Spanish companies have a large stake in the renewable energy sector on a global stage, and, in fact, many of them have set up subsidiaries in Japan.
However, since many foreign companies, including Spanish ones, entered the Japanese renewables market, the situation has changed.
Therefore, we shall present the current situation regarding renewable energy companies in Japan, in particular: (i) insolvency proceedings and (ii) the progress of the draft bill that requires the recycling and disposal of solar panels.
I. Bankruptcy in renewable energy generation companies
On the 6th of May 2025, Teikoku Databank, the largest credit investigation company in Japan, published a report on trends in insolvency proceedings and ceasing of activity of renewable energy producers in the 2024 fiscal year.
According to the report, there were eight cases of insolvency proceedings pertaining to renewable energy producers, like solar energy and woody biomass, with debts surpassing 10 million yen. This figure is double that registered in the 2023 fiscal year, in which there were only four cases. If we add to that the 44 cases of suspension of activities or dissolution, we reach the record figure of 52 cases in which companies have disappeared from the market.
In the five years since the 2020 fiscal year, there have been 19 insolvency proceedings in energy generation companies. The worst affected sector was that of solar energy, with seven cases, followed by woody biomass, with four, thermal energy (including natural gas), with three, and wind energy, with two.
Among the reasons for these insolvency proceedings we find the rise in maintenance costs, management of investments in generation installations, as well as the reduction in the level of electricity purchase prices.
When it comes to pulling out of the renewable energy business in Japan, it is important to keep in mind, along with liquidation or insolvency proceedings or other methods in Japan, the tax and accounting repercussions for the parent company.
On the other hand, the management of risk is also important for companies that carry out transactions with said companies. It is necessary to carefully confirm the contents of the contracts, such as what security rights can be exercised or whether ownership can be reserved. It is also important to collect debts in due time.
II. Draft bill on the obligation to recycle and the disposal of solar panels
In Japan, solar energy quickly became popular in the 2000s. The lifetime of solar panels is said to be between 25 and 30 years, so in the 2030s a large number of solar panels will reach the end of their lifetime.
In this context, in recent years there has been a debate about the obligation to recycle and dispose of solar panels. In December 2024, the Japanese Environment Ministry published a draft bill making recycling and disposing of solar panels mandatory. According to this draft, manufacturers and importers of solar panels would be required to pay for recycling costs, and solar energy producers to pay the costs of disposal before using the solar energy installations.
However, on the 13th of May 2025, the Japanese Ministry for the Environment and Ministry for the Economy, Commerce and Industry, announced their intention to postpone the draft bill’s presentation before Parliament. The reason is that it turns out to be difficult to require manufacturers to pay costs for panels that have already been installed.
Although the presentation of the draft bill before the Japanese Parliament has been postponed, they intend to present it once again after modification.
As we have seen in section I, the renewable energy operators find themselves in a complex economic situation, although more burdens may be placed on them in the future.
Satoshi Minami
Vilá Abogados
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27th June 2025
