market; that is, if market prices are high, the premium decreases, and if market prices are low, the premium increases.

Future outlook for Japan’s distributed solar sector: Japan is promoting its energy transition with a focus on distributed energy sources by raising its renewable energy targets. The PV market is expected to grow from 2023, driven by residential and industrial rooftop markets, PV mandates for new buildings, and new corporate renewable PPA models. Declining module prices support deployment across all segments, making rooftop projects comparable to ground-mounted ones. Long-term cost reductions will further integrate solar power into the energy system, complementing peak daytime demand and enhancing consumer participation in energy management.

Access the complete report here