General Framework

“The New Energy Law” established in 1997 defines the responsibility of each sector, the national and local governments, energy consumers, energy suppliers and energy system manufacturers, to introduce and expand new energy. “The Renewables Portfolio Standard (RPS) Law,” newly established in 2002, which obliges energy suppliers the use of certain percentage of renewable energy, was thoroughly enforced in 2003.

In addition, the Japanese Government established “the Basic Energy Plan” in 2003, in order to materialize the basic policies based on “the Basic Law on Energy Policy” enforced in 2002. In addition to these, the “Law Concerning the Promotion of Measures to Cope with Global Warming” and the “Law on Promotion of Green Purchasing” were enacted.
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National Programme

The budgets for major national PV programmes implemented in FY2003 are as follows:

1. Research and development of photovoltaic power generation technologies: 7 420 MJPY
2. Residential PV System Dissemination Programme: 10 500 MJPY
3. PV Field Test Programme for Industrial Use: 260 MJPY
4. Field Test Projects on Advanced Photovoltaic Power Generation Technology (New): 3 500 MJPY
5. Demonstrative Research on Clustered PV Systems: 2 370 MJPY
6. Project for Supporting New Energy Operators: 38 810 MJPY
7. Project for Promoting the Local Introduction of New Energy: 12 710 MJPY
8. Project for Establishing New Energy Visions at the Local Level: 1 320 MJPY
9. Project for Promotion of Non-profit Activities on New Energy and Energy Conservation: 1 140 MJPY
10. Project for Supporting Regional Activities for Prevention of Global Warming: 590 MJPY

Research, Development and Demonstration

The development areas of the programme are classified into the fields as stated above. The specific programmes in progress are as follows; the short- and medium-term targets are

1. technological development of advanced PV cells (thin-film Si solar cells, thin-film CIS solar cells and InGaP/InGaAs/Ge solar cells),
2. development of technology focused on PV promotion (large area a-Si solar cells, thin-film mc-Si solar cells, mc-Si substrate, etc.) and
3. development of common base technology necessary for mass dissemination of PV applications (performance evaluation of solar cells, PV modules and PV systems, recycle and reuse technologies of PV systems, etc.).

The long-term targets are research and development of innovative next generation technologies for PV systems (Cat-CVD process, nano-structure silicon solar cells, dye-sensitized solar cells, spherical microcrystalline silicon solar cells, carbon-based thin-film solar cells, organic thin solid film solar cells, chalcogenide solar cells and III-V-nitride thin-film solar cells).
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Demonstration

• PV Field Test Programme for Industrial Use
  This programme started in FY1998 and installations were completed with great success in FY2002. 740 PV systems with 18 100 kW in total were installed at schools, medical facilities, welfare facilities, factories, office buildings and private-sector facilities by the end of FY2002. Collection and analysis of the data has been conducted since FY2003.

• Demonstrative Research on Clustered PV Systems
  This programme started in FY2002 for a 5-year scheme in order to conduct demonstrative testing of large-scale and the intensive introduction of grid-connected PV systems equipped with storage batteries. It aims at establishing grid connection technologies for centralized grid-connected PV systems intensively installed in one area.
  The specific research objectives are
  1. development of technology to avoid restriction of PV system output,
  2. analysis and evaluation of higher harmonics,
  3. analysis and evaluation of devices for mis-actuation function to prevent islanding operation,
  4. development of applied simulations and
  5. evaluation of characteristics of power generation and economical efficiency.
  The demonstrative researches will be carried out by installing residential PV systems and batteries to 200 residences in FY2003 400 in FY2004.

• Field Test Projects on Advanced Photovoltaic Power Generation Technology
  This field test programme aims at leading dissemination of middle-scale PV systems by installation of PV systems employing advanced technologies on a trial basis and promoting improvement of performance and cost reduction of the PV systems. This programme is regarded as a succeeding program of PV Field Test Program for Industrial Use. Under the programme, the following 4 model technologies are defined:
  1. the PV system with new modules,
  2. the PV system with building material integrated modules,
  3. the PV system with new control systems and
  4. the PV system aiming at higher efficiency.
  Introduction of the PV systems for public facilities and industrial uses are promoted under the programme. A total of 157 projects with 4 820 kW were selected in FY2003.

Implementation

• The Ministry of Economy, Trade and Industry (METI)
  The main implementation programmes that were carried out in FY2003 were the “Residential PV System Dissemination Program,” the “Project for Promoting the Local Introduction of New Energy” and “Project for Supporting New Energy Operators.”

• Residential PV System Dissemination Programme
  The “Residential PV System Monitor Programme” initiated in FY1994 was renamed the “Residential PV System Dissemination Program” in FY1997, in order to develop the initial residential PV system market. The programme continues to be actively promoted.
  The total number of PV systems installed under these programmes exceeds 150 000 systems. This programme aims at reducing the installation cost of PV systems and creating the initial PV market through subsidizing the installation cost for residential PV systems.
  The subsidy is given through three categories; i) an individual who is going to install PV system to his own house, ii) a ready-built house supplier of housing developments and iii) a local public organization that is going to introduce PV systems to public housing. PV systems with 9,99 kW of the maximum output capacity, connected to low voltage grids and allowing reverse power flow qualify for the programme.
  The amount of the subsidy in FY2002 was 100 000 JPY/kW, but it was decreased to 90 000 JPY/kW in FY2003.
  Residential PV systems have been installed to 77 503 houses, a total of 280,0 MW from FY1994 to FY2001. In FY2002, for 42 837 houses, a total of 161,8 MW were installed. In FY2003, 42 811 applications for the programme were accepted, as of December 26, 2003.

• Project for Promoting the Local Introduction of New Energy
  This programme aims at accelerating new energy introduction by supporting the regional projects that local governments developed for introducing new energy. Subsidy is provided for local public organizations that are going to introduce and promote PV power generation, wind power generation, use of solar thermal energy, differential temperature energy, natural gas co-generation, fuel cells, wastes generation, use of waste thermal energy, production of waste fuel, clean energy vehicles and energy conservation measures. PV systems with 150 kW output capacity and over are qualified under the programme. Half of the installation cost is subsidized.
  118 systems in total were subsidized from FY1998 to FY2001. Out of these, 52 systems were PV systems. The total capacity installed was 7 039 kW. In FY2002, 57 systems in total were qualified and out of these, 21 systems were PV systems. Total capacity installed was 2 391 kW. In FY2003, 101 systems in total were qualified and 70 systems out of them were PV systems. Total capacity installed was 3 311 kW. The programme allows local governments to understand the benefit of the introduction of renewable energy and then introduce PV systems intensively to school buildings and public facilities over several fiscal years.

• Project for Supporting New Energy Operators
  This programme aims at accelerating new energy introduction by supporting the industrial entrepreneurs who set about introducing new energy, such as PV power generation, wind power generation, solar thermal energy, differential temperature energy, natural gas co-generation, fuel cells, wastes power generation, use of waste thermal energy, production of wastes fuel, etc. The private entrepreneurs who start new energy businesses are eligible for guaranteed debt or subsidization. A third of installation costs are subsidized, and 90 % of the debt is guaranteed. The capacity of eligible PV systems is 100 kW and over. 110 systems in total were qualified from FY1998 to FY2001, and 3 of these systems were PV systems with 356 kW in total. In FY2002, 25 systems were qualified and one of these systems was a 25-kW PV system (installed with other new energy systems). In FY2003, 39 systems were qualified; 2 systems were PV systems and the total installed capacity was 217 kW.
  Besides these programmes, support has been offered to local governments for the projects to develop their own visions for the introduction of new energy and to nongovernmental organizations (NGOs) supporting activities to introduce new energy at local level.

• The Ministry of Land, Infrastructure and Transport (MLIT)
  Under the “Guideline for Planning Environmentally-Friendly Government Building (Green Building),” construction of green government buildings with PV systems has been promoted. The introduction of PV systems with 455 kW in total was completed in 13 central government office buildings as of June 2003. The Ministry of Education, Culture, Sports, Science and Technology (MEXT) The Ministry continues its “Eco-school Promotion Pilot Model Project” initiated in partnership with METI in FY1997 and is promoting the introduction of PV systems to elementary schools, junior high schools and kindergartens in Japan. 244 schools all over Japan were designated as pilot model schools by FY2002, and each of the 161 schools among them installed PV systems with 10 kW and over. In FY2003, 97 schools were designated as pilot model schools and PV systems are to be installed to 68 of these schools.

• The Ministry of Environment
  The Ministry is promoting projects of CO2 emission reduction by use of natural energy under the “Law Concerning the Promotion of Measures to Cope with Global Warming;” enforced in FY1998.
  In addition, it implemented the “Law on Promotion of Green Purchasing” in April 2001, and commodities procured by the national and local governments have to be replaced with environmental-friendly products. Since the PV system is specified as one of the special procurement products, introduction of PV systems to governmental facilities has been in progress. Besides this, the Ministry started the Community-Based Eco-House Project to demonstrate various types of technologies to prevent global warming, while suitable for specific regions and introduced PV systems to the Eco-Houses.

• Local Governments and Municipalities
  The movement to actively work on environmental issues has been spreading among the local governments and municipalities. Some prefectures began to set their own target for the introduction volume of new energy following the national target for PV system introduction (4 820 MW). More and more local authorities began to develop their own new energy introduction visions and plan the introduction of PV systems into public facilities and public housing. Some local governments and municipalities also provide their own additional subsidies to the national subsidy for residential PV systems and the number of these local governments has been increasing, year by year. Promotional supports to PV systems are enhanced at local governments and municipalities. In 2003, a total of 262 local governments provided subsidies for residential PV systems.

• Utilities
  Electric power companies continue the introduction of PV systems to their own facilities and net billing to buy-back surplus PV electricity at the same rate as selling. As of the end of March 2003, the PV power generation capacity installed in their facilities was 4 511 kW and the power bought by buy-back contract was 182 136 MWh in total.
  Electric power companies in Japan established the “Green Power Fund” in October 2000; which aims at introducing and promoting PV systems and wind power generators. The utilities bill an additional charge as a contribution at 500 JPY/share/month to their supporters among their customers, and contribute the same endowment as the amount of their supporters’ contribution for the installation of PV systems and wind power generators. From 2001 to 2002, 126 public facilities across Japan including schools were subsidized through the Fund. The total capacity installed was 2 260 kW. In 2003, 159 public facilities were selected, and installation of PV systems with 2 856,1 kW in total are underway.

• Financing Institutes
  Some banks and other financing institutes provide preferential financing at a low interest rate, for the introduction of residential PV systems for private use.

Industry Status

The PV industry has been working on

1. enhancement of production capacity,
2. promotion of cost reduction,
3. improvement of conversion efficiency of solar cells and PV modules,
4. development of the products from the user’s point of view,
5. new entry to the PV business in the domestic market,
6. advancing the establishment of overseas PV module plants and
7. the acquisition of international certification of PV modules in the overseas market.

Among these movements, it should be noted that new activities which correspond to the growth of the PV market mainly pushed by the expansion of residential PV systems, have been carried out one after another. This includes enhancement of the production capacity and the construction of new manufacturing facilities by PV manufactures, new entry to the PV market by several companies, etc. As for the activities of PV manufactures in 2003, the following points are noteworthy.

Sharp raised its production capacity to 248 MW/Year from 200 MW/Year, and constructed a PV manufacturing plant with 20 MW/Year of production capacity in Tennessee, USA. It also plans to construct a 20 MW/Year scale of PV module manufacturing line in the UK in 2004. Kyocera started operation of a PV module manufacturing plant with 12 MW/Year of production capacity in Tianjin, China. It announced that it would increase the production capacity of mc-Si solar cells and PV modules to 120 MW/Year in 2004 from 72 MW/Year. Sanyo Electric newly constructed a manufacturing plant for a-Si/sc-Si PV module with 33 MW/Year of production capacity, and increased the total production capacity from 30 MW/Year to 63 MW/Year. It also started operation of a 10-MW/Year PV module factory in Mexico. Mitsubishi Electric also raised the annual production capacity of mc-Si solar cell from 35 MW/Year to 50 MW/Year and plans for further expansion to 90 MW/Year in 2004. It also provides original equipment manufacturing (OEM) solar cells for an overseas company. Kaneka and Mitsubishi Heavy Industry also increased the production volume, and plan to expand production capacity of a-Si/mc-Si solar cells. Showa Shell Sekiyu, a PV module manufacturer, enhanced their partnership with Shell Solar GmbH more closely and decided to spin off its PV division into Shell Solar Japan, in order to increase its share of the market. MSK expanded its PV module line and established a production system with 100 MW/Year of production capacity.

As for new entrants, Hitachi started to operate a 6 MW/Year manufacturing plant of bifacial PV modules. Fuji Electric started the business of flexible a-Si PV modules. Honda Motor advanced its business of Cu(In,Ga)Se2 (CIGS) solar cells. Sekisui Jushi plans the business of highly efficient sc-Si PV modules in cooperation with Sunpower of the USA. Moreover, Aishin Seiki, Showa Denko and other various companies are developing dye-sensitized solar cells, and consider establishing the solar cell business. In addition, venture companies appeared to enter the business of silicon wafer manufacturing for solar cells.
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Market Development

The PV market in Japan consists of following 5 market segments:

1. residential houses,
2. industrial and business facilities,
3. public facilities,
4. electric power generation and other applications and
5. consumer use.

Among them, residential PV systems overwhelmingly dominate the PV market with 85 % of the share. In the residential PV market, dissemination of PV systems for newly built and existing houses has been successfully ongoing, and the market size has expanded to annual sales of 50 000 to 60 000 systems. Thus, PV manufactures place great importance on development of PV modules for houses and released PV modules with higher conversion efficiency, small-sized PV modules which can increase installation areas on roofs, lead-free PV modules, etc. Leading housing manufacturers are creating a new market for residential PV systems by developing all-electrified houses equipped with PV systems and zero-energy houses, by raising the power generation capacity of the PV systems to 5 to 7 kW. They also promote large-scale housing developments in which PV systems are installed in all the houses built for sale.

In the area of industrial and business facilities and the area of public facilities, more and more large-scale PV systems have been installed and installations of middle scale PV systems with 10 to 30 kW capacity have been increasing. To correspond to these movements, inverter manufacturers commercialized 100 kW inverters and small-sized 10 kW inverters, which occupy smaller space.

Application areas are expanding year by year, in these two sectors. In the industrial and commercial segments, PV systems are installed in factories, commercial buildings, research laboratories, railway stations, warehouses, convenience stores, service stations, parking spaces, etc. In the area of public facilities, PV systems are installed in national and local government office buildings, schools, hospitals, welfare facilities, parks, water treatment facilities, etc. PV modules used for these areas become more and more diversified. Flexible type modules, lightweight modules, light-transmitting modules, bifacial power generation modules, roofing material-integrated modules and wall-material integrated modules are used as well as conventional ones.

In the sector of electric power generation and other applications, off-grid non-domestic PV systems, which do not require governmental supports are mainly utilized as power supply sources for telecommuni-cations, traffic signs, monitoring devices, ventilation, and lighting.

Recently, lighting fixtures combining light emitting diodes (LEDs) and solar cells and small-scale hybrid power generation systems combining wind power generators and PV systems have been commercialized one after another.

As for new developments of the PV system market, development of power supply systems for communities utilizing distributed power generation systems was started. Demonstrative projects to intensively install on-grid PV systems to houses in one area and other demonstrative projects to install several types of power generation systems using new energy technologies such as PV systems, wind power generators, fuel cells and biomass power generation systems for supplying electricity to each community were started.
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Future Outlook

METI has started to revise the Long-Term Energy Supply and Demand Outlook with an eye to FY2030 and deliberate the policies on energy and environment, as they ought to be. The future of new energy is also discussed under the revision; and the long-term energy supply and demand outlook of new energy will be plotted out in FY2004.
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Further reading about Japan

• Japan - Country information