General Framework

In 2004, three visions foreseeing the year 2030 were released: “Energy Supply and Demand Outlook for 2030,” “Vision for New Energy Business” and “PV Roadmap Toward 2030 (PV2030),” a roadmap for technological development of PV system. The efforts for larger scale dissemination of PV systems from a long-term view point were started.

Beside these, the “Law Concerning the Promotion of Measures to Cope with Global Warming” and the “Law on Promotion of Green Purchasing” were enacted to promote the introduction of new and renewable energy.
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National Programme

The budgets for major national PV programmes implemented in FY2004 are as follows:

1. Research and development of photovoltaic power generation technologies: 6 540 MJPY
2. Residential PV System Dissemination Programme: 5 250 MJPY
3. Field Test Project on Photovoltaic Power Generation Systems for Industrial and Other Applications: 140 MJPY
4. Field Test Project on New Photovoltaic Power Generation Technology: 5 030 MJPY
5. Demonstrative Project on Grid-Interconnection of Clustered Photovoltaic Power Generation Systems: 5 940 MJPY
6. Project for Supporting New Energy Operators: 48 260 MJPY
7. Project for Promoting the Local Introduction of New Energy: 11 030 MJPY
8. Project for Establishing New Energy Visions at the Local Level: 1 180 MJPY
9. Project for Promotion of Non-profit Activities on New Energy and Energy Conservation: 1 330 MJPY
10. Project for Supporting Regional Activities for Prevention of Global Warming: 610 MJPY
11. Demonstrative Project of Regional Power Grids with Various New Energies: 6 360 MJPY

Research, Development and Demonstration

1. Development of Advanced Solar Cells and Modules
   Short- to medium- term goal of this programme is to establish elemental technologies that can achieve PV power generation cost on par with typical residential electricity rate and transfer developed technologies into practical applications at an earlier stage.
   The programme is focusing on development of thin-film crystalline Si solar cells, thin-film CIS solar cells and super high-efficiency polycrystalline compound solar cells (InGaP/InGaAs/Ge).

2. Development of Technology to Accelerate the Dissemination of Photovoltaic Power Generation Systems
   This programme aims at developing of industrial technologies in order to accelerate practical application of results of technological development thus far. Technological development has been advanced in the following area: silicon feedstock for solar cell, mc-Si sheet silicon wafers for solar cells, mass-production process of a-Si solar cell on plastic films and fabrication equipment of a-Si/thin-film mc-Si hybrid solar cell.

3. Development of PV System Technology for Mass Deployment
   This programme was designed to develop common infrastructural technologies to support the environment for large-scale PV deployment from technological aspects. Development of technologies for performance evaluation of solar cells, PV modules and PV systems and recycling and reuse technologies of PV systems has been carried out under the programme.

4. Development of Photovoltaic Power Generation Technology (Investigation for Innovative Photovoltaic Power Generation Technology)
   The programme has a long-term goal for exploring seeds technologies for further improvement of performance and economical efficiency of PV power generation in and beyond the year 2010. R&D has been carried out for new materials, novel concepts and structures: nano-structure silicon solar cells, dye-sensitized solar cells (DSC), carbon-based thin-film solar cells, organic thin-film solar cells, etc. In FY2004, NEDO has transferred these programmes into the preliminary R&D programme with an eye to the year 2030 and designated five R&D areas:
   1. thin-film silicon solar cell,
   2. crystalline silicon solar cell,
   3. CIS solar cell,
   4. dye-sensitized solar cell (DSC) and
   5. PV system technology, in order to efficiently promote technological development of innovative next generation technologies for PV systems.

Demonstration

1. Field Test Project on Photovoltaic Power Generation Systems for Industrial and Other Applications
   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 to schools, medical facilities, welfare facilities, factories, office buildings and private-sector facilities by the end of FY2002. Data collection and analysis have been continued since FY2003.

2. Field Test Project on New Photovoltaic Power Generation Technology
   This field test programme aims at leading dissemination of middlescale PV systems by installation of PV systems employing advanced technologies on trial basis and promoting improvement of performance and cost reduction of those PV systems. This programme is regarded as a succeeding programme of Field Test Project on Photovoltaic Power Generation Systems for Industrial and Other Applications. 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 this programme. 148 projects were selected and PV systems totaling 4 480 kW were installed in FY2003. 300 projects totaling 8 671 kW were selected in FY2004.

   

3. Demonstrative Project on Grid-Interconnection of Clustered Photovoltaic Power Generation Systems
   This programme started in FY2002 for a 5-year scheme to install grid-connected PV systems equipped storage batteries into 600 households to conduct demonstrative research of a large-scale and intensive introduction of on-grid PV systems. The programme aims at establishing grid connection technologies for grid-connected PV systems intensively installed to one area. The specific research objectives are
   1. development of technology to avoid restriction of PV system output by using storage batteries,
   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.
   Residential PV systems with storage batteries were installed about 250 residences by the end of FY2004 and the demonstrative researches have been carried out.

4. Demonstrative Project of Regional Power Grids with Various New Energies.
   This programme was launched in FY2003 to intensively install various types of distributed power sources such as PV systems, fuel cells and wind power generators, etc. in one area, aiming at demonstrating various issues: ensuring quality of electricity, balance between supply and demand of electricity, stability, and studying economical performance of distributed power sources. In FY2003, 3 demonstrative sites were selected across the country: Aichi Prefecture (total 2 400 kW of distributed power generation systems including 3 PV systems totaling 330 kW), Aomori Prefecture (total 710 kW of distributed power generation systems including an 80-kW PV system) and Kyoto Prefecture (total 850 kW of distributed power generation systems including a 50-kW PV system). Installation of power generation systems was started in FY2004. The demonstration site of Aichi Prefecture is located on the premises of the 2005 World Exposition (EXPO 2005), Aichi, Japan, and the power generation systems will supply electricity for the Government Exhibition, etc.

Implementation

• The Ministry of Economy, Trade and Industry (METI)
  The main implementation programmes carried out in FY2004 were “Residential PV System Dissemination Programme,” “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 “Residential PV System Dissemination Programme” in FY1997 to develop the initial residential PV system market. The total number of PV systems installed under these programmes expanded to the scale of 200 000.
    This programme aims at reducing the cost burden of purchasers of residential PV systems and creating the initial PV market through subsidizing the installation cost for residential PV systems. The subsidy is given through three categories:
    1. an individual to install a PV system to one's own house,
    2. a ready-built house supplier of housing development and
    3. a local public organization to introduce PV systems to public housings.
    PV systems with 9,99 kW of the maximum output capacity, connected to low voltage grid and allowing reverse power flow are qualified for the subsidy. Although the amount of the subsidy in FY2003 was 90 000 JPY/kW, it was further reduced to 45 000 JPY/kW in FY2004.
    Under this programme, Residential PV systems were installed to 115 765 houses, total 421,4 MW, from FY1994 to FY2002. In FY2003, 52 863 houses equipped PV systems totaling 201,4 MW. In FY2004, 55 842 applications for the programme were received as of January 14, 2005.

  • Project for Promoting the Local Introduction of New Energy
    This programme aims at accelerating new energy introduction by supporting the regional projects developed by local governments for promoting the introduction of new and renewable energy. Another object is raising awareness of the local residents for new and renewable energy. Subsidy is provided for local public organizations who are going to introduce and promote power generation using new and renewable energy such as 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 wastes fuel, clean energy vehicles and energy conservation measures. PV systems with 50 kW of output capacity and over are qualified under the programme. Half of installation cost is subsidized. 184 systems in total were subsidized from FY1998 to FY2002. 78 systems out of them were PV systems.
    Total capacity installed was 9 994 kW. In FY2003, 101 systems in total were qualified and 70 systems out of them were PV systems. Total capacity installed was 8 311 kW. In FY2004, 71 systems in total were qualified and 45 systems out of them were PV systems. Total capacity installed was 3 433 kW. The programme allows local governments to understand the benefit of introduction of new and renewable energy and introduce PV systems intensively to school buildings and public facilities, etc. 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 business are eligible for guaranteed debt or subsidization. A third of installation cost is subsidized, and 90 % of the debt is guaranteed. The capacity of eligible PV system is 50 kW and over. 135 systems in total were qualified from FY1998 to FY2002, and 4 systems out of them were PV systems, 381 kW in total. In FY2003, 39 systems were qualified and 2 systems, 217 kW in total, out of them were installed. In FY2004, 37 systems were selected and 3 systems were PV systems, and the total installed capacity was 147 kW.

  Besides these programmes, supports have been offered to local governments for their projects to develop their own visions for introduction of new energy and to nonprofit organizations (NPOs) for their supporting activities to introduce new energy at local level.

• The Ministry of Land, Infrastructure and Transport (MLIT)
  Under “Guideline for Planning Environmentally-Friendly Government Building (Green Building),” construction of green government buildings equipped PV systems has been promoted. Introduction of PV systems with 455 kW in total was completed in 13 central government office buildings as of June 2003. In addition, MLIT introduces PV systems to local facilities for the central government such as the national government buildings of local branches every fiscal year.

• The Ministry of Education, Culture, Sports, Science and Technology (MEXT)
  MEXT continues the “Eco-school Promotion Pilot Model Project” initiated in partnership with METI in FY1997 and has been promoting the introduction of PV systems to elementary schools, junior high schools and kindergartens. 341 schools all over Japan were designated as the pilot model schools by the end of FY2003, and 229 schools among them installed PV systems with output capacity of 10 kW and over each. In FY2004, 82 schools were newly selected as the pilot model schools and PV systems are to be installed to 49 schools among them.

• The Ministry of Environment
  The Ministry of Environment 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 “Law on Promotion of Green Purchasing” in April 2001, and commodities procured by the national and local governments have to be replaced by 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 implemented measures for maintaining and improving the local environment such as the “development of practical application of technology to introduce renewable energy” and the “model town project for virtuous cycle of environment and economy,” as measures for technological development projects to cope with global warming.

• The Local Governments and Municipalities
  The movement to actively work on environmental issues has been spreading among the local governments and municipalities year by year. Prefectures began to set their own target for introduction volume of new energy following the national target for PV system introduction (4 820 MW) one after another. 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 housings. Some local governments and municipalities also additionally provide their own subsidies to the national subsidy for residential PV systems and offer preferential loans for the introduction of PV systems, and the number of such local governments has been increasing over the years. Promotional supports to PV systems are enhanced at local governments and municipalities. The number of local governments that provide additional subsidy for residential PV systems increased from 262 in FY 2003 to 282 in FY 2004.

• Utilities
  Electric power companies in Japan 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.
  Electric power companies established the “Green Power Fund” in October 2000, aimed at introducing and promoting PV systems and wind power generators. The utilities bill an additional charge as a contribution of 500 JPY/share/month to the supporters among their customers, and contribute the same endowment as the amount of their supporters' contribution for installation of PV systems and wind power generators. From 2001 to 2003, 285 public facilities including schools across Japan were subsidized through the Fund and the total capacity installed was 5 116 kW. In FY2004, 160 sites were selected, and installation of PV systems totalling 3 254,5 kW are underway.
  Electric utilities achieved to purchase required amounts of new energy designated under the Renewables Portfolio Standard (RPS) Law that was enforced from FY 2003. Usage volume of electricity generated by new energy by utilities for FY 2003 was 4 015 TWh in total, including 147 TWh from PV power generation. The accredited facilities for power generation using new energy under the RPS Law was 141 935 systems totaling 4 099 MW as of March 2004. Among them, PV systems are 141 154, accounting for 528 MW of generation capacity.

• Financing Institutes
  Some banks and other financing institutes provide preferential financing at low interest rates for the introduction of residential PV systems for private use and houses equipped with PV systems.

Industry Status

In the domestic market, 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 considering user's viewpoint,
5. development of new solar cells for further diversification of application, and
6. new entrants starting in the PV business.

In the overseas market, the PV industry also has been advancing

1. expansion of overseas manufacturing sites of PV modules,
2. enhancement of production capacity of overseas PV module plants,
3. acquisition of international certification for PV modules.

Among these movements, it should be noted that new activities to correspond the growth of the residential PV systems have been continued: PV manufactures enhance production capacity and construct new manufacturing facilities, several companies started PV business, etc.

As for the activities of Japanese PV manufacturers in 2004, following topics were particularly noteworthy.

• Sharp raised the production capacity of solar cells from 248 MW/year to 400 MW/year. It also has a plan for further enhancement in 2005. Sharp has newly constructed a PV module manufacturing line in Wrexham, the UK, in 2004, in addition to the PV module plant constructed in 2003, in Memphis, Tennessee, the USA, and has been extending its overseas manufacturing sites.

• Kyocera announced a plan to increase the manufacturing capacity of mc-Si solar cells from 150 MW/year to 240 MW/year during 2005. It also started to produce PV modules in the newly constructed plant in Tijuana, Mexico, following the PV module plant in Tianjin, China, that started operation in 2003. In addition, Kyocera will construct another overseas PV module plant in Kadan, Czech Republic in 2005, and establish the “quadripartite global production framework” for PV modules.

• Sanyo Electric increased the total production capacity of a-Si/sc-Si solar cells (HIT solar cell) and a-Si solar cell from 68 MW/year to 160 MW/year. Moreover, it announced further increase of the production capacity to 250 MW/year in 2006 and 1 GW/year by 2010. It will construct a new PV module manufacturing plant in Oizumi-Cho of Gunma Prefecture. As for the overseas factory, it will newly establish a PV module manufacturing site in Dorog, Hungary, and start operation in 2005, in addition to the PV module factory in Monterrey, Mexico.

• Mitsubishi Electric enhanced the production capacity of mc-Si solar cells from 50 MW/year to 90 MW/year in 2004. Further expansion plan is underway toward 135 MW/year in 2005 and 230 MW/year in 2006 and beyond.

• Kaneka and Mitsubishi Heavy Industry (MHI) also increased the production volume, and plan to expand production capacity of a-Si/mc-Si solar cell.

• Shell Solar Japan (SSJ), a joint venture of Showa Shell Sekiyu and Shell Solar GmbH is working on its PV business specialized in the residential PV system market.

• MSK newly constructed a PV module factory with 80 MW/year of manufacturing capacity in Omuta City of Fukuoka Prefecture, in addition to Saku Factory, a 100-MW/year plant in Nagano Prefecture to expand domestic manufacturing sites.

• Fuji Electric started the business of flexible a-Si PV modules using plastic film substrates with 3 MW/year of production capacity. It plans to cultivate the market by taking advantages of the PV module: lightness in weight (1 kg/m²) and flexibility.

As for new types of solar cells, Clean Venture 21 and Kyosemi have been developing spherical micro Si solar cells. Showa Denko, Aishin Seiki, Fujikura, Hitachi Maxell and other companies have been working on commercialization of dye-sensitized solar cells (DSC).

In the area of silicon materials for solar cell, JFE Steel increased the production capacity of mc-Si ingots for solar cells from 400 t/year to 800 t/year, equivalent to 90 MW/year of solar cell. M. Setec newly constructed a manufacturing plant for sc-Si for solar cells in Susaki City of Kouchi Prefecture and started its operation. It will construct another plant of sc-Si for solar cells in Souma City of Fukushima Prefecture and start production in 2005. Tokuyama decided to construct a demonstrative plant for polysilicon for solar cells based on vapor to liquid deposition (VLD) process using SiHCl3 in 2005.

Besides these activities, with the growth of the PV system market, manufacturers of balance of systems (BOS) and raw material providers for solar cells have been actively increasing their capacity investment.
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Market Development

The PV market in Japan consists of the 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 domestic PV market with about 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 the annual sales of over 60 000 systems. Thus, PV manufactures place great importance on development of PV modules for houses and commercialize PV modules with higher conversion efficiency, small-sized PV modules which can increase installation areas on the roof, lead-free PV modules and so on. In addition to these, PV manufacturers promote value-added products combining a residential PV system with “Eco-Cute,” a highly-efficient heat pump and induction heating (IH) cooking equipment. Leading housing manufacturers are creating a new market for residential PV systems by developing all-electrified houses equipped with PV systems and zero utility charge 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 and disaster-prevention housings equipped with PV systems and storage batteries.

In the area of industrial and business facilities and in 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 of power generation capacity have been increasing. In order to correspond to these movements, inverter manufacturers commercialized 100-kW inverters and small-sized 10-kW inverters that 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 the 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. As well as conventional ones, various types of PV modules are adopted: flexible modules, lightweight modules, lighttransmitting modules, bifacial power generation modules, roofing material-integrated modules, wall-material integrated modules and PV modules using plastic film substrates, etc.

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 telecommunications, traffic signs, monitoring devices, ventilation, lighting and charging for mobile devices. Recently, lighting fixtures combining light emitting diodes (LEDs) and solar cells, small-scale hybrid systems combining wind and PV power generation and PV system for agricultural uses have been commercialized one after another. In 2004, a luminescent PV module integrated with light emitting diodes (LEDs) was commercialized as a novel product.

As for new development of the PV system market, development of power supply systems for communities utilizing distributed power generation systems was started. In the Demonstrative Project on Grid-Interconnection of Clustered Photovoltaic Power Generation Systems, grid-connected PV systems are intensively installed on houses in one area. Under the Demonstrative Project of Regional Power Grids with Various New Energies, 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 are installed in each community. Housing manufacturers started to offer preferential loans for newly built houses equipped with PV systems in corporation with financial institutes, and work on sales expansion. Table 1 shows the cumulative PV power installed by the end of 2003 in 4 sub-markets.
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Table 1: The cumulative installed PV power in 4 sub-markets in kWp

Sub-market/ application	1995	1996	1997	1998	1999	2000	2001	2002	2003
Off-grid domestic	300	350	400	450	500	550	600	955	1 101
Off-grid non-domestic	29 360	35 890	44 900	52 300	56 200	63 000	66 227	71 692	77 792
Grid-connected distributed	10 820	20 500	43 100	77 750	149 000	263 770	383 086	561 295	777 830
Grid-connected centralized	2 900	2 900	2 900	2 900	2 900	2 900	2 900	2 900	2 900
Total	43 380	59 640	91 300	133 400	208 600	330 220	452 813	636 842	859 623

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Future Outlook

All of these are developed toward the year 2030 from a long-term perspective, and the strategies for technological development of PV power generation, the new energy industry and the energy policy were presented. As each vision presents the future potential and significance of the role of the PV system, these visions are regarded as key guiding principles of further deployment of PV systems and development of the PV industry in Japan.

PV2030 Roadmap laid out technical background to achieve 7 JPY/kWh of PV power generation cost, similar cost level as that for electricity rate for industrial use, by continuous enhancement of technological development and milestones for technical development for the target. In the Vision for New Energy Business, PV systems, wind power generation and biomass energy are emphasized. The Vision shows that the new energy industry would be self-sustainable and competitive by shifting measures on new energy from the current measures depending on subsidies to the measures for creating the market environment based on the needs from the demand side.

The Energy Supply and Demand Outlook describes energy supply and demand outlook for 2030. As the paths of energy supply toward 2030, the report set out several pictures of the future:

1. Reference case based on business as usual,
2. Energy technology advanced case (Energy conservation advanced case, New energy advanced case),
3. Nuclear power case (High case, Low case),
4. External macro factor case (High & Low economic growth cases, High & Low crude oil price cases).

Among these cases, PV system delivers significant impact on the New energy advanced case of Energy technology advanced case. Under this case, supply volume of new and renewable energy in FY 2030 is estimated to be 39,46 million kilolitres, accounting for about 10 % of the total primary energy supply, and about half of the estimated volume is generated by PV power generation as shown in Table 2. The supply volume of PV power generation corresponds to about 80 GW, and the potentiality of PV systems is highly regarded.

With the Government's supports for promotion and deployment of PV systems, publicity activities, promotion measures to arrest global warning and green procurement thus far, individuals, ministries and agencies, local governments and private entrepreneurs have been promoting further introduction of PV systems. With the growth of the PV market, PV manufacturers make an effort to expand their production capacity and reduce PV system price. More and more industries such as the roofing industry, the building material industry, the housing industry, the construction industry and the power source equipment industry, which are expected to play an essential role to promote PV systems as a go-between of the PV industry and end users, have been engaged in the PV market. At the same time, the producers providing mass volume of raw materials for various types of solar cells to PV manufacturers and the manufacturers of production equipment for solar cells are being fostered.

Consequently, the PV system market is being structured on the basis of solar cells and PV modules with raw materials, components, production equipment of solar cells and application products using PV systems. Thus, the PV system market, especially led by the segments of residential houses, public facilities, industrial and business facilities, is expected to expand and grow to be a self-sustainable market in the near future, by achieving cost reduction with the Government's support for research, development and introduction of PV systems.
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Further reading about Japan

• Japan - Country information