Introduction:
Historically, photovoltaic (PV) market in this country was dominated by residential PV application (Ted 23). Among the revolutions made by the then government of Japan was to invent and promote other renewable sources of energy (Paxson 201). This paradigm shift by the Japanese government has been motivated by the craving to put some environmental factors in check. Also, the energy demand not only in Japan but also all over the world has increased. This has reached a level where the existing energy sources are unable to meet the current market demand.
This paper seek to address various concerns of solar panel power in with a particular prominence on building an economic demand model for the energy consumption of solar energy in the Japanese setting. In the attempt to estimate the most likely demand model in Japan, this paper will examine the various factors that affect solar energy demand for Japan. I will build an economic model that seek to ascertain the relationship that exist between the so chosen determinants to the overall demand for solar energy in Japan.
Japan having a large population and a complex economic structure, it follows that energy demands by the Japanese government and her people are consequently complex. The paper will encompass various sections each of them dedicated to address pertinent issues that we consider critical to this research.
Literature:
Research concerning solar power in Japan is either limited or not captured on the international arena, but this piece will attempt to present a general summary of the available research work which has been conducted by a number of energy experts, other professionals and scholars in this field.
According to Nasser Ayoub and NakaYuji in their article “Governmental intervention approaches to promote renewable energies-Special emphasis on Japanese feed-in tariff” by the Elsevier Ltd, the shrewd choice for Japan’s potential energy is solar panel energy (Nasser 12). There is evidence from this article that Japanese are in dire need of sustainable form of energy that will not pose health complications to the present and future generation. The desire for clean and safer living environment is also a major concern which seem to increase every time.
According to Robert Margolis in his article “Japan’s Solar Photovoltaic (PV) Market: An Analysis of Residential System Prices” a significant number of Japanese population are those who are able and willing to produce and utilize solar panel energy. It is among the major factors leading to fast growing need for solar panel energy in Japan and the rest of the world. In the international outlook, solar panel energy is becoming the rapidly growing as the source of renewable energy. According to the Department of Energy of Japan, the projections of 2035 solar energy will account between 23-25% of the.
In Japan, the solar sector is rapidly expanding. Japan’s national solar energy vision is to deploy 63 GW by 2030 (cumulative installed capacity). Japan is recognized worldwide in solar panel energy since the change of energy policy in 2011. Although it continues to experience numerous challenges, it has managed most of them and to this day it is one of the most popular solar production all over the world. It is believed that in two years’ time, the solar energy industry expanded by over 60% compared to the historical years.
This Study
This paper will examine the main determinant of solar energy consumption in Japan. I will also build an economic model that we use in establishing a relational demand function that will explain the link existing between the variables of study with the overall result. We shall investigate five variable in our study. We shall have a single dependent variable plus four independent variables whose individual leverage on the response variable will be established using partial analysis of variance.
The Classical theory of demand and supply explains that consumption is a function of demand (Hofman 29). Modelling the demand function for solar panel energy in Japan there is a logical conclusion that we then consider consumption as a dependent variable. This variable will be abridged on the form of solar generation units (kWp) in Japan for a time series between 2007 and 2014.
The independent variables chosen are those that affect economic decision making at bot macro and micro level. These are interest rates, real gross per capita, median electricity prices paid by households and firms and the cost of solar panels installed in many residential homes and industries operating in Japan. Interest rates and GDP per capita are chosen because they have direct impact on the consumption behaviour of any consumer and therefore are key drivers of demand for any product in the market. Prices and cost of what is to be consumed are selected as independent factors to influence the demand for solar panel energy in Japan because these two variables directly affect consumption.
It is interesting to note that we are avoiding to use the mean figures of prices paid because this statistical measure is robust. This means that it is more responsive to outliers in the data which is a drawback. Therefore, to minimize this effect, we resolve to use the median as a measure central tendency. All these data will constitute a time series between 2007 and 2014.
The corresponding p-values found from the kind of a test will form the basis upon which we determine of the significance level of the results in our multiple log regression equation. The significance level we adopt in this paper will be 0.05. Using this significance level, all variables having p-values less than the adopted significance level will be deemed statistically significant in the equation. T-test, the R-squared, Variance Significances (*** high significance level), will be our test rules for the general significance and the overall correlation between variables in the model.
Results;
LN Energy Demand for Japan(panel)=96.5+0.8interest rate-8.3 GDP per capita-3.0 median salary-1.1 cost of solar panel
Summary
There is high correlation between observed real GDP per capita and cost of solar panels variable in the above model. High correlation in these variable implies that there exists a high extend of association between them. This means that one unit increase in cost of solar panel will lead -1.2 decrease in demand for solar energy in Japan. However, the positive correlation need not be confused with causation. As a second variable, the median price of other sources of electricity has negative gradient. This implies a negative trend in the response variable is displayed when this particular explanatory variable is increased. This means that one unit increase in price of traditional electricity will result to -3.0 unit decrease in demand. This is an inverse relationship between price of traditional electricity and solar demand which can be explained by other qualitative properties in the Japanese population. As noted earlier, a large population of Japan constitute individuals who are able and willing to produce and consume solar power in domestic and manufacturing sector (Beverly 24). This can also be explained basing on the fact that the large number of solar panels installed in most regions of Japan between 2007 and 2014. As a fourth variable, real GDP per capita has negative gradient. This is also the inverse relationship between the two variables. It means that one unit increase in real GDP per capita will lead -8.3 reduction in demand for solar energy in Japan.
On running the log regression on out time series panel data, the outcomes showed that each of these four independent variables in the study was related closely to the energy consumption variable. Some showed positive relationship while others showed negative relationship. What is key is the fact that each independent viable affect consumption and consequently demand (Deaton 43).
The probability of observing an extreme value in the sample is quantified the p-value. In this analysis, the p-values of every independent variables in the study is less compared to the significance level. This indicates that all of the output of relationship presented by the model are statistically significant.
Inclusion of such economic model in future research and policy formulation will result to obtaining more reliable models that can be used in energy planning and forecasting purposes in Japan.
Works Cited.
Attanasio, O., & Banks, J. The Assessment: Household Saving- Issues in Theory and Policy. Oxford Review of Economic Policy, 17, 1-19. http://dx.doi.org/10.1093/oxrep/17.1.1 2001.
Beverly, S. G., McBride, A. M., & Schreiner, M. A Framework of Asset-Accummulation Stages and Strategies. Journal of Family and Economic Issues, 24, 143-156. 2003.
Cameron, C., & Trivedi, P. Microeconometrics: Methods and Applications. Cambridge: Cambridge University Press. http://dx.doi.org/10.1017/CBO9780511811241 (2005).
Deaton, A. Franco Modigliani and the Life Cycle Theory of Consumption. Discussion Paper, Princeton University, 1-20. 2005.
Deaton, A., & Paxson, C. Growth, Demographical Structure and National Savings in Taiwan. Princeton University, pp. 1-45. (1999).
