Japan Seeks to Balance Renewable Growth With Environmental and Regional Considerations

According to a report by Fuji Keizai, Japan’s domestic green electricity retail market is projected to reach around JPY 4.8 trillion in FY2040, 6.9 times the FY2023 level, while the domestic market for solar power PPA services is projected to expand to JPY 370.9 billion in FY2040, 6.8 times the FY2023 level. However, this growth may not be a linear process given recent moves to tighten renewable energy regulations. The government is now considering revisions to 16 laws, including the Species Conservation Act, to tighten regulations on large-scale solar power plants that it considers pose a risk of local environmental degradation or intensifying natural disasters. Measures under discussion include stricter development rules in habitats of rare species to ensure such ecosystems can coexist. The central government plans to compile a policy package by the end of this year.

The local environmental impact of large solar projects has been criticized in various regions, with a recent case in which construction was suspended near Kushiro Shitsugen National Park in Hokkaido. The new administration led by Sanae Takaichi, launched last month, has indicated it will tighten regulations on solar panels, citing national security risksassociated with widespread use of Chinese-made solar panels, as well as the potential negative local environmental impact of large projects.

Article content — The local environmental impact of large solar projects has drawn criticism in several regions, including a recent case near Kushiro Shitsugen National Park in Hokkaido.

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Regional Policy Responses to Renewable Energy Regulation

Ahead of the central government decision, some prefectures have introduced a locally crafted co-existence tax on renewable projects (Renewable Energy Zoning Tax) aimed at balancing regional development with regulatory oversight. In April 2024, Miyagi Prefecture introduced such a tax on projects involving the development of forested areas exceeding 0.5 hectares. More recently in October 2025, Aomori Prefectureintroduced a similar tax on onshore wind facilities above 0.5 MW and solar facilities above 2 MW, with tax rates differentiated by zoning.

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Understanding how these nationwide and regional rules influence the deployment of renewable energy sources is increasingly important. They also have significant implications for other related businesses, including PPA arrangements and BESS projects, among others.

Shulman Advisory closely monitors the interplay between the deployment of renewable facilities and policy developments, and provides tailored consulting services for clients seeking to navigate the various segments of the evolving Japanese renewable energy sector. If you are interested in learning more about our services, please contact us at info@shulman-advisory.com