It’s been a big year for global renewable energy development as Japan announced its intention to phase on nuclear energy and instead rely heavily on clean energy sources. Recent clean energy subsidies in the county sparked $2 billion in clean energy investments in just two months while the Japanese government predicts a “$640 billion spending boom” between now and 2030.
Major investors in the emerging Japanese solar market include Goldman Sachs Group Inc. and billionaire Masayoshi Son. Bloomberg Businessweek reports that “99 percent of applications for the new tariffs are for electricity generated from sunlight.”
Analysts say that within the Japanese solar boom, land prices and industry salaries are quickly becoming overly inflated. Investors looking to cash in on the new wave come from all industries, ranging from (according to Businessweek) gambling parlor operators to asset managers.
This is causing critics of solar in Japan to predict a “solar bubble” in the future.
But big investors like Sumitomo Corp, one of the world’s biggest trading companies, still sees potential in the market. So Sumitomo is taking an alternate route in renewable energy investment, choosing to focus on wind over solar.
Sumitomo is certainly influenced by data from the Japanese government showing that while solar is overwhelmingly the most popular development choice at present, wind farms can actually be built less expensively and yield higher returns.
In fact, Sumitomo’s local utility, Summit Energy Corp., is predicting that it will triple its wind power profits over the next few years. Sumitomo will be developing multiple wind farms as well as at least two biomass plants. Both types of energy will qualify for the government subsidies that pay above-market rates for electricity generated from clean energy sources.
Summit Energy Corp president Shinichi Kitamura explained the company’s strategy in an interview in early September, saying, “With so many companies rushing in, we are seeing a solar bubble forming and land prices are rising.”
He added that his company sees wind energy as a “more manageable” way to achieve Japan’s renewable energy goals.