METI to Survey The Japanese Solar Farms

The Japanese solar boom has continued unabated over the last one and half years with massive FITs leading to every Tom, Dick and Harry rushing to Japan to build a solar farm. Gambling operators and Goldman Sachs have also thrown their hats into the ring. When GS invests in a totally unrelated area, it is a good indication that some big rent seeking opportunity has come about. The Japanese feed in tariff rates are so high that they assure you of a 20-30% IRR, which is huge in a country with interest rates below 1%. Almost every big Japanese company is building a solar farm these days by taking permits from the Japanese government.

But a lot of these farms have not come out well, as every one does not have the execution skill to build one. A lot of these permit holders are just waiting to flip the permits to rake in huge profits without moving their ass. Now Japan’s powerful ministry of industry METI is undertaking a survey of all large un-built solar farms to find out the real reasons for the delay. This will create problems for the financial investors who were just waiting to sell permits or those who were looking to benefit from lower component costs and intentionally delaying building the solar panel farms.

It remains to be seen if METI comes down harshly on the gamers or slaps the wrist of the procrastinators. There have been genuine reasons for delay as Hokkaido does not have enough transmission capacity to evacuate the solar power being generated. There has been no shortage of solar panels thanks to the massive Chinese capacity which has found itself working full time to meet the Japanese needs. Inverter shortages have also gone down. Note lucrative FIT programs have always drawn in shady and unethical players. Spain saw massive frauds while Italy saw the mafia building the solar farms.