The Japanese ministry of economy, trade and industry is drawing up plans to reduce 10% in solar tariff given the drop in cost of equipments.

A government panel has recommended for the reduction in tariffs to further boost the growth of the solar industry.

If approved by the government, the tariffs for new applicants will be down to JPY37.8 ($0.39) per kWh for a 20-year term starting 1 April 2013; currently the tariffs are pegged at JPY42 ($0.43) per kWh.

Officials related to the development suggested that the government should reduce incentives, given that the country’s solar support would still remain three-fold of the incentives offered in Germany and China, reported Bloomberg

Japan Photovoltaic Energy Association secretary general Hisao Kayaoka told the news agency, "The solar market is expanding, and we don’t think the proposed tariff would change the trend much."

"The proposed tariff will allow for continued growth in the market."

According to the ministry, the average system cost for non-residential solar dropped 14% to JPY280,000 ($2,921) per kW since October 2012.