Japan’s aggressive feed-in tariff could drive the solar market and push increased development of more efficient monocrystalline solar wafers.

NPD Solarbuzz forecast this week that wafer manufacturers will increase production by 19 percent in 2013, boosting output back to 2011 levels after a 15 percent decline in production in 2012.

While multicrystalline silicon wafers are still dominating the market because of lower prices, NPD predicts that Japan’s limited space will demand the more efficient monocrystalline wafers and drive their increased production.

“Supported by attractive solar PV incentive rates, Japan will account for more than 10 percent of global PV demand in 2013,” said Charles Annis, vice president at NPD Solarbuzz. “With a strong rooftop segment and limitations on the availability of land for large-scale ground-mount installations, Japan has now become a key driver for mono c-Si based modules.”

Bloomberg New Energy Finance predicted in April that the country would become the second biggest market for solar energy in the world – behind China – in 2013, installing 6.1 to 9.4 gigawatts of solar in 2013. That revised forecast was double Bloomberg’s earlier estimation that the Asian nation would install 3.2 to 4 gigawatts.

“The upward revision was done because of the rapid increase in shipments seen last quarter,” according to the Bloomberg report, “as well as the fact that the pipeline of projects is even stronger than previously expected.”

In July 2012, Japan launched its feed-in tariff program to spur the rapid adoption of solar and alternative energy sources to replace the country’s nuclear infrastructure. Japan decided to move away from nuclear power after the 2011 earthquake, tsunami and subsequent crisis at the Fukushima nuclear plant.

But Japan is only a piece of the increased production expected from wafer manufacturers. The increased production might not be warranted, according to NPD Solarbuzz’s report. The industry is still only using about 60 percent of the supply, according to the report.

“And while prices have stopped falling, no significant increases are expected, so profitability for wafer makers will remain challenging,” according to the report.