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Market News

 August 08, 2007
Japan: Solar Energy

 Clean energy sources such as solar power have enormous potential in Japan. While the global photovoltaic (PV) market is expanding rapidly, the Japanese government is leading efforts to expand the installed PV power generation base in Japan. The country's manufacturers enjoy nearly 40% market share of PV cell production. With rapid increases in demand for solar-grade silicon there will be shortages that will spur the development of better PV technologies. Firms offering these technologies will enjoy a number of opportunities.

Market Demand

The PV market has seen average annual growth of 20 percent to 30 percent over the last five years. According to the Japanese Agency for Natural Resources and Energy, targeted PV power generation is 4.82 million kilowatt (kW) by 2010 or twice the current rate.

Market demand is for a variety of PV modules suited to various locations and purposes. For example, lightweight, flexible, bifacial, and integrated inverters are required for PV modules.

Growth in demand is expected in:

  • the development of value-added PV modules with diverse functions such as sound and heat insulation and anti-reflection and
  • the integration of PV modules with building materials and components.

And to remain competitive, manufactures will need to reduce module manufacturing costs through cell efficiency improvements and other innovations.

Market Data

The Japanese government plans to increase PV power generation to 4.82 million kilowatt (kW) by 2010. At the end of 2005, Japan generated 1422 mW of solar electric power for the year but ceded the top position to Germany. With a 40% market share, Japan is still the world's leading PV manufacturer.

In 1980, the Japanese government established the New Energy and Industrial Technology Development Organization (NEDO). In 1994, NEDO released its PV Roadmap Toward 2030. According to this document, PV technology should be able to generate 100 GW of power by 2030, which would supply 50 percent of residential electricity consumption (approximately 10% of total electricity consumption) in Japan. The first review of the program will be conducted in 2009.

Best Prospects

There will be steady growth in PV power generation systems in Japan. PV power will become more and more important in the future. Currently, the most common PV cell is a crystalline silicon solar cell. However, because of a lag in demand of solar grade silicon, new technologies such as thin-film silicon solar cells are attracting attention. The Japanese government is focusing on technologies using other materials as well. The lack of silicon will provide a larger opportunity to introduce new technologies including thin-film silicon solar cells, "CulnSe" solar cells, and dye-sensitized solar cells. Companies have good opportunities to introduce new technologies to gain market share. Also, integration in building materials is a key factor for entering the Japan.

The Japanese government is promoting PV in non-residential facilities and is trending towards systems with a capacity of 10kW or higher. NEDO is carrying out field test to promote further use medium and large-scale PV systems. There are also efforts to expand residential PV systems. The Tokyo Metropolitan Government (TMG) announced in February 2007 that it established a study group to expand the residential use of solar power to reduce carbon dioxide emissions. The TMG's is striving to introduce the solar power equivalent of one million kilowatts into houses and apartments in Tokyo. As for residential use, because Japanese homes generally have small roofs, efficient PV systems are required.

Market Entry

Japan leads the world in solar power generation and is a competitive market for PV. It is a challenge to enter this market. The stakes are high as PV shows staggering potential in niche areas. Global energy resources and environmental issues are creating positive conditions for the expansion of the PV market. Right now, PV power provides only a small portion of Japan's energy, but efforts are underway to promote it. New and efficient technologies may be successful in Japan.

Market Issues & Obstacles

Japanese government subsidies for PV installation ended in 2002. However, there are local entities that are subsidizing PV installation. The main issue is the cost of solar energy. Solar energy is still expensive with consumer rates at about twice those of the average household. Lowering such costs will continue to drive the development of better technologies. Third party certification for PV power generation systems (module) are being carried out intensively since April 2005. Under the Japanese Building Law, roofing materials must comply with fire safety regulations. So, fire safety regulations will affect whether solar module will be used as roofing materials. Recycling and reusing power system components need to be considered.


Excerpts from "Japan: Solar Energy", U.S. Commercial Service, July 2007.