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The penetration of solar PV in Japan
Innovation and Entrepreneurship in Japan JFIT-STAJE conference at UC San Diego Ahmed Abdulla ayabdulla [at] ucsd [dot] edu May 6, 2016
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Kanagi Solar Power Project (14MW)
http://www.prnewswire.com/news-releases/pattern-development-and-green-powerinvestment-complete-14-mw-kanagi-solar-power-project-in-japan-300257485.html
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Japan’s quest for energy security 3rd
2015 2010 2005 2000 1995 1990 1985 1980 1975 1970 1965 1960 1955 1950 1945 1940
2nd
1st
0% Coal
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10%
20%
30%
Petroleum & Liquids
40%
50%
Natural Gas
60%
70%
Hydropower
80%
Nuclear
90%
100%
Renewables
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Multiple prongs to Japanese policy • Diversify sources of energy, specifically electricity – Develop advanced coal-fired power plants (00s/10s) – Pioneer liquefied natural gas development (70s/80s) – Strike Faustian bargain with nuclear power (70s/80s) – Develop and deploy renewables • Find and help develop liquid hydrocarbon sources – Softly “claim” them for Japan (e.g. Arun) – Strike long-term contracts – Diversify exporting countries (e.g. China) • Maintain friendly relations with source countries • Emphasize energy efficiency 5/6/16
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Cautionary notes about what follows • Not all renewables are equal – I will discuss solar PV specifically – Different sources pose different institutional challenges – Differences between solar, wind, and nuclear striking • We need to distinguish between – Development • Research into solar PV technologies – Deployment • Demonstration in real world conditions • Institutional framework development
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Solar PV enhances energy security • Opportunities afforded by solar PV – Gaining prestige: remaining at the technological frontier – Mitigating environmental damage – Encouraging electricity market liberalization – Creating economic (export) opportunities – Developing human capital – Enhancing energy security Why has Japanese PV not swept the world?
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The history of solar PV in Japan • Checkered history: – Government R&D (GERD) into solar photovoltaics (PV) began in earnest after the 1973 oil shock (Sunshine) – Private industry had been investing in solar PV for at least a decade before the shock • Institutions only halfheartedly embraced solar PV (if that). Possible reasons: – GERD was mainly due to technological novelty – Economic prospects were bleak (cost-effectiveness) – Existing coalition resisted the technology in favor of fossil fuel and nuclear interests
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R&D expenditures were non-trivial 35,000
PV total R&D (MUSD)
160
30,000
140 25,000
120 100
20,000
80
15,000
60
10,000
PV production (GWh)
180
40 5,000
20 0 1975
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1995
2005
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4
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Compare to German PV R&D JPN GER
35,000
PV total R&D (MUSD)
160
30,000
140 25,000
120 100
20,000
80
15,000
60
10,000
PV production (GWh)
180
40 5,000
20 0 1975
1985
1995
2005
0 2015
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Japan:Germany total PV R&D 5
Japan:Germany ratio
4.5 4
PV R&D in JPN > GER 26 years PV R&D in JPN < GER 16 years
3.5 3 2.5 2 1.5 1 0.5 0 1975
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1995
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2015
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5
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Japan:Germany GERD 5
Japan:Germany ratio
4.5
JPN GERD generally greater than GER’s
4 3.5 3 2.5 2 1.5 1 0.5 0 1975
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1995
2005
2015
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Japan’s PV R&D did not deliver results Despite Japan investing more than Germany in solar PV R&D: • In 2010, share of Japanese electricity from solar PV: 0.1% • In 2010, share of German electricity from solar PV: 2% • Market position of Japanese solar PV manufacturers deteriorates despite exploding demand.
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PV module production by region
Fraunhofer Institute for Solar Energy Systems https://www.ise.fraunhofer.de/de/downloads/pdf-files/aktuelles/photovoltaicsreport-in-englischer-sprache.pdf
School of Global Policy and Strategy
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Japan’s PV manufacturers biggest losers
1
2000
2003
2006
2014
2015
Kyocera
Sharp
Sharp
Trina
Trina
2
BP
BP
Hanwha
Yingli
Canadian
3
Sharp
Kyocera
Kyocera
Canadian
Jinko
4
Shell
Shell Suntech Hanwha Industry protection through RWESchott Sanyo Jinko inspection standards = Mitsubishi highMitsubishi JA module costs Sanyo RWESchott Sharp
JA Hanwha
5
AstroPower
6
RWESchott
7
Photowatt
8
Isofoton
Isofoton
Motech
ReneSola
SFCE
9
Sanyo
Hanwha
BP
First
ReneSola
10
Mitsubishi
Photowatt
SunPower
Kyocera
SunPower
35%
50%
42%
< 4%
NA
First Yingli
RE World; IHS; PV Tech 5/6/16
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R&D did not translate into deployment Possible reasons: • Support for tech. development does not automatically translate to support for tech. deployment. – You need dedicated policy instruments for solar PV deployment. Japan’s were weak until 2012. • Japan chose the wrong areas of solar PV R&D to explore • Japan was nurturing PV strictly for export market – National energy strategies emphasized • Energy security • Development of new energy technologies • Sustainable development 5/6/16
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Japan solar PV deployment incentives • 1974: Sunshine Program - Long-horizon, multi-technology effort to enhance energy security and end fossil fuel dependence - Solar thermal solar PV • 1992-1994: Net metering and New Sunshine Program – Deployment of grid-connected distributed systems – Subsidy tapers off. Ends in 2004 by design – Good idea poorly implemented (steep taper) • 2003: Weak Renewable Portfolio Standard • 2009: Reinstatement of PV subsidy + Feed-in-Tariff (TiF) • 2012: More aggressive FiT structure 5/6/16
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Let’s explore the first hypothesis
25,000
FiT
FiT
Weak RPS End of subsidy
30,000
Net-metering PV subsidy
35,000
4 chapters to the PV deployment story in Japan Research
Installed PV capacity (MW)
40,000
20,000 15,000 10,000
Let’s look at chapter 3:
5,000 0 1990
1995
2000
2005
2010
2015
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2000-2012: Distributed PV deployment 7,000
Most deployment occurred through distributed systems GC = Grid-connected; OG = Off-grid. OG
4,000
FiT
5,000
3,000 2,000 1,000 0 1992
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GC-Centralized
Net metering PV subsidy
Installed PV capacity (MW)
GC-Distributed 6,000
1997
2002
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The argument in brief • Japan spent more money on solar PV R&D than Germany • Japan had the industrial base, economies of scale, and human capital to maintain its dominance in PV manufacture • Domestic deployment would have: 1) enhanced energy security; 2) mitigated emissions; 3) buoyed Japanese PV industry; and 4) catalyzed innovations in system optimization and grid integration • But, domestic deployment tracks govt. incentive structure – Poor showing due to poor institutional and policy design – It took Fukushima to catalyze widespread deployment – Japan now has 3rd largest PV capacity (>24GW), 70% of it installed after Fukushima – Fukushima made utilities interested in centralized PV
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We are exploring the following at GPS • Expanding on the above story – Estimating loss to Japan of letting its PV industry falter • Economic; environmental; human capital • What are the implications of a Japanese nuclear phase-out? – Both economic and environmental • Mapping the resources available to Japan for expanding biomass, solar, wind, and geothermal – Detailed GIS mapping ~ End ~
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