Abstract
On the 29th of March 2013, the Japanese Government announced this year's purchase price for photovoltaic electricity（PV）under its feed in tariff system. While this price level is, by 10％, lower than last year's, it was still two times higher than corresponding international prices for PV. From the eyes of a few critics, this level of purchase price appears excessively favorable toward investors at the expense of utility companies and consumers. This question is intended to be addressed by conducting a cash flow analysis on the current purchase price in terms of“Equity IRR”，rather than“Project IRR”employed by the Government in determining the level of purchase prices. The author's analysis has indicated that the current level of purchase price for PV provides investors with a 19.6％Equity IRR, which is excessively high.
