A market research firm said Japan is set to overtake both Japan and the USA in the installation of photovoltaic (PV) capacity.

According to IHS IMS, Japan will grow by 120 percent and will install over five gigawatts of PV systems during 2013.

But there’s a clear financal reason for that. A feed-in tariff in Japan pays up to �42 per kilowatt hour. “At �42 Japan’s feed-in tariff is by far the most attractive globally,” he said. He described the tariff as perhaps “overly generous” Ash Sharma at IHS said. That could mean the market "overheats”.

He said the industry expected Japan to reduce the tariff by 10 percent later this year, but that won’t prevent Japan leapfrogging over Germany, Italy and the USA to become the second largest PV market in the world.

The tariffs will help Japanese companies that sell modules and inverters – currently they lag behind overseas companies. Japan, said IHS, wants foreign companies to speed up PV installations – and Chinese and US module suppliers now sell into the market.

One of the main reasons for Japan’s boost is on projects over two megawatts – dubbed “mega solar”. While that’s going to assist growth during 2013, it will be a short lived move because there’s a shortage of available land. High electricity prices and a shortage of nuclear energy are all contributing to growth in the country.