PV UPDATE in Japan

50th IEA PVPS Task 1 expert meeting7th April 2018

Izumi KAIZUKA, RTS Corporation, Tokyokaizuka@rts-pv.com

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1MW floating PV in Ranzan, Saitama

Japan is no1 in number of floating PVprojects

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https://www.solarplaza.com/channels/top-10s/11634/floating-solar-plants-niche-rising-surface/

PV Market in 2017 and 2018• 2017 newly added PV capacity

was ~7GWdc (final data maybe > 7GW)

• Cumulative PV capacity reached ~49 GW as of the end of 2017

• PV share in electricity demand: ~5.7%

• With the pipeline of the PV projects under the FIT, 64 GW national target will be achived in around 2020

• Increase of electricity charge due to surcharge for FIT concerend

– Surchage of FY 2018: 2.9 Yen/kWh (0.02734 USD/kWh)

– 754 Yen /month for average family(7.1 USD/month)

– Grid fee for non-residential is under discussion

Source: IEA PVPS Trends Report 2017, RTS Corporation

FY2030 National target :64GW

Key challenges for PV power dissemination

� Further cost reduction � Grid constriction

2 Key challenges identified under discussion of revised Basic Energy Plan

Demand and supply on 30th Apr. 2017 in Kyusyu Power Co. area

Grid connection of PV is difficult in some areas (ex. Kyusyu)

Source: Kyusyu Electric Power Company

Source: METI, Grid Working Group (Dec. 2017)Cost of residential PV system in 2016 Source: IEA PVPS

PV installation cost in 2017

Japan1 US (1Q2017)2

Residential 364 Yen/W (3.45 USD/W) 2.80 USD/W

Utility scale 277 Yen/W (2.62 USD/W) 1.03 USD/W

Source1: METI2: Ran Fu, et. al., NREL “U.S. Solar Photovoltaic System Cost Benchmark: Q1 2017”

Grid connection is limitedConnection with cost sharing by developpers

Pathway for cost reduction

� Scheduled FIT for small PV (<10kW)

– FIT is set until FY 2019– By 2019, FIT will be lower than

hose hold electricity rate– Opportunity for storage

� Auction for 2 MW more PV– 1st auction results was unsuccessful

� Target capacity was 500 MW� 141 MW (9 projects) awarded � 41 MW (4 projects) paid deposit

– Rule change for deposit in 2018 is expected to increase selected capacity

● Distribution of winner Ceiling price

Source: METI, TEPCO compile d by RTS Corporation

Source: METI

0.17 USD/kWh

0.26 USD/kWh0.25 USD/kWh

Pathway to host more renewable energy: Connect & Ma nage

Source: Material from second meeting of Subcommittee for Large-volume Introduction of Renewable Energy and Next Generation Electricity Network

Utilizing gapFull operation of power source, demand in estimated as minimum

Rationalization of assumed power flow

Assessed probability of power function such as leveling effect to long-term hibernated power or naturally fluctuating power. Utilizing vacant capacity when assessing cases in which difference of demand and output become the largest

Power control of N-1 Enough capacity for power transmission is secured even if failure occur in single line (N-1), the capacity is utilized by conducting power control in case of failure

No-firm type connection

New idea of power connection which allow power transmission if there is vacant capacity in grid (utilizing gap in grid). Output curtailment in crowded condition is prerequisite

No-firm type connection

Current Situation

N-1 Power Control

Rationalization of expected power flow

Capacity of power facility

Image of power flow in Japanese version of Connect and Merge

Heat capacity of dual line

Heat capacity of single line

8,760 hours

Image below is only a image and specific management is considered in future

� Current National target

�National target:

� PV electricity 7% (= 64GW) by FY 2030

� Potential of PV is higher

Outlook for Japanese PV market

■Geothermal

■Wind

■Biomass

■PV

■Hydro

■Geothermal and RE ■Hydro ■Oil ■LNG ■Coal ■Nuclear

Source: METI “Long term energy supply-demand outlook” (July 2015)

� Japanese PV market potential

Source:

METI, “Long term energy supply-demand outlook” (July 2015)

Ministry of Environment (MoE), “Study group for study potential of renewable and

distributed energy toward 2050” (April 2015)

Japan Photovoltaic Energy Association, “JPEA PV OUTLOOK 2050”

RTS Corporation, “Proposal for development of PV industry (PV 150)”

(GW)

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• Electricity supply of around 150 TWh/year accounting for 15% of Japan’s total electricity demand

• PV can sufficiently play a role as a mainstream energy source

150 TWh/yr

66 TWh/yr

74 TWh/yr

1 TWh/yr

Annual generation by 1 kW of PV module is assumed to be 1,000 kWh.

• Promoting transition of energy supply-demand structure

• Leading the world through the establishment of a de-carbonized society

• Encouraging capital investment by private sector

• Improvement of international competitiveness of the PV industry

RTS proposal target PV installed capacity toward 2 030

Industry

Large commercial

Small commercial

Residential

Demand in new fields

Cum

ulat

ive

PV

inst

alle

d ca

paci

ty (

GW

, PV

mod

ule

cap

acity

)

Electricity supply for large-scale electricity demand

<Response to energy for manufacturing>

Industry

Large commercial

Small commercial

Residential

New fields

Distributed power supply for consumers’ electricity demand

<Response to energy for living>

Electrictiy supply for new fields

(Long-term Energy Supply and Demand

Outlook)

Source: “Recommendation for development of the PV industry (PV150) A standard-bearer ‘PV power generation’ in the era of great energy transition - Aiming to achieve 150 GW installation in Japan in 2030-” (Feb. 2018) published by RTS Corporation

Year

PV for home and buildings� Energy efficiency standard will accelerate ZEB and ZEH

Source：Ministry of Land Infrastructure and TransoirtainMLIT）, METI and RTS Corporation

Subsidies of batteries for ZEH are available

Item FY 2018 budget (ministry in charge) Specifically…… Requirement Amount/rate of subsidy

Advanced low carbon housing progressing further CO 2 saving

10.2 BJPY

(MLIT)Life Cycle Carbon Minus (LCCM) housing LCCM housing -

Promote supply of ZEH for further dissemination in the future

60 BJPY

(METI)

ZEH with higher performance, ready-built housing, apartments (medium and high-rise)

ZEH+

1.15 million Yen/ project + fixed amount (in case of utilizing cross laminated timber(CLT) or renewable energy heat utilization technology: maximum 0.9 million)[Energy storage option: 30,000 Yen /kWh (maximum 0.45 million Yen, etc.)

ZEH（ZEH、Nearly ZEH ）

0.70 million Yen/ project + fixed amount (in case of utilizing CLT or renewable energy heat utilization technology: maximum 0.9 million)[Energy storage option: 30,000 Yen /kWh (maximum 0.30 million Yen, etc.)]

ZEH Oriented-[Possibility of utilizing achievement as ZEH builder? (confirmation necessary)

ZEH+／ZEH of ready-built housing (Same as mentioned above)

ZEH-M Oriented （high rise ）2/3 (high performance building material, facilities, etc.) (maximum 0.5 billion Yen/ year, 1 billion Yen/ project)

Continue promotion of supplying ZEH

8.5 billion Yen

(MoE)Custom housing, apartments (low rise)

ZEH-M（Nearly ZEH-M、ZEH-M Ready）（medium and low-rise ）

0.70 million Yen x total number of houses (maximum 0.3 billion Yen/ year, 0.6 billion Yen/ business)[Energy storage option: 30,000 Yen /kWh (maximum 0.30 million Yen/ housing, etc.)]

Model business to promote CO2saving rental housing (as of FY 2017)

1/2 (maximum 0.6 million Yen/ housing) 1/3(maximum 0.3 million Yen/ housing)

ZEH constructed withSMEs 11.5 BJPY (MLIT)

Favorable treatment for operators with little experience of construction

Greening business of regional housing (advanced energy-saving type)

1/2 (maximum 1.40 million Yen/ housing (in case of constructing 4 or more housing: 1.25 million Yen/ housing)

Budget includes subsidy for other items for ZEH

Environmental friendly cars in Japan

Hybrid Vehicle

26% of totalnew cars

0.6% of totalnew cars

Source: http://www.cev-pc.or.jp/tokei/hanbai3.html

Smart H2 station using PV

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Demonstration by the Ministry of Environment (MoE)

- 70MPa Smart H2 station ＆ FCV charger

- 20kW PV station by Solar Frontier

Electricity Market reform in Japan:

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April2015

Sept.2015

OCCTOestablished

OCCTO: Organization of Cross-regional Coordination of Transmission OperatorsEGC: Electricity and Gas Market Surveillance Commission

EGCestablished

Apr.2016

Full liberalization of retailmarket

Apr.2017

Imbalance Settlement basedon the market price

Apr.2020

Legal

Unbundling

Open procurementof balancing power

Regulated Tariff maybeabolished

Share of new entrants increased

High & extraHigh-voltage

Total

Low-voltage

Example of TPO model combining with new electricity market player

Source: Ecosystem Japan 日本エコシステム

Ecosystem Japan Install residential PV systemfor free

Ecosystem provides cheaper power from PV in the daytime and electricity in the night by Enet (PPS)

After 20 years, PV system ownershipWill be transferred to owners

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Opportunities

• PV can contribute as major energy source• Challenges makes opportunities

– More efficient use of grid, smart inverters, demand response, accurate forecasting

– Shifts to distributed application expected� Higher efficiency, BIPV, light weight and flexible PV modules, etc.

– ESS including EVs will contribute grid stabilization• R&D is essential

Acknowledgement for the support of PVPS activities

Contact : Izumi KAIZUKA, RTS Corporation, kaizuka@rts-pv.com

The effects of Section 201 of Safeguard on PV module price

• U.S. President Trump decided safeguard measures against imported crystalline silicon PV cells/modules based on Section 201 of the Trade Act

• the United States Trade Representative (USTR) announced tariff and exempt volume for solar cell on January 22, 2018

• The measures came into effect on February 7, 2018 and will be applied for 4 years

• Increase in PV module cost is expected. NREL expects 10 cent/W for utility scale projects

• Safeguard 301 for steel & aluminum products will also increase 0.1 US cent/W(Support structures and frames)

Product Type of measure Year 1 Year 2 Year 3 Year 4

PV cell

Maximum import volume exempted from

tariff2.5GW 2.5GW 2.5GW 2.5GW

Tariff for exceeding maximum

30% 25% 20% 15%

PV module Tariff 30% 25% 20% 15%

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Safeguard tariff announced by USTR

Reactions for Safeguard 201 as of 29th March 2018

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Request discussion

through WTO

Malaysia

Phillipines

Japan

EU

Singapore

South Korea

Taiwan

China

Mexico

Requesting to Comply NAFTA

Canadian manufacturers

Canadian Solar, Canadian Solar Solutions,Silfab Solar, Heliene

Filing to US Court of InternationalTrade

Vietnam

Comparison of US consumption and production

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Source：James P.Dougan , Ecomonic Consulting Services “SEIA Joint Respondents 'presentation” USITC Inv. No. TA-201-75 (August 15, 2017)