GPE SOLAR
Solar Market and Business
Management
Solar Japanese Market Report
Gottschalck Cavalcanti, Fabian
10/06/2012
TABLE OF CONTENTS
INTRODUCTION..........................................................................................3
JAPAN´S CLIMATE & GEOGRAPHICAL DATA……………………..….4
OVERALL ECONOMY.................................................................................6
ELECTRECITY IN JAPAN...........................................................................7
ELECTRICITY DISTRIBUTION……………………………………………11
SOLAR INDUSTRY......................................................................................12
CONCLUSIONS.............................................................................................15
REFERENCES................................................................................................16
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INTRODUCTION
The basic requirement for producing solar energy is enough sunshine, which is why solar
power is particularly suitable in the “sunbelt” between latitude 30 degrees north and 30
degrees south. As concerns about climate and energy supply issues escalates, government
support for the development of renewable energy is increasing and the cost reductions in
the industry are moving towards a level approaching grid parity. Besides that, solar cells
have become more efficient, which makes them an even greater value than they were a few
years ago. There have also been great strides in our ability to install and implement PV
technology as contractors and builders have begun to treat PV as a mainstream building
technology. The economics of solar energy are compelling, particularly as the costs of
conventional oil and gas continue to climb. Most PV systems are warranted for at least 25
years and usually pay for themselves in much less time, even assuming that gas and oil
costs don't rise.
The 2010 global photovoltaic (PV) market soared past the forecasts of the previous year
allowing prices, throughout the PV chain, to hold up much better than anticipated.
Worldwide, PV market installations reached a record high of 18.2 GW in 2010,
representing growth of 139%. The PV industry generated $82 Billion in global revenues in
2010, up 105% from $40 Billion in 2009. Meanwhile, worldwide solar cell production
reached 20.5 GW in 2010, up from 9.86 GW in 2009.
Due to the recent sharp cuts in tariffs in Europe, the industry will need to stimulate positive
PV policies across new markets and regions in order to continue being successful.
Germany, Spain, USA, Italy, Japan and South Korea are the most developed solar markets
today, but other markets are following and see solar power as a key resource in their future
energy supply.
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FIGURE 1: MAJOR PV COUNTRY MARKET IN 2010 AND 2011.
The Japanese market continues experiencing high growth –increasing its solar energy size
from 477 MW in 2009 to almost 1.5 GW in 2011, as a result of the nationwide residential
incentive program and the introduction of a Japanese version of a Feed-In-Tariff (FIT) in
2009. New government initiatives have made a declaration to increase the cumulative
installed PV capacity by 20 times to reach 28GW by 2020 - and if implemented thoroughly
theses government initiatives present very strong opportunities to bring world leader
position back to Japan.
JAPAN CLIMATE AND GEOGRAPHICAL DATA
Japan is an island nation in East Asia comprising a volcanic archipelago extending along
the Pacific coast of Asia. Measured from the geographic coordinate system, Japan stretches
from 24° to 46° north latitude and from 123° to 146° east longitude.
Japan belongs to the temperate zone with four distinct seasons, but its climate varies from
cool temperate in the north to subtropical in the south. Japan is generally a rainy country
with high humidity. Because of its wide range of latitude and seasonal winds, Japan has a
variety of climates, with a latitude range often compared to that of the east coast of North
America, from Nova Scotia to the U.S. state of Georgia. Climate also varies dramatically
with altitude and with location on the Pacific Ocean or on the Sea of Japan. Northern Japan
has warm summers but long, cold winters with heavy snow. Central Japan in its elevated
position has hot, humid summers and moderate to short winters with some areas having
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very heavy snow, and southwestern Japan has long, hot, humid summers and mild winters.
The climate, in general, from June to September is marked by hot, wet weather brought by
tropical airflows from the Pacific Ocean and Southeast Asia. These airflows are full of
moisture and deposit substantial amounts of rain when they reach the land. There is a
marked rainy season, beginning in early June and continuing for about a month.
Sunshine, in accordance with Japan’s uniformly heavy rainfall, is generally modest in
quantity, though no part of Japan receives the consistently gloomy fogs that cover other
regions in Asia. Amounts range from about 6 hours per day in the Inland Sea coast and
sheltered parts of the Pacific Coast and Kantō Plain to 4 hours per day on the Sea of Japan
coast of Hokkaidō. In December there is a very pronounced sunshine gradient between the
Sea of Japan and Pacific coasts, the former side can receive less than 30 hours and the
Pacific side as much as 180 hours. In summer, however, sunshine hours are lowest on
exposed parts of the Pacific coast where fogs from the Oyashio current create persistent
cloud.
FIGURE 2: SOLAR IRRADIATION IN JAPAN.
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OVERALL ECONOMY
The economy of Japan is the third largest in the world after the United States and the
People's Republic of China and is the world's second largest developed economy.
According to the International Monetary Fund, the country's per capita GDP (PPP) was at
$34,362 or the 24th Highest in 2011.
The general inflation rate in Japan was last reported at 0.5 percent in March of 2012. From
1971 until 2010, the average inflation rate in Japan was 2.97 percent reaching an historical
high of 24.90 percent in February of 1974 and a record low of -2.50 percent in October of
2009.
FIGURE 3: JAPAN’S INFLATION RATE OVER THE LAST5 YEARS.
Japan has the largest electronics goods industry, and is often ranked among the world's
most innovative countries leading several measures of global patent filings. Facing
increasing competition from China and South Korea, manufacturing in Japan today now
focuses primarily on high-tech and precision goods. The fields in which Japan enjoys high
technological development include consumer electronics, automobile manufacturing,
semiconductor manufacturing, optical fibers, optoelectronics, optical media, facsimile and
copy machines, and fermentation processes in food and biochemistry.
With a population of 126,860,000 and only 377.944 square kilometers of area (about same
size as the state of Montana/US), Japan has inadequate natural resources to support its
growing economy and large population. Although many kinds of minerals were extracted
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throughout the country, most mineral resources had to be imported in the postwar era.
Local deposits of metal-bearing ores were difficult to process because they were low grade.
The nation's large and varied forest resources, which covered 70 percent of the country in
the late 1980s, were not utilized extensively. Because of political decisions on local,
prefectural, and nation levels, Japan decided not to exploit its forest resources for economic
gain. The nation therefore built up the manufacturing and processing industries to convert
raw materials imported from abroad. This strategy of economic development necessitated
the establishment of a strong economic infrastructure to provide the needed energy,
transportation, communications, and technological know-how.
ELECTRICITY IN JAPAN
Japan lacks significant domestic sources of fossil energy and must import substantial
amounts of crude oil, natural gas, and other energy resources, including uranium. Therefore
roughly 80% of its oil is imported from OPEC: especially, United Arab Emirates, Saudi
Arabia, Kuwait, and Iran. Also most coal comes from Australia and the United States.
Using large amount of oil and coal for energy affects the environment negatively. Fossil
fuels emit carbon dioxide, which lead to global warming. In 1999, it is reported that Japan
emitted carbon dioxide totaling 5% of global emissions. In 2010, Japan was number one
hard coal importer (187 Mt, 20 % of total world coal import) and number one top natural
gas importer (99 bcm, 12.1 % of total gas import).In 1990 Japan's dependence on imports
for primary energy stood at more than 85%, and the country had a total energy requirement
of 428.2 million tons of petroleum equivalent.
In 2008, Japan ranked third in the world in electricity production, after the United States
and China, with 1.025× 1012 KWh produced during that year. In 2011, Japan’s total
electricity production was 1 053 934 GWh.
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FIGURE 4: JAPAN’S ELECTRECITY PRODUCTION IN 3 DIFFERENT YEARS.
In terms of per capita electricity consumption, the average person in Japan consumed 8169
KWh in 2009. That was 115% of the EU15 average of 7409 kWh/person and 95% of the
OECD average of 8991 kWh/person. Its per capita electricity consumption decreased by
3.43% between 2004 and 2009.
With 53 active nuclear power generating reactor units in 2009, Japan ranked third in the
world in that respect, after the United States (104 reactors) and France (59). Almost one
quarter (24.93%) of its electricity production was from nuclear plants, compared to 76.18%
for France and 19.66% for the United States. After the 2011 earthquake and tsunami some
nuclear reactors were damaged, causing much uncertainty and fear about the release of
radioactive material, as well as highlighting the ongoing concerns over Japanese nuclear
seismic design standards.
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FIGURE 5: JAPAN’S ELECTRICITY PRODUCTION BY SOURCE.
Now days, the renewable energy is becoming stronger in Japan. The Japanese government
announced in May 2011 a goal of producing 20% of the nation's electricity from renewable
sources, including solar, wind, and biomass, by the early 2020s.According to the OECD,
Japan produced more electricity in May 2011 than it did in May 2010, but did so with 34%
LESS nuclear energy and 1% hydro. Citing the Fukushima nuclear disaster, environmental
activists at a United Nations conference urged bolder steps to tap renewable energy so the
world doesn't have to choose between the dangers of nuclear power and the ravages of
climate change.
From 2010 to 2011, Japan produced 295% more electricity from renewable-energy
resources – including geothermal, solar and wind power.
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FIGURE 6: ELECTRICITY PRODUCTION IMPROVEMENT ACCORDING TO EACH SOURCE.
Although it only makes a minor contribution to the total, Japan was the world's first largest
producer of photovoltaic electricity until overtaken by Germany in 2005, a year in which it
had 38% of the world supply compared to Germany's 39%. In December 2011, Tohoku
Electric Power began operating a solar power plant in Hachinohe, Aomori. The 10,000
panel plant, occupying a 50,000 square meter site, is expected to produce 1.6 million KWh
of electricity a year, about the equivalent needed to power 500 households. Also, in
September 2011, Japan had 1,807 wind turbines generating 2440 MW of power. A lack of
locations with constant wind, environmental restrictions, and emphasis by power utilities
on fossil and nuclear power hinders the employment of more wind power in Japan.
As the energy prices increase in Japan, photovoltaic’s systems are very welcome. As an
example, the latest news said that Japan's 10 major power utilities plan to raise electricity
prices in June due to higher fuel costs. Japan's largest utility, Tokyo Electric Power
Company, said its household customers, who consume an average 290 kW/month, will pay
about Yen 6,973 (€69.32) in June/12, up from Yen 6,912 (€68.71) in May/12. Household
customers of Kansai Electric, Japan's second-largest power utility will pay Yen 6,769
(€67.29) in June/12, up from Yen 6,739 (€67.00) in May/12, for average usage of about
300 kW/month. Household customers of Chubu Electric, the third largest, will pay Yen
7,082 (€70.40) in June/12, up from Yen 7,040 (€69.99) in May/12, for average
consumption of 300 kW/month.
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Each utility uses a different mix of feedstock for power generation, including coal, oil,
LNG, nuclear and hydro, accounting for the variation in prices.
ELECTRICITY DISTRIBUITON
The electric power industry in Japan covers the generation, transmission, distribution, and
sale of electric energy.
Japan doesn't have a single national grid like most other industrial countries have, but has
separate eastern and western grids. The grids are connected together by 3 frequency
converter stations (Higashi-Shimizu, Shin Shinano and Sakuma), but these can only handle
1 GW.
FIGURE 7: POWER GRID OF JAPAN.
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In Japan, the electricity market is divided up into 10 regulated companies:
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Chugoku Electric Power Company (CEPCO)
Chubu Electric Power (Chuden)
Hokuriku Electric Power Company (HEPCO)
Hokkaido Electric Power Company (Hokuden)
Kyushu Electric Power (Kyuden)
Kansai Electric Power Company (KEPCO)
Okinawa Electric Power Company (Okiden)
The Tokyo Electric Power Company (TEPCO)
Tohoku Electric Power (Tohokuden)
Shikoku Electric Power Company (Yonden)
SOLAR INDUSTRY
The domestic PV market was originally created by a national policy in the early 1970s to
lead the nation away from its dependence on foreign oil. The federal government funded
R&D projects and created policies to support the introduction and dissemination of PV
systems. One of the most important of the federal programs was the Residential PV System
Dissemination Program, which provided up-front cash rebates. Between 1994 and 2005,
this governmental program funded total installations of over 930MW, comprising over
250,000 residential PV systems. During this period, Japan dominated the world PV market
in terms of both production and installation.
After 12 years, the federal government thought the PV market was self-sufficient and
discontinued the residential incentive program, while Germany and several other countries
moved ahead with national FIT policies. In 2006, Japan saw its first ever decrease in the
annual PV market; it declined further to 230MW in 2007, and remained at about the same
level in 2008. The market decline was due not only to lack of incentives, but also to lack of
domestically-available modules, since Japanese module makers focused on exporting to
Europe, where profit margins were much higher.
To stop the market from further decline, the federal government re-launched the national
residential incentive program in January 2009. In this program, the government covers up
to 35 percent of a home PV system’s installation costs. A requirement that utilities pay
homeowners a premium for electricity fed back into the grid by renewable energy
systems—known as a feed-in tariff or FIT—makes residential PV even more attractive.
Japan’s FIT rate for PV is about twice what a resident would normally pay for a kilowatthour of electricity. In November 2009, the federal government initiated a Net FIT policy,
requiring electric power utilities (a total of 10) to buy excess electricity generated by PV
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systems at a premium rate. Residential PV owners currently get paid for 10 years a rate of
¥42/kWh, compared to the average of ¥20/kWh under the traditional net-billing. The main
reason Japan is implementing the Net FIT policy – purchasing only excess generated
electricity, instead of purchasing all generated electricity – is to incentivize energy
conservation and to limit the program cost burden that is shared by all electricity ratepayers.
Since then, the Japanese residential PV market has been making a strong come back.
FIGURE 8: JAPAN’S PV INSTALLATION GROWTH.
The dominance of the residential sector remains strong, accounting for 86% of the total
market in 2011. The residential segment will continue to dominate domestic PV demand,
though its share will fall gradually as the non-residential segment starts to take-off with a
new FIT that will start in July 2012.
In the past, the federal government supported the non-residential PV segment with hefty
upfront cash incentives (about 30-50% of the installed system cost), but the segment didn’t
grow as fast and as large as the residential segment due to higher installed system costs and
lower electricity rates. By 2011, the federal PV incentive program was no longer available
for the non-residential segment. To compensate for the lack of incentives, the government
raised the net FIT rate for the non-residential segment from ¥16/kWh in 2010to ¥40/kWh in
2011. This increase has not been sufficient enough to drive the non-residential segment
since this policy compensates only excess generated PV electricity, is available only for
systems below 500 kW, and is not available for power generators.
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Moreover, with technology improvements and further installations under the national PV
2030+ initiative, the government aims to make solar PV among the cheapest electricity
options available. .By 2020, Japan aims to increase this eightfold, to 28,000 megawatts,
with a goal of 53,000 megawatts by 2030. This would be sufficient to power 18 million
Japanese homes.
Many homeowners are qualified for not only federal incentives, but also incentives from
their prefecture, city and town, respectively. As of October 2011, a total of 870 local
governments offer PV support programs, including subsidies and loans.
With only a few months before the true FIT is implemented in Japan, many projects are in
limbo due to uncertainty in rates and terms for the FIT. The Japanese government is under
pressure to come with the “right” rates to accelerate the domestic PV market, while at the
same time minimizing the burden on homeowners and businesses who suffer from slow
economic conditions, and also to prevent a repeat of the market swings seen in Spain and
the Czech Republic.
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CONCLUSIONS
In the end the Japanese market is considered to be a very preferment market. The Japanese
government wants to assure that in the future they will have a safe, clean, and selfsustainable environment, but unfortunately the renewable energy (specially the solar
energy), still depend a lot of the of local regulations and incentives. Companies are waiting
for the announcement of the Japanese government of the new Fid-in-Tariff, for nonresidential solar installations, in July/2012, in order to invest their money in this market.
With the increasing electricity prices in Japan, solar generated electricity becomes an even
better power source to stop Japan’s dependence of foreign raw-material for electricity
generation and also to unleash Japan from the danger of a nuclear power, which in Japan it
becomes even more dangerous due to the enormous quantity of natural disasters that can
occur in the country.
Ultimately, if Japan achieves its photovoltaic’s installations goals for 2030, with the
ambitious “2030+” national program, certainly the photovoltaic system still has a very
bright future ahead.
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REFERENCES
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