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 and renewable energy. “The Renewables Portfolio Standard (RPS) Law” newly established in 2002, which obliges energy suppliers the use of a certain percentage of renewable energy, was thoroughly enforced in 2003. In addition, the Government of Japan 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 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 the technological development of PV systems. The efforts for larger scale dissemination of PV systems from a long-term view point were started. In addition, the Cabinet endorsed the “Kyoto Protocol Target Achievement Plan” in 2005, and the Plan positioned the utilization and large-scale deployment of new and renewable energy as one of the countermeasures to reduce greenhouse gas emission toward 2010.

Besides 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 introduction of new and renewable energy.
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National Programme

Regarding demonstrative research, the Field Test Project on New Photovoltaic Power Generation Technology has been conducted to demonstrate the effectiveness of PV systems employing new PV modules, new components, advanced system technology and newly developed installation methods, etc. and enlarge the application area of PV systems. The Demonstrative Project on Grid-Interconnection of Clustered Photovoltaic Power Generation Systems, in which a large number of PV systems are intensively installed in a community, also has been conducted. Moreover, the Demonstrative Project of Regional Power Grids with Various New Energies has been underway as a demonstrative research of energy supply system, that intensively employ various types of new and renewable energy sources such as PV system, wind power generation, fuel cells, etc. The major dissemination measures, the Residential PV System Dissemination Program was terminated in FY2005 as the Government evaluated that with the “creation of the initial market,” the goal of the Program had been achieved. In addition, the Government has continuously implemented supporting programs for local governments and private entrepreneurs in order to introduce new and renewable energy.

The budgets for major national PV programs implemented in FY2005 are as follows:

1. Research and Development on Photovoltaic Power Generation: 4 100 MJPY
2. Residential PV System Dissemination Program: 2 600 MJPY
3. Field Test Project on Photovoltaic Power Generation Systems for Industrial and Other Applications: 110 MJPY
4. Field Test Project on New Photovoltaic Power Generation Technology: 9 230 MJPY
5. Demonstrative Project on Grid-Interconnection of Clustered Photovoltaic Power Generation Systems: 1 248 MJPY
6. Project for Supporting New Energy Operators: 34 500 MJPY
7. Project for Promoting the Local Introduction of New Energy: 7 600 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: 170 MJPY
10. Demonstrative Project of Regional Power Grids with Various New Energies: 6 000 MJPY

Research, Development and Demonstration

1. Development of Advanced Solar Cells and Modules
   The short- to medium- term goal of this program is to establish elemental technologies that can achieve PV power generation cost on par with typical residential electricity rates and transfer developed technologies into practical applications at an earlier stage. The program 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). All the development goals, initially set, were achieved. In 2005, commercial production plans of thin-film Si hybrid solar cell and thin-film CIS solar cell employing developed technologies were announced.

2. Development of Technology to Accelerate the Dissemination of Photovoltaic Power Generation Systems
   This program aims at developing industrial technologies in order to accelerate practical application of results of technological development so 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 mass production film fabrication equipment for low-cost, thin-film polycrystalline silicon. All the projects are to be finished by the end of FY2005, and planned to transfer to the phase of commercial application. From FY2005, a new 3-year successive program, PV Systems Advanced Practical Technology was started. The development of a high-performance inverter is underway.

3. Development of PV System Technology for Mass Deployment
   This program 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 program. Fundamental technologies such as evaluation technology of solar cell performance will be continued in FY2006 and later.

4. Development of Photovoltaic Power Generation Technology (Investigation for Innovative Photovoltaic Power Generation Technology)
   The program has a long-term goal for exploring seed 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 programs into the preliminary R&D program with an eye to the year 2030 and designated 5 R&D areas, based on the PV2030 Roadmap: 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. In FY2006, new technological development program will be started based on the results of these R&D issues.

Demonstration

1. Field Test Project on Photovoltaic Power Generation Systems for Industrial and Other Applications
   This program started in FY1998 and installations were completed with great success. 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 program aims at leading dissemination of middle-scale 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 program is regarded as a succeeding program of the Field Test Project on Photovoltaic Power Generation Systems for Industrial and Other Applications.
   Under this program, 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.
   The introduction of PV systems for public facilities and industrial uses are promoted under this program. 263 projects were selected and PV systems totalling 7 191 kW were installed in FY2004.
   In FY2005, METI enhanced this application area as a prioritized area for PV power dissemination, the number of the selected projects significantly increased to 574, totalling 23 960 kW.

3. Demonstrative Project on Grid-Interconnection of Clustered Photovoltaic Power Generation Systems
   This program started in FY2002 for a 5-year scheme, to install grid-connected PV systems equipped storage batteries into 600 households to conduct demonstrative research on a large-scale and to intensively introduce on-grid PV systems. The program 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 480 residences by the end of FY2005 and the demonstrative researches have been advanced.

4. Demonstrative Project of Regional Power Grids with Various New Energies
   This program 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 was located in the premises of the 2005 World Exposition (EXPO 2005), Aichi, Japan, and the micro-grid formed by the PV systems and other new energy power generation systems supplied electricity for Government Exhibition, etc. (see also photographs).

Implementation

• The Ministry of Economy, Trade and Industry (METI)
  The main implementation programs carried out in FY2005 were the “Residential PV System Dissemination Program,” the “Project for Promoting the Local Introduction of New Energy” and the “Project for Supporting New Energy Operators.”

  1. Residential PV System Dissemination Program
     The “Residential PV System Monitor Program” initiated in FY1994 was renamed the “Residential PV System Dissemination Program” in FY1997 to develop the initial residential PV system market. The program was terminated in FY2005. The total number of PV systems installed under these programs expanded to the scale of 250 000, and the initial market of residential PV system was successfully created.

     This program aims at reducing the cost burden to buyers 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 FY2004 was 45 000 JPY/kW, it was further reduced to 20 000 JPY/kW in FY2005.

     Under this program, residential PV systems were installed to 162 525 houses, total 595,1 MW, from FY1994 to FY2003. In FY2004, 54 475 houses equipped with PV systems totalling 200,1 MW. In FY2005, 39 643 applications for the program were received as of October 2005, and the Program was terminated since the applications reached the budget.

  2. Project for Promoting the Local Introduction of New Energy
     This program aims at accelerating new energy introduction by supporting the regional projects developed by local governments for promoting 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, that 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 10 kW of output capacity and over are qualified under the program.

     Recipients can receive the subsidy, lower amount of half of installation cost or 400 000 JPY/kW. 285 systems in total were subsidized from FY1998 to FY2003. 148 systems out of them were PV systems. Total capacity installed was 18 295 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. In FY2005, 103 systems in total were qualified and 33 systems out of them were PV systems. Total capacity installed was 870 kW. The program allows local governments to understand the benefit of the introduction of new and renewable energy and introduces PV systems intensively to school buildings and public facilities, etc. over several fiscal years.

  3. Project for Supporting New Energy Operators
     This program 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. Private entrepreneurs who start new energy businesses are eligible for guaranteed debt or subsidization. A third of the installation cost is subsidized, and 90 % of the debt is guaranteed. The capacity of an eligible PV system is 50 kW and over (10 kW and over is also eligible in case of installation of multiple new energy sources). 174 systems in total were qualified from FY1998 to FY2003, and 6 systems out of them were PV systems, 598 kW in total. In FY2004, 37 systems were qualified and 3 systems, 147 kW in total, out of them were installed. In FY2005, 66 systems were selected and 2 systems were PV systems, and the total installed capacity was 27,2 kW.

  Besides these programs, supports have been offered to local governments for their projects to develop their own visions for the introduction of new energy and to non-profit organizations (NPOs) for their supporting activities in introducing new energy at the 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 equipped with 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 Ministry of International Trade and Industry (current METI) in FY1997 and has been promoting the introduction of PV systems to elementary schools, junior high schools and kindergartens. 440 schools all over Japan were designated as the pilot model schools by the end of FY2004, and 282 schools among them installed PV systems with output capacity of 10 kW and over each. In FY2005, 95 schools were newly selected as the pilot model schools and PV systems are to be installed at 55 schools among them. From FY 2005, the Ministry of the Environment (MOE) also joined to the Project.

• The Ministry of Environment (MOE)
  The Ministry of Environment (MOE) 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 has been implementing several measures:

  1. the development of practical application of technology to introduce renewable energy as a measure for technological development projects to cope with global warming,
  2. a project to improve and maintain the local environment as a model town project for virtuous cycle of environment and economy,
  3. a project for the introduction of CO2 low-emission houses using PV system as the project to construction and maintenance of model houses to reduce CO2 emission and
  4. the environment-friendly renovation of schools and environmental education projects, such as the project of environment-friendly renovation of schools and the project of a model school for environmental education.

• 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 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 introduction of PV system, 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 282 in 2004 to 339 in 2005.

• Utilities
  Electric power companies in Japan continue the introduction of PV systems at 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, aiming 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 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 FY2001 to FY2004, 445 public facilities including schools across Japan were subsidized through the Fund and the total capacity installed was 8 439 kW. In 2005, 147 sites were selected, and installation of PV systems totaling 4 372,8 kW are underway.

  Electric utilities achieved to purchase required amounts of new energy for FY2004 designated under the Renewables Portfolio Standard (RPS) Law that was enforced from FY2003. Usage volume of electricity generated by new energy by utilities for FY2004 was 4 908 TWh in total, including 346 TWh from PV power generation. The accredited facilities for power generation using new energy under the RPS Law was 199 027 systems totalling 6 858 MW. Among them, PV systems are 198 159, accounting for 741 MW of generation capacity

• Financial 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. The number of such financial institutions has been increasing year by year.

Industry Status

1. completion of the Residential PV System Dissemination Program, which had been leading the expansion of Japan's PV market for the past 12 years (October 2005),
2. enhancement of a global strategy by domestic PV manufactures to meet the increasing global demand for solar cells, and
3. promotion of new energy by the national and local governments following the decision of the Kyoto Protocol Target Achievement Plan. The annual production volume of PV cell/module in Japan grew to over 800 MW.

The PV industry in Japan achieved progress in terms of the following aspects:

1. technological development of production of solar-grade polysilicon (SOG-Si),
2. enhancement of production capacity of solar cells, expansion of PV module production sites overseas and the introduction of PV modules with higher conversion efficiency into the market by PV manufacturers,
3. new entries into thin-film PV module manufacturing,
4. enhancement of market development of PV systems for public and industrial facilities in addition to the residential PV system market,
5. commercialization of large-sized inverters for PV systems installed in industrial and public facilities by power source manufacturers,
6. start of new market development such as the one for MW-scale PV systems, and 7) expansion of manufacturers' production capacity of raw materials for PV cells/modules; for example, raw materials for PV modules such as EVA and PET.

Highlights of PV cell/module manufacturers in 2005 are as follows:

• Sharp raised the solar cell production capacity from 400 MW/year to 500 MW/year. It also newly constructed a 15 MW/year manufacturing line for thin-film crystalline silicon tandem solar cells.
• Kyocera increased its solar cell manufacturing capacity from 150 MW/year to 240 MW/year. It also completed a PV module production line in the Czech Republic in 2005, and established the “quadripartite global production framework” for PV modules in Japan, Mexico, China and the Czech Republic. Sanyo Electric completed a PV module factory with a capacity of 50 MW/year in Hungary and began operations for the European PV market.
• Mitsubishi Electric commercialized a 170-W lead-free PV module with higher efficiency and larger output and an inverter for residential PV systems with 95,9 % of power conversion efficiency.
• Kaneka and Mitsubishi Heavy Industry (MHI) are both preparing for an enhancement of amorphous silicon PV modules' production capacity towards 2006. Hitachi increased production capacity of bi-facial single crystalline silicon bi-facial solar cells from 6 MW/year to 10 MW/year.

New entrants announced the construction of new plants; Fuji Electric Systems announced the construction of a flexible amorphous silicon PV module plant with a capacity of 15 MW/year, Showa Shell Sekiyu also announced the establishment of a CIS PV module plant with a capacity of 20 MW/year, Honda Motor disclosed plans to construct a CIGS PV module plant with a capacity of 27,5 MW/year. Clean Venture 21 and Fujipream jointly announced the construction of a light-concentrating spherical silicon solar cell and module plant with a capacity of 12 MW/year.

In the area of the silicon feedstock and wafer production, Tokuyama completed the construction of a solar-grade polysilicon (SOG-Si) plant with a capacity of 200 t/year, using the Vapor to Liquid Deposition (VLD) process and has begun demonstrative research. Chisso planned a demonstrative research for mass production of solar-grade polysilicon (SOG-Si) with a SiCl4 zinc reduction process. M. Setek started to build an integrated manufacturing plant, covering from polysilicon to silicon wafer for solar cells.

Besides these activities, with the growth of the PV system market, manufacturers of inverters and raw material providers for PV cells/modules have been actively increasing their capacity investment.

In the distribution of PV systems, Misawa Homes started to adopt the PV system as standardized equipment for residential houses. This movement has penetrated other housing companies such as PanaHome, Sekisui House, Daiwa House Industry, as well as major prefabricated housing companies, after Sekisui Chemical followed Misawa Homes with successful results. Providing PV system equipment in newly-built housing is now becoming a regular practice.

As stated above, PV installations in Japan have been steadily and ceaselessly expanding in 2005, based on the strong industrial structure around the PV system, which realized 1 GW of cumulative PV capacity. However, due to the phenomenally rapid growth of worldwide demand for PV systems over the past three years, a shortage in the supply capacity of raw materials and component materials for PV cells/modules started to become an obstacle for the growth of PV market. While PV cell/module production capacities are being expanded, expansion of component and raw materials supply capacity for PV cells/modules aren't able to meet the demand.
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Market Development

Especially, for the concept of zero-utility charge house using the PV systems, a new concept for the residential house was created; buyers, who recognize economical efficiency for the running costs of the house, as well as the environmental value, are increasing.

In the PV market for existing houses, PV manufacturers established the sales channels with local builders, electric contractors, electric appliances stores and roofers, etc. and cultivate buyers all over Japan.

Through the long-term field test projects, PV systems for non-residential use, such as for public and industrial facilities have seen significant progress, year by year, in many aspects: economical efficiency, grid-connection technology, design and installation as well as system efficiency. Consequently, opportunities for market expansion have been increasing and diversified in such areas as application, design, installation sites, power generation capacity and introducers of the PV system and the market development of non-residential area is in progress. As for the installation sites, the PV system have been made to a wider variety of places in addition to public facilities (schools, government office buildings, community buildings, water purification plants, welfare and medical facilities) and industrial facilities (factories, warehouses, laboratories, office buildings, commercial buildings). In addition to these sites, recently, PV systems have been installed to agricultural facilities (farm houses), commercial facilities (shopping malls, family restaurants), railway facilities (station buildings and platforms), road facilities (parking lots and expressway toll booths), financial facilities (banks, etc.), transport facilities (logistics centres, etc.) and resort facilities (hot-spring resorts, etc.). Generation capacity of one installation site has been increased to as large as 5 MW. The introducers, who purchase PV systems to install, are very much varied, from large to small-sized local governments, large corporations to sole proprietors, and to public-interest organizations and non-profit organizations (NPOs). Furthermore, some companies have been introducing the PV system to their factories and offices nationwide; and are installing additional PV systems to existing PV-equipped facilities.

Others have been introducing the PV system intensively in specific areas or introducing large-sized PV systems, and the number of such companies has been increasing year by year.
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Future Outlook

The Subcommittee started to consider appropriate measures for disseminating new energy, including evaluation and re-examination of the Renewable Portfolio Standard (RPS) Law. The direction of new and additional measures on the PV system will be revealed, based on the achievements made, thus far.

As for future measures, the framework for dissemination of the PV system by METI and the Ministry of the Environment (MOE) will start, as MOE recently joined in the work on dissemination measures on a full scale, in line with METI, which has been responsible for the dissemination of the PV systems on its own. METI will enhance introduction of PV systems into public, industrial facilities and complex housings through the Field Test Project on New Photovoltaic Power Generation Technology, and designate these application areas as the future driving force for further deployment of the PV system. MOE, which set up the “creation of 'the nation of the environment' to establish a new era,” as the prioritized measure in FY 2006, will start “operation solar,” a program to reduce CO2 emissions and to launch deployment of PV systems.

As for the PV market, finally the residential PV system market has made the first step to be an independent and self-sustainable market since the monitoring program for residential PV system started in 1994. As major manufacturers of residential PV systems have grown to produce products to meet the needs of the residential market in Japan and the number of housing manufacturers sell houses equipped with the PV system as standard equipment has been increasing. Also, the nationwide distribution network has been established lead by major solar cell manufacturers to promote installations of PV system to existing houses. It is expected that the PV manufacturers will promote further cost reduction of the PV system and build up a stronger partnership with housing manufacturers and housing-related industries to expand the market size with annual sales of 100 000 to 200 000 systems (400 – 800 MW/year), taking advantages of such strong infrastructures of the production framework and the distribution channel. Meanwhile, as for the market for non-residential application, it is assumed that creation of the initial market of PV system for public and industrial uses will advanced with the support of the national measures to disseminate the PV system.

The end-users of the PV system; individuals, industries, local governments and ministries and agencies have been gaining better understanding in the significance of introducing PV systems. It is expected that the introduction capacity of PV systems in Japan will steadily increase in the future.
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Further reading about Japan

• Japan - Country information