I’m very pleased to have a new guest post for you today, from long-term RetireJapan community member Leonard Loo. I’m also very interested in solar power, batteries, and the possibility of energy independence. Will definitely be looking into this when we get a house.
Wanting to invest in something green and sustainable, and at the suggestion of my wife, I recently signed a contract to have solar panels installed at our detached home. In this article, I would like to share the process I underwent from contacting solar generation system providers to concluding a contract, as well as the numbers related to it from an investment standpoint.
The process
I contacted three different providers and asked each for an estimate for a solar power generation system equipped with a storage battery. Two of them provided me with two sets of estimates (with and without), while another just gave one (with).
From here, let me mainly talk about the one I finally ended up choosing. First, the salespeople came to the house to do some rough measurements of the roof from the ground. This is so they can propose a layout on the number and way the panels will be placed on the roof. After that, they came in, explained some things and answered some questions, then went on their way. It is important to note that had I been able to provide the blueprints/drawings of the roof, then measuring from the ground would not have been necessary (our house is a second-hand one and some of the drawings had gone missing).
A few weeks later, they came back with their proposed layout and estimate. They also provided a simulation of how much electricity can be generated over the course of a year on a monthly basis, how much I can save per month, etc.
They then came back a third time to perform a proper on-site inspection with technicians (called a genba chosa: 現場調査) and not just the salespeople. They climbed up the roof, took proper measurements, studied where the wires will pass, determined where the “power conditioner” (referred to as パワーコンディショナー in Japanese – I believe “power inverter” is the term more often used in English; this is for converting direct current produced by the solar panels to alternating current) will be installed, and so on. Through such an on-site inspection, they confirmed that the layout they initially proposed (remember they initially did the measurements of the roof from the ground) was indeed feasible and that the condition of the roof is appropriate for installing the panels.
Thereafter, I decided to go through with installing the solar generation system with that company and signed the contract on the day of the on-site inspection. Since the main purpose of getting the panels was as an investment, it did not make sense to get the storage battery as well, as can be seen from the numbers below.
The numbers
4.46 kW solar system (no battery)
Total price: 1,260,000 yen
Yearly savings/income: 83,995 yen (exact figure they gave; I don’t know the actual parameters they used to calculate this and how they calculated it, so I am just taking it as it is)
ROI: 6.67% (around 15 years to pay for itself)
Based on the company’s estimate, a 4.46 kW solar system installed at our house translates to around 4,700 kWh of energy produced in one year. From their estimate, the amount produced per month ranges from 246 kWh for December (shorter days, less sun) to 547 kWh for May (longer days, more sun).
I put “Yearly savings/income” above since this value is a combination of savings from not needing to buy electricity from the utility provider (e.g., the fridge running during the day), and income from selling electricity to the utility company (this happens automatically when the amount of electricity produced exceeds the electricity being consumed).
I looked at our contract with the utility company and the amount we pay increases in stages (15 to 120 kWh at 20.31 yen/kWh, more than 120 kWh to 300 kWh at 24.10 yen/kWh, more than 300 kWh at 27.80 yen/kWh, as of the time of writing). Also, they will buy the electricity at 16 yen/kWh (they set this every year and it has been on a downward trend). Therefore, if the price of electricity or our consumption increases, we save more on electricity, the ROI becomes higher, and the solar system pays for itself faster. Looking at it another way, it will pay for itself not by selling electricity per se, but by saving on needing to buy electricity over the long run.
Just FYI, having a battery installed together would have cost 2,600,000 yen, and the yearly savings/income the company estimated only went up to around 105,000 yen (apologies, I lost the original estimate they made for one with the storage battery and I am pulling this number from memory). Looking at just this from an investment perspective, it made no sense to get the battery. Of course, if your goal is to have a backup source of power in case of a blackout, then I think getting the battery is worth thinking about.
Also, I promised Ben that I would write a follow-up post a year later reflecting the actual numbers from owning the solar generation system. Please look forward to it next year. 😉
Other information
– In my case, it is taking a little under three months from signing to having the panels installed (signing at the beginning of April, installation at the end of June).
– The panels apparently offer extra insulation for the top floor of a detached house. At the time of writing, the second floor of our house is around 22 degrees Celsius while the third floor goes up to 27. Based on memory, I’m sure it reached 38 degrees Celsius last summer, or even higher.
– If there is a blackout, other than a socket directly connected to the power conditioner, electricity will not be available even during the day. I asked for the reason and got a vague answer of electricity not circulating due to the blackout, thus not allowing the electricity from the solar generation system to circulate within the household (?). If anyone can provide a better explanation, please do so. Of course if you have a battery, this will not apply.
– The panels come with a 25-year warranty, while the power conditioner comes with a 15-year one. According to the salespeople, most power conditioners break down before the 15-year period is up, and can therefore receive a new one for free.
– I may need to pay extra for damage insurance for the panels. That is, the 25-year warranty above is a warranty for the panels’ ability to generate electricity and not for disasters. If there is a typhoon and a piece of debris flies and hits the panels, this will be covered by separate insurance.
– Depending on the type of roof you have and how old it is, they may recommend repainting it before installing the solar panels. Luckily, our roof was the good type and therefore didn’t need the extra expense.
– The installation is scheduled to last for three days: the first and third days are for installing and removing scaffolding, while the actual installation of the solar generation system will be carried out on the second.
– Although solar panels lose efficiency as they age, according to the data the company provided, there is data showing that 30-year-old panels just lost 13% of their energy-making capacity.
– After 10 years, the amount I can sell electricity for will go down drastically. From the current 16 yen, they approximate that it will get cut in half. I don’t know the reason.
Thank you so much, Leonard. I hope this post will be useful for others in the RetireJapan community, and for others living in Japan. We’re always looking for new content, so if you have an idea for a post that would be of interest to our readers do get in touch (we only accept genuine posts for people living in Japan).
Dear Ben,
This a really great post, like so many others.
Are there any tax benefits from installing solar panels?
Yours sincerely,
Stuart McLean
Dear Stuart, Leonard here. I asked the salespeople that as well. They said that for corporations, there is some benefit in that you can put it up as an investment expense or the like. I’m not familiar with the details though.
Thanks for posting this. When we bought our house with great sunlight, solar was one of the things we looked into. But eventually scraped the idea because it seemed like a complete waste of money.
The few people with panels we spoke to had no years of evidence from their company that showed they’ll be saving money over of use. They kept saying the company estimates this and that even when the company had been in business a while.
And another thing was their electric bill. I thought was panels their bill would’ve been zero. Nope. They still do get a bill after paying all that start up cost.
Why can’t electricity be generated during a black out if the sun is being shone? I just feel like it’s all a scam here in Japan.
Leonard here. I’ll see in a year’s time the numbers for my case and write a follow-up. 🙂
As for the electricity bill not being zero, I believe it depends on your usage, especially if you use it at night when there’s no sun and you are using the AC. 😅
For your last question, it does generate electricity; just that you can’t use it for the house unless you have a battery. The power conditioner I mentioned in the article actually has a socket to which you can directly plug in to use in a blackout. As to why you can’t use the electricity besides that one plug, I am also in the dark. My best guess is the electricity isn’t circulating because of the blackout; you know how a battery only works if there’s a complete loop for the electricity (electrons) to move around? Maybe it’s the same concept for a blackout in that the electricity can’t circulate?
The reason why you cannot use the solar panels’ power is due to safety. Even during an outage, the solar panels will continue to produce electricity which may feed back into the grid, endangering utility linemen who might be working on the power lines.
That’s a myth actually. No lineman will work on a segment they haven’t isolated themselves. Multiple people can add to the isolation so that if one person is finished, the circuit is still inactive.
Something like this in a small scale: https://www.osha.gov/etools/electric-power/hazardous-energy-control
We installed solar panels a few years ago when the feed-in tariff was 21 yen/kwH.
It was around 1,200,000 for a system of around 4.5 to 5.0 kW (sorry I can’t remember the exact number).
We get back around 100,000 per year for electricity sold and also end up with a lower electricity bill, the benefit of which is a bit harder to quantify (maybe a few thousand yen cheaper per month).
For a family of 4 with relatively high electricity use we usually break even for about 9 months of the year in terms of electricity sold vs. electricity bought (i.e., have zero net electricity cost), but 3 months over the winter is more expensive.
Some local authorities will have extra subsidies in place (we were eligible for 100,000 back due to installing panels on an already built house).
Thanks for the info!
I asked regarding subsidies and unfortunately, my area (Osaka City) did not provide any.
IIRC, the amount that power companies were paying for solar was over 40 yen/kWh right after the 2011 earthquake and tsunami. I read somewhere that the government really strong-armed the power companies into this deal at the time. The amount they pay has steadily decreased since then (and seems like it will go lower in the future.
One reason that the power company might keep the buying and selling of power separate is that consumers would get a better deal if only total kW in/out were tracked. For example, if you generate 100kWh in a month, at 16 yen/kWh, they will pay you 1600 yen. But if you consume 100 kWh in a month, based on the price listed above at 20.31 yen/kWh, they will charge you 2031 yen. So, it is in their best interest to charge and pay separately.
I feel confident to say that this is one of those industries in Japan where the costs are never passed on to the consumer. Solar panels have not only gotten dramatically cheaper in the past ten years, but the efficiency has also gone up. But I’m sure that the prices being charged to install the panels haven’t gone down to reflect those savings and have probably actually gone up.
This is informative. Thank you!
We were one of those families that needed to rebuild post 3/11. While looking at these numbers now, I am not sure how much of a “Deal” it was, but PanaHome and Panasonic Solar offered us a package for a ¥3m solar system that was split 3 ways. We paid ¥1m, Tohoku Electric ¥1m and a government subsidy of ¥1m. Looking at the prices here, while solar is probably cheaper now, I’d imagine the prices were inflated due to demand and … I had looked into the Tesla Power Wall systems, however when I checked with our homeowners insurance provider, we were told to contact Tohoku Electric who told us that battery systems are not allowed on TE feed systems. Sounds like I need to start doing research once again since Tesla is marketing the PW in Japan now. https://www.tesla.com/ja_jp/powerwall
It will probably get even cheaper in the future so maybe ours would also look expensive several years down the road. 😅
Once the price of selling electricity halves after 10 years, it may be time to get a battery, maybe a Tesla Powerwall. Hopefully the price also goes down further. 🙂
Thanks! for posting this.
Good to see the costs are going down and efficiency going up.
I am on the fence in regards to solar myself. I wonder if using the same money to improve insulation and so reduce the electric bill in winter is a better option
I’ve never looked into insulation so I can’t provide any supplemental info for that. Maybe something to think about for the future. 🙂
Which panels did you get?
I think ours are called Sharp Black Solar. I can’t remember how much you pay for them. I must check again.
I think they had a 15-year guarantee and we got a fixed rate from OkiDen for 10 years of buyback.
From a company called Choshu Industry, a Japanese company (https://choshu.co.jp/english/). According to the provider, because of the weakening yen, imported ones got more expensive so this was what they recommended.
Hi Leonard. Thanks for posting this. I’ve been on the fence for years about adding solar to our roof. Would you mind telling us what maker you are installing? Panasonic? Sharp? Canadian Solar? A Chinese import from Alibaba?
Hello Adrian. It’s a Japanese manufacturer called Choshu Industry (https://choshu.co.jp/english/).
I am really surprised reading the amounts quoted. I have 2 quotations, for Canadian Solar, both without battery. Via Tepco (kind of a lease contract, with ownership at the end) a 4.6 kW setup costs 2.2 million over a 15 year period. Via a different company, direct buy, a 3.0 kW setup costs 1.9 million. This is now (May/June 2023). Which suppliers charge 1.3 million for an approx. 4.5 kW setup? By the way, the Tepco plan with battery comes to roughly 4.4 million over a 15 year period. Buying a battery make no economical sense (yet).
Wow. Those numbers are way different than mine. Maybe the area also plays a factor (I live in Osaka City)? The provider I went with is called 日本エコシステム.
Just got another quotation. This time Chousui (Japanese maker), 3.3kW (they say nothing bigger fits on our roof), 1.5 million Yen. Including 9kW battery and after 0.2 million Yen support money, 3.5 million Yen. By the way, I live in Chiba, but on the border with Tokyo. With the estimated savings (limited, because I also use gas), the payback period of the solar only option is 28 years, The payback of the option including battery is 66 years. Just wanted to share this, as there is clearly no economical motive for solar and it is an extremely expensive option to safeguard against blackout. I am going to stop any further thinking about solar on my roof. For 3.5 million Yen I can also buy a second-hand camper (with solar and airco), to survive a disaster.
Sorry, took some of the info provided by the sales guy at face value. Did my own savings calculation and the amounts all still stand, but the pay-back periods are very different at resp 18 (solar) and 31 (solar + battery) years.
I don’t know why the amounts are quite far from mine. 😞
I hope you can find something else you will be happy with!
My house only uses electric (オール電化) and so I guess if I use solar panels I will save more money than someone living in a house that uses both gas and electricity. At the same time, I am guessing that future savings are going to be greater than in the past as the electric prices are going up. A final consideration I have is that if I put solar panels on the roof then that will make the third floor of the house cooler (where we sleep and I work) and therefore save me money.
Any thoughts?
I agree that for an オール電化 place, solar panels are more effective. When it’s time to replace our gas stove/heater, we’ll probably choose an electric counterpart. As for electricity prices, based on the recent trend, it seems likely the increase will continue. But no one can predict it so of course, you can’t be certain. 🙂 As for the third floor getting cooler, I am looking forward to that as well. Even now, I am already avoiding staying in the third floor of our house. 😅
One reason why you can’t power your house via solar only if there’s a blackout is that the inverter itself needs a *stable* source of power to operate. This is true regardless where in the world you live.
So if you have a battery backup, you’re good. The battery will also supply the inverter while helping the panels during blackout. I bet even small DIY will suffice.
For only being able to use the socket on the inverter during blackout is dependant on the inverter/breaker box. If I chose to go with solar, I can choose which breakers will be powered to the max of 1500W. Basically I can choose the refrigerator and the freezer for example.
Thank you very much for the information!!
I got 10kW of panels installed for 2.2m. My panels are a European brand but manufactured in Singapore. Forgot the name, something Max. I also got quotes for domestic makes, Asahi, Sharp, Pasasonic but the costs were similar for half the generating power (2.5m for 5kW). I wanted to get batteries too but I decided to hold off and wait for the Tesla Powerwall.
I generate around 1000kWh between Mar and Nov, earning around 20k on average. Dec – Feb is lower, around 5k per month. Could probably generate more if I cleared the snow off my panels.
I would’ve wanted to get more than 5 kW of panels but the roof size wouldn’t allow it. 😅 Thanks for the info!
Does any have a company they would recommend?
I won’t say that I definitely recommend them but I have been so far satisfied with the one I went with, 日本エコシステム (https://www.j-ecosystem.co.jp/) (at the time of writing this reply, the installation is halfway done; it rained on the day they were scheduled to install everything so they were only able to take care of installing the necessary devices inside the house). That is, they were very transparent with everything and were also accommodating to my questions. My only issue was that the copy of the signed contract arrived on the day the initial payment (50% of the total cost) was due despite following up a couple of times (probably due to corporate red tape).