The Japanese government has unveiled a plan to boost investment in clean energy sources, in a move that paves the way for the country to lower its dependence on fossil fuels and nuclear power and build up its fledgling renewable energy market.

Under the feed-in-tariff scheme approved on Monday, electric power companies will be required from July 1 to buy all renewable energy generated by qualifying suppliers, at a higher rate than initially expected, providing a strong incentive for businesses to invest in clean energy facilities.

The government is abolishing the ceiling on the amount of energy from renewable sources power companies will be required to buy, in a move that will transform solar power generation from a side business for companies generating more electricity than they can consume to a viable business on its own. At present, electric power companies are only required to buy excess electricity generated by renewable sources and only up to a maximum of 500 kilowatt hours.

The decision to create a guaranteed market for clean energy is expected to make Japan a major market for companies in the solar power industry, including panel makers such as China’s Suntech and Japan’s Sharp.

Nomura expects the plan to add 2.4 gigawatts of solar energy capacity this year, or the equivalent of about 2 nuclear reactors. It forecasts an additional 3.4 gigawatts of capacity in 2013 and 4 gigawatts in 2013 compared with 1.3 gigawatts of new solar energy capacity introduced last year.

The push to encourage clean energy highlights the growing pressure on Japan to reduce its dependence on nuclear power, amid widespread safety concerns in the wake of the March 11 nuclear disaster in Fukushima.

The plan comes just days after the government announced the resumption of two nuclear reactors in western Japan, ending a complete shutdown of the country’s nuclear power plants, which before the shutdown provided nearly 30 per cent of its electricity.

However, the Fukushima accident has forced the government to completely re-think its energy policy, which had been based on a degree of dependence on nuclear power.

Japan which depends on fossil fuels for 60 per cent of its electricity, has lagged behind other developed countries in sourcing electricity from renewables, which, excluding hydroelectric power, provide less than 1 per cent of its overall energy consumption.

Widespread opposition to the country’s dependence on nuclear power and the increasingly high costs of conventional fossil fuels are putting pressure on the government to spur investment in clean energy.

Under the plan, power companies will be required to buy solar power at Y42 per kilowatt hour ( 53 US cents) for twenty years, or about double the tariff in Germany, according to the Ministry of Economy, Trade and Industry.

The costs of subsidising clean energy will be passed on to consumers. “The price of Y42 is quite expensive and will encourage the development of the market,” said Kyoichiro Yokoyama, analyst at Nomura Securities.

Companies have already started investing in solar power on expectations the subsidies will make it an attractive business.

Softbank Energy, a subsidiary of Softbank, the telecoms group, is building solar facilities throughout Japan with a total capacity of 200,000 kilowatt hours.