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Likely Beneficiaries of Japan’s Push on Solar

Japan’s new Renewable Energy Bill has raised a number of questions concerning implementation and the likely beneficiaries. I’m working on an article on this at present. However, it seems worth providing an initial view.

In two articles which I published on Seeking Alpha back in March I suggested that we would see this development in Japanese solar and that it would be significant.

The main domestic players in the Japanese residential solar market are in fact seven of the big Japanese Zaibatsus – Sharp (SHCAY.PK), Sanyo (SANYY.PK), Panasonic (PC), Kyocera (KYO), Mitsubishi (MIELY.PK), Mitsui (MITSF.PK), Toshiba (TOSBF.PK) and Honda (HMC) as well as Solar Frontier, which is a subsidiary of Showa Shell Sekiyu. Finding a pure play is not easy. And you can bet that the seven Zaibatsus above will control the roll-out process.

Beneficiaries elsewhere are likely to be those with good relationships with the above companies. A dedicated solar cell provider like JA Solar will certainly be one – the Japanese players will need their product. This is certainly another very good reason to be long JA Solar.

In addition, the Japanese players are also likely to face capacity constraints. So they will need to pull in end product in terms of finished modules. Suntech Power is reported to be the largest player amongst foreign suppliers. Trina Solar should also benefit as a low cost supplier.

In addition, back in March my main conclusion was that SunPower would be well placed to benefit as a result of its relationship with Toshiba.

I’ll write more in an article to follow.

Disclosure: I am long JA Solar.