Japan Power EPC Market - Growth, Trends, and Forecasts (2022 - 2027)

Japan's power EPC market is expected to register a CAGR of more than 4.2% during the forecast period. COVID-19 was first detected in Japan in early 2021; the country was under strict lockdown, drastically impacting the power EPC market. The market witnessed a decline due to the unavailability of a workforce, delays in funding, delays in the manufacturing of required products, and supply chain disruption. Factors such as increased investment in renewable energy are likely to propel the demand for power EPC in the forecast period. The high volatility of fuels such as coal and gas prices are anticipated to restrain the solar inverters market during the forecast period.

Key Highlights

• The increased investment in renewable energy projects from private companies and supportive government policies are likely to boost the demand for power EPC services in Japan during the forecast period.
• Digitalization in the electricity sector in japan has witnessed significant growth in the last few years. Generation, distribution, consumption, and smart energy production are expected to have an enormous revolutionary change due to big data, IoT, cloud computing, and machine learning technologies. Resulting stable and reliable power supply, which is likely to provide a significant opportunity for the power EPC contractors
• Increased investment in smart grid deployment is anticipated to drive the power EPC market in the forecast period.

Key Market Trends

Increased Investment in Renewable Energy Project

• Renewable power sources are gaining importance as clean energy sources in the country; Japan depends heavily on non-renewable energy sources, like coal and gas, for power generation. Renewable power provides energy security, not dependent on limited natural resources.
• In 2021, the renewable energy industry in Japan remained remarkably resilient. Rapid technology improvements, decreasing costs of renewable energy resources, and increased battery storage competitiveness have made renewables one of the most competitive energy sources in many areas.
• For instance, till 2020, the average yearly price of solar PV modules declined by about 73%. The residential solar system cost was around 280 JPY/W in 2012, reduced to 127 JPY/W in 2020.
• Furthermore, the government of Japan has set a net zero emission target to be achieved by 2050. The ambitious target has led to significantly increasing renewable energy projects in the country, and mainly, solar projects have witnessed significant investment in the last few years.
• For instance, in April 2022, Japanese utility Jera Co Inc and domestic renewable engineering firm West Holdings finalized a deal for developing and constructing at least 1 GW of solar projects on the local market. Under the agreement, the tie-up will install photovoltaic (PV) parks at new and former power plant sites owned by the Tokyo-based electric company, and the work will be carried out over four years.
• All these initiatives will likely boost the renewable energy project in the country in the near future, providing a significant opportunity for power EPC companies as the renewable energy projects are located in off-gride locations that need to be connected with the national grid. Hence the rise in solar energy projects would drive the power EPC market in Japan during the forecast period.

Increase Investment in Smart Grid Network

• In the last few years, there has been a rise in investment in smart grids; this can ascribe to the ageing grid network in Japan. Furthermore, Japan witnessed more earthquakes than other countries due to its location, affecting the power networks.
• According to Japan's Infrastructure Ministry, the cost of maintaining and fixing old infrastructure could swell to YEN 5.5 trillion by 2023. Thus the government aims to deploy smart and advanced grid connections in the country, providing stable and reliable electricity all across the country.
• The Smart grid helps ensure the safer and more secure delivery of electricity. It provides foundations for new market structures and a higher quality of service to the customers. In addition, smart grids are the critical enablers of greenhouse gas (GHG) mitigation, as they increase the hosting capacity of renewable generation, improve asset utilization, and increase resiliency.
• Moreover, the electricity industry in Japan sees the smart grid as a suite of information-based applications made possible by increased automation of the electricity grid, as well as the underlying automation and communication infrastructure itself.
• Furthermore, after the COVID-19 pandemic, Japan witnesses a steady rise in demand for electricity in the country. In 2020 the country generated 997.0 terawatt-hours of electricity, and in 2021 it increased by 1019.7 terawatt-hours, which is 2.6% higher than in 2020.
• Further, due to advancements in technology used in manufacturing, the demand from the industrial and commercial sectors is likely to increase in the near future. all these sectors need a steady power supply, and a smart grid could play a vital role.
• Increased investment in the smart grid project would lead to higher demand for the power EPC services, fueling the power EPC market in Japan during the forecast period.

Competitive Landscape

Japan's power EPC market is moderately fragmented. Some of the key players in the market include SHIZEN ENERGY Inc., J-POWER, JUWI GmbH, Sumitomo Corporation, and Toshiba Energy Systems & Solutions Corporation.

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