This article first appeared on the BNEF mobile app and the Bloomberg Terminal.
- Economies of scale don’t always work in Japan’s PV market
- Experience may not be a crucialfactor in winning auctions
Japan’s latest solar auction saw many of the winning bids consisting of small projects backed by bidders who aren’t necessarily established market players, showing that economies of scale don’t always work and experience may not be crucial in Japan.
The auction, which was open to any investor regardless of experience, saw the weighted average bid for projects below 2 megawatts fall below projects of more than 2 megawatts. Large PV projects are typically more costly than smaller projects because they require a dedicated chief electrical engineer and must acquire large tracts of land.
BNEF expects the trend to continue. The auction result is good news for all companies wanting to develop renewable energy regardless of their size. However, land and grid issues will prevent bids falling further.
Clients can find the report ‘Solar auction finally succeeds in Japan’ on The Terminal or on web.
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