The purpose of this paper is to make clear the conditions which can achieve the target for PV capacity attaining goal of PV system sales price assuming carbon tax and buyback in Japan. Based on the results of analysis, under expected carbon tax, PV needs subsidy for a while even if we consider both avoided cost and Green Credit. For attaining the target in 2010, PV needs more expensive buyback than that at present. After 2010 necessary subsidy decreases gradually and it becomes unnecessary in 2030. Annual income of the expected carbon tax can sufficiently cover the estimated annual subsidy. (c) 2006 Elsevier B.V. All rights reserved.