Last July, the Japanese government introduced a feed-in tariff scheme for renewable energy to help offset the loss of nuclear power in the aftermath of the March 2011 Fukushima nuclear power plant disaster, which led to the idling of nearly all of the nation's 50 reactors amid safety concerns.
While the feed-in tariff applies to wind and geothermal power, solar power can be developed more cheaply and does not require time-consuming environmental assessments as do wind farms.
Figures from Japan's Ministry of Economy, Trade and Industry indicate 11,012 megawatts of non-residential photovoltaic projects were approved since the start of the FIT policy and the beginning of this year.
A recent report by IHS Inc. said Japan's solar power market is forecast to reach $19.8 billion this year, surpassing Germany, which was the biggest market from 2009 to 2012.
The FIT scheme authorizes the Trade Ministry to give "special consideration to the profits of renewable energy suppliers" for the first three years of the new tariff to promote the scheme, a report Wednesday in National Geographic's news portal said.
But the FIT scheme also includes provisions that allow utilities to restrict or deny access to the grids to ensure the stability of the electricity supply.
In a survey by the Japan Renewable Energy Foundation of companies involved in solar projects, 20 percent of the respondents said they were denied access by local utilities because of overcapacity and 37 percent said they would experience limits on the amount of electricity the utilities could accept.
In April, regional utility Hokkaido Electric Power said its transmission system, onto which large solar systems are interconnected, had received four times as many applications as it could manage.
While this situation has yet to occur in other parts of Japan, experts say the country's electricity system will need to be revamped soon if the solar boom continues.
Softbank's 180,000-plus megawatt project to build three large solar power plants in the northern Japanese island of Hokkaido is currently on hold because Hokkaido Electric Power has not decided which applicants it will allow to connect to the grid.
"The government needs to show what direction it wants to take the nation's energy policy," Hiroaki Fujii, executive deputy president of SB Energy, Softbank's group company that operates its renewable energy business, was quoted as saying by National Geographic.
"Only then can the utilities make plans about future investment and the operators think about profitability and draw up business plans."