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The Photovoltaic Market in Japan:
Unquestioned Leadership of World Market

by Oliver Ristau
15.09.2001

Since 1999, Japan has been number one when it comes to photovoltaics. The East Asian country's global market share exceeded 40 % in the year 2000, and this year that position will at least be held. One reason Japan achieved this solar prominence can be attributed to the uninterrupted federal assistance, which has been afforded mostly by the very influential Ministry for the Economy, Trade, and Industry (Meti).


Photo: Solarserver

State Promotions

No other country in the world promotes photovoltaic technology more than Japan. Due especially to the research program "New Sunshine Project" started in 1993 and the incentive program "Residential PV System Dissemination Program", as well as its predecessor "Residential PV System Monitoring Program" begun in 1994, the Japanese have been able to build up a self-supporting market. These programs are supported by Meti (known as Miti until 2000), while the concrete development is subject to the supervision of the New Energy and Industrial Technology Development Organization (Nedo). With the commercialization of photovoltaics at the forefront of the New Sunshine Project's objectives prior to the year 2000, now the Japanese industry aims at mass production by 2005. At that point, current companies could offer their products in other solar markets like Europe and the USA. With their photovoltaic systems manufactured at lower prices they would be able to efficiently win market shares while forcing those competitors who haven't yet reached mass production levels, and are therefore inevitably more expensive, out of the market.

 

70,000 Roofs

Under the Residential Program, Meti promotes the installation of solar power systems on private rooftops. Often described as the 70,000 Roofs Program, this promotion is similar to the 100,000 Roofs Program in Germany in that its primary goal is to stimulate demand. According to Nedo statistics for the International Energy Agency, the Japanese roof program had promoted 51,899 solar power systems by the end of fiscal year 2000 (to March 31, 2001). The capacity of these systems amounts to about 210 megawatts. The maximum output of all such systems installed in Japan up to this point was 317,5 MW, also according to Nedo. In comparison, at the end of the first fiscal quarter, Germany had only about 110 MW.

An enlightening phenomenon is the fact that Meti's promotion for the installation of photovoltaic systems has actually gone back noticeably. The Ministry actually gave 14.5 billion Yen (about 0 million) less for the promotion of solar rooftops than they did in the previous year (16.04 billion Yen = about 0 million); despite this the demand for these funds has rapidly increased. Last year 18,907 applications were approved, while the year before that only 17,396 were granted, and the largest run from the Meti funds so far occurred in the second half of the 2000 fiscal year, resulting in 10,873 approved applications. All this was possible even as the promotional funds per kilowatt of peak output were decreased over 30 % to a maximum of 180,000 Yen (about ,630) for a maximum of 4 kW output (10 kW before). With this evidence, it appears that promotion and demand are clearly becoming independent of one another: Japan is on course to a self-supporting and subsidy-free solar market. It comes as no surprise then, that Meti plans to phase out the 70,000 Roofs Program by fiscal year 2002/2003. The federal government's goal of building up to 5 gigawatts of maximum solar output by the year 2010 can only be realized with an independently functioning market.


Meti and the Industry

The Ministry for the Economy, Trade and Industry (Meti) directly influences the companies of the solar industry, mostly in the area of research and the build-up of the corresponding production sites in Japan. Thus, only Meti has the right to publish concrete numbers correlating to the volumes of production in the industry.

Last year two Japanese companies, whose solar power operations had been subsidized for years by the Meti, felt the brunt of the blow from the ministry. In the spring of 2000 it became known that over 20 % of solar power systems, which had been delivered throughout Japan by Sanyo Electric between 1996 and 1998, had defects. The Meti forced the CEO of Sanyo, Sadao Kondo, to step down, and in the beginning of April the accepted PV-expert, Yukinori Kuwano, took his place. Another player in the Japanese solar market met with an even worse fate. In the beginning of 2000, an investigation by the Miti found that between 1990 and 1994, the solar cell manufacturer Kyocera had used research funds appropriated for the development of solar-powered automobiles for other purposes. Although Kyocera dishonorably paid back an amount close to 5,000 and publicly apologized, the offense was not forgiven: Kyocera will never again receive research funds for solar technology.


Industry and Export

Kyocera must now look for good fortune elsewhere, and its German subsidiary company Kyocera Fineceramics GmbH should take care of success in far-off markets. From Swabian Esslingen, the group wants to conquer markets in Europe, Africa, and the Near East, with Germany itself topping the list.


Photo: Solarserver
German Roofs - Market chance for the Japanese PV Industry?

"We want to build our market share up to 20 %," says Edgar Willem, responsible for Kyocera Fineceramics' solar business. "Last year Kyocera succeeded in selling 5 MW in Germany." That corresponds to roughly 12 % of the entire market. Now a solar factory in Europe appears more than just a possibility because of the problems in Japan, but more is not yet known according to Willem. Also to consider is what other product ranges the group might be able to use the factory for. Kyocera is currently allowed to produce 4 MW in Japan, and the plans to build-up to 5 MW can no longer be

 

The Leading Solar Quintet:
Kyocera, Sharp, Mitsubishi, Sanyo, Kaneka

Since 2000, the Sharp Corporation has been able to feel like the world leader, rather than Kyocera. The company based in Osaka was able to leap from the mid ranks of solar cell manufacturers to the top within just two years. "In June of 2001, the second production line in Shinjo went into operation. The yearly production capacity is 94 MW," says Hiromi Morita of the Japanese Sharp headquarters. The volume of sales in the solar branch should grow around 50 % to 28 billion Yen (about $ 250 million) this year. Most of the solar cells will still be sold in the domestic market. "This year we won't sell any solar products here," explains Martin Beckmann, spokesperson of Sharps Electronics (Europe) GmbH in Hamburg, Germany, and probably not in the coming year either, as heard in well-informed circles. Such is the talk even though the Sharp headquarters in Hamburg is responsible for all European business done by the Japanese.


Data: Project Company Solar Energy Systems GmbH
( Projektgesellschaft Solare Energiesysteme mbH)

Graphic: Solarserver

The outlook is similar for Mitsubishi Electric. The marketing department of the German subsidiary in Ratingen, does not know about the activities in the solar market of the mother company in Japan.
With 12 MW in the year 2000, Mitsubishi Electric was number 4 in Japan behind Sharp, Kyocera, and Sanyo, and this year the electronics giant plans to expand its capacity to 24 MW. Likewise, the Munich-based Europe headquarters of Mitsubishi Heavy Industries (MHI) presents itself as being ignorant. It shares the name and logo of Mitsubishi Electric, but it operates completely independently from that company. "We do concern ourselves with wind power plants, but we have nothing to do with solar cells," says a company spokesperson from MHI, whereas in Japan MHI has done research in the area of amorphous solar cells for years.

At Sanyo Electric, however, the situation is different. The electronics corporation has concentrated on Europe more strongly since the new CEO Yukinori Kuwano assumed office. Since October of 2000, Shijiki Komatsu of Sanyo Energy (Europe) GmbH, based in Munich, has been responsible for the company's efforts to break into the European market. Despite this, Komatsu concedes that it is not yet completely clear if Sanyo will run its sales department alone, or if it will work with instructed sales people. Komatsu sees the future of Sanyo's efforts in solar operations in Germany, Spain, Italy, and the Netherlands. This is where Sanyo will offer its hybrid solar cells that are composed of both crystalline and amorphous silicon. "Last year Sanyo produced 17 MW in Japan. In the current fiscal year it should reach 33 MW," says Komatsu. In the long term, Komatsu confirms that Sanyo would like to build its capacity up to 120 MW. Presently, the company is building a large solar power plant in the parking lot of the Sanyo Factory in Gifu, Japan, which with a peak output of 3.4 MW should be the largest in the world. By the end of March 2002, the installation of one megawatt is expected.

The Japanese corporation Kaneka Corp. is the youngest participant of the solar quintet leader, Nippon. Since November 1999, the subsidiary Kaneka SolarTech Co. Ltd. has produced solar cells made of amorphous silicon. Originally, Kaneka wanted to get into thin-layer technology with BP, but BP apparently lost interest after its merger with Solarex. Therefore, Kaneka had to delay its plans for the construction of a production site with an output of 20 MW. For this project, the company plans to invest $ 14.3 million of its budget, and as far as it is visible, production should begin by the end of fiscal year 2001. Udo Möhrstedt, chairman of the managing board for Systemhauses IBC Solar AG in Bavarian Staffelstein, estimates the current production output of Kaneka in Japan from eight to ten MW. IBC has distributed thin-layer solar modules from Kaneka since June 2001, whereby Kaneka entered the European market. This year, the company wants to concentrate its sales of solar modules with 5 MW capacities in Germany, Holland, Switzerland, and Belgium. Consequently, Kaneka is the first Japanese company - with the exception of Kyocera - firmly planted in Europe. Now this relatively small supplier could try to position itself in the promising European solar market before the export offensive of the large Japanese solar players.

 

Mass Production for the World Market?

In the coming two to three years, a Japanese-style export offensive can be expected. Until then, as defined in the Meti Research Program "New Sunshine Project", companies should have successfully taken the step to mass production. Then what the Japanese had accomplished in other industry sectors could become reality: the flooding of foreign markets with low-priced, mass-produced articles. "That's what we have to look out for," says an insider familiar with Japan from a large German solar company.

Unlike Kyocera and Sanyo, who have researched and applied photovoltaic technology for years, not all Japanese companies are keeping at it: Fuji Electric has apparently completely left the solar electricity field, even though the company announced plans in 1997 to produce amorphous solar cells. "Of solar cells," according to Jörg Jung, marketing manager at Fuji Electric Europe in Frankfurt, "no one is speaking anymore." Fuji probably became a victim of the selection process that took place during the research program, because only those companies showing the best results while receiving promotional funds are considered for further funding. Likewise, Canon dropped out, even though up until last year they were involved with the US-American Energy Conversion Devices in the US-Solar Cell Manufacturers United Solar Systems. In the spring of 2000 Canon sold its share to the Belgian steel company Bekaert - the company now wants to use the knowledge gained from solar cell technology for its copy machines.

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