Cost-effectivess of subsidization to photovoltaics in Japan from the viewpoint of carbon dioxide emission reduction

Publisher Summary This chapter analyzes the cost-effectiveness of subsidies to photovoltaics (PV) in Japan through an electricity buy-back program from reducing carbon dioxide (CO2) emissions point of view. For this analysis, the energy system of Japan is modeled using MARKAL, which is one of the energy system model based on multi-objective linear programming. With national PV capacity targets in mind and an assumed carbon tax, PV system sales price and electricity buy-back rates necessary to make PV cost-competitive with other energy technologies is estimated. The results show that, under the expected carbon tax of 6000 JPY/t-C, PV require continuous subsidies via buy-backs even if both fuel savings and green credit are taken into account. Annual revenue of the assumed carbon tax is sufficient to finance the estimated total annual subsidy. Estimated cost-effectiveness of the subsidy ranges from about 33000 JPY/t-C in around 2020 to zero in 2030. It is anticipated that the analysis will provide decision making support for prioritizing and optimizing subsidies to new energy technologies.