Japan solar subsidies lure fewer users than planned

TOKYO Wed Apr 8, 2009 5:33pm BST

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TOKYO (Reuters) - Japan's subsidies for home solar panels have attracted far fewer applicants than planned, industry data showed on Wednesday, underscoring the likelihood of bold government steps to promote solar power.

Greater spending on solar power systems is expected to be a key feature of Japan's new stimulus plan, its fourth such package in the last year. The plan is expected to include fiscal spending of up to $150 billion and some details are expected later on Wednesday.

A top economic and fiscal policy advisory committee said last month that Japan should increase its solar power capacity 20-fold by 2020 from 2005 levels, double its previous target.

In January, the government introduced a subsidy of 70,000 yen ($700) per kilowatt of solar panel equipment, aiming to attract 35,000 applications in the January-March quarter.

But data from the Japan Photovoltaic Energy Association showed that there were so far only 21,653 applications.

The current subsidy works out to around 245,000 yen for 3.5 kilowatt of equipment per household, or around 10 percent of the cost.

But analysts say homeowners wary about big investments amid a deteriorating economy will not be easily won over, especially as solar power is expected to become cheaper and more efficient in coming years.

"People say they would rather wait until the cost halves in 3 to 5 years, which is what the government has forecast," said Etsuko Akiba, head of media relations at the Nippon Association of Consumer Specialists.

The government budgeted 9 billion yen for its subsidies over the three-month period and has also announced an additional 20 billion yen for the financial year that began April 1, aiming for 120,000 applications over the 15 months.

Many local governments are also providing subsidies for solar power to supplement moves by the central government.

Solar power is the most costly among clean energy sources in Japan, and fiscal assistance is seen as necessary to expand demand and encourage solar panel makers, such as Sharp Corp, to invest in research and expansion abroad.

Demand for solar panels dried up after the government pulled the plug on subsidies in March 2006.

($1=100.17 Yen)

(Editing by Edwina Gibbs)

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