Japans Solar

- Company, Technology and

Business Strategy February 5, 2009

Gen Ito
President

JETRO New York

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3Gs for Solar Energy

Glocal = Global + Local

Government Grid
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Classifications of Photovoltaic Cells

Monocrystalline
Silicon
Monocrystalline PV Cells (Showa-Shell)

Polycrystalline*
Amorphous*

Photovoltaic Cell

Inorganic Chemical Compounds (non-silicon)

Monocrystalline * Polycrystalline

(GaAs, etc.)
(CIS, CdTe, etc.)

Organic Materials *
Polycrystalline PV Cells (Sharp)

* The various thin-film technologies are currently being developed.

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Which Technology Will Win ?

Technology Share:07 Crystalline Si. 89.6% Companies Q-Cells, Suntech, Sanyo, Mitsubishi, SunPower Sharp

ThinFilm Si.

5.2%

CdTe CI(G)S

4.7% 0.5%

First Solar Nanosolar, Honda, Shell

Others: Dye-Sensitized, Conductive Polymer, Hybrid, Nanocrystal, Photoelectrical Chemical etc.

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Japans Position: Production

2004 1 2 3 4 5
Sharp(27.1) Kyocera(8.8)

2006
Sharp(17.4)

2007
Q-Cells(10.4) Sharp(9.7) Suntech(8.8) Kyocera(5.5) First Solar(5.3)

QCells(10.1) BPSolar(7.1) Kyocera(7.2 ) Mitsubishi(6.3 Suntech(6.3 ) ) Q-Cells(6.3) Sanyo(6.2)

Japan (Source) PV News Global

50.3%

37.5% 2,521MW

24.6% 3,733MW
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1,195MW

Japans Big-4 for Photovoltaic Cells

1.
5 $1.5B
Monocrystalline, Polycrystalline By 2011, production capacity 2X 2008 level at 650MW.

2.
10 $1.5B
Polycrystalline

Annual Sales

Annual Sales

4.
By 2011, production capacity 3X 2008 level at 600MW.

1% $0.5B
Polycrystalline

By 2010, production capacity 2X 2008 level at 600MW.

3.
4% $0.7B
Monocrystalline & Amorphous

Annual Sales

Annual Sales

(Source) JETRO/NY estimations based on annual reports and press release materials.

Japans Position: Patents

Others China Korea 2% 1% 3% EU 11% USA 8%

Korea Others 1% China 2% 1% EU 9% USA 6% Japan 81%

China Korea 3% 2% Others 2%

Japan 75%

Crystalline Si.
EU 23% Japan 55% USA 15%
(Source) METIs estimates

ThinFilm Si.

CI(G)S
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Company Alliances for Q-Cells

Brillants 234 Elkem
Agreement for supply of purified metallurgical silicon 17.9% of its capital 100% of its capital 100% of its capital 51% of its capital

(Micromorphous modules)

Calyxo
(CdTe modules)

REC
33.3% of its capital

Q-Cells
33.3% of its capital 22% of its capital

VHF Technologies
(Flexible thin film)

66.7% of its capital

(Silicon stringribbon modules)

Ever-Q

Solibro
(CIGS thin film)

33.3% of its capital

Evergreen

CSG Solar
(Crystalline silicon on glass)
(Source) Photovoltaic Barometer April 2008, p. 66.
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Global Competition for PV Cells

Silicon Materials
Rank 1 2 3 4 5 6 7 Company Name Hemlock Semiconductor (USA) Wacker Polysilicon (Germany) REC Silicon (USA) Tokuyama (Japan) MEMC (USA / Italy) Mitsubishi* (Japan) Osaka Titanium Technology (Japan) Production Share 28.3% 20.8% 14.7% 13.4% 12.3% 7.7% 2.8%

Photovoltaic Cell / Module

Rank 1 2 3 Company Name Producti on Share 10.4% 9.7% 8.8%

4
5 6 7 8 9 10 11

*Mitsubishi Material, Mitsubishi Polysilicon, USA

(Source) Kogyo Raremetal Annual Review, 2008.7.

Q-Cells (Germany) Sharp (Japan) Suntec Power (China) Kyocera (Japan) First Solar (Germany / USA) Motec (Taiwan) Sanyo (Japan) SunPower (USA) Baoding Yingli (China) Mitsubishi (Japan) Others

5.5%
5.5% 5.3% 4.4% 4.0% 3.8% 3.2% 39.2%
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(Source) PV NEWS (2008.3)

Economy of Scale for PV Cells

1,000 900 800 Market (MW)

883.8 $20,000
Equipment Cost (US$)

25,000

20,000

700 600 500 400 300 200 100 0 10,000 15,000

$6,650
5,000

16.3
0

94

95

96

97

98

99

00

01

02

03

04

19

19

19

19

19

19

20

20

20

20

20

Year

(Note) Equipment cost: the average cost of PV cell systems for household use (Source) Data from Japan Photovoltaic Energy Association (JPEA) and RTS Corporation

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05

Equipment Cost (US$)

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Market Size (MW)

Market Structure for Solar Energy: USA Solar

Geothermal Waste 14% Wind

1%

5%

5%

Biofuels 14%

2,000 TWh (2007)

Wood 29%
Hydropower 32%

Industrial 12% Electric Power 13%

Transportation 1%

Commercial 50%
(Source) DOE/EIA, Annual Energy Review 2007 (June 2008); DOE/EIA, Solar Photovoltaic Cell/Module Manufacturing Activities 2007, Table 3.7.

Residential 24%
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Market Structure for Solar Energy: Geothermal Japan

2%

Wind 2%

Biomass/ Waste 45%

Solar 1%
Comercial &Industrial 15%

374 TWh (2005)

Hydropower 50%

Residential 85%
Source:METIs estimates, Data from Japan Photovoltaic Energy Association (JPEA)
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Japans Wind Energy Market

DeWind (Germany) Others 1% NORDEX 5% (Germany) RePower 3% (Germany) Lagerwey 4% (Dutch) Siemens 4% (Denmark) 5% Gamesa (Spain) 7% Vestas (Denmark) 27%

1,675 MW (As of 2007)

GE Wind (USA) 20% Mitsubishi Heavy Industry (Japan) 14%
(Source) METIs estimates
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Enercon (Germany) 10%

Japanese Companys Activities in US Markets

October 2006: Mitsui & Co. acquired SunWize Technologies (New York). June 2008: Itochu acquired Solar Deposit (California).

October 2008: Sanyo started the construction of new plant for PV cell wafers in Oregon (full capacity to be reached by 2010).
April 2009: Nissinbo will open its sales office for their PV cell manufacturing equipment. (Source) Press release materials

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Germany : The Largest Market for PV Cells

1200 MW 1000 800 600 400 200 0 5000 4000 3000 1918.9 2000 830.5 1000 0 Germany Japan USA Spain Italy
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1135

Annual Installed PV Power (2007)

(Source)IEA, Trends in Photovoltaic Applications
512 210.4 206.5 70.2

MW

Germany 3862

Spain

Japan

USA

Italy

Cumulative Installed PV Power (2007)

(Source) IEA, Trends in Photovoltaic Applications

655 120.2

Domestic Sales of PV Cells in Japan

350,000

kW

Subsidy Ends!

300,000

250,000

200,000

150,000

100,000

Subsidy Starts!

50,000

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Year

(Note) Japans incentive program for solar power began in 1994 but ended in 2005. It was based on providing subsidy to homeowners who install photovoltaic system in their home. The amount of subsidy provided was dependent on the output capacity of the system.
(Source) Data from Japan Photovoltaic Energy Association (JPEA)
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Feed-in-Tariff System in Germany

(Main changes from switching to EEG system)

Utility companys purchasing price will no longer be determined by the retail price, but fixed at predetermined price for the next 20 years. As a result, the purchasing price has tripled from 0.16 /kWh to 0.51 /kWh.
The annual reduction rate in purchasing price is now announced in advance.
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Obamas Federal Renewable Portfolio Standard

(10% by 2012 & 25% by 2025) Electricity generation portfolio
100% 80% 60% 40% 20% 0%
1995 2000 2006 2012 2025

Coal Petroleum Natural Gas & Other Gas Nuclear 25% Hydroelectric 10% Other Renewable

Other renewable in 2006 is 2.4%

(Source) DOE/EIA
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Electricity Price for EU, Japan & US

(/kWh)

18 16 14 12 10 8 6 4 2 0

17.6 14.4 10.7 8.6 6.7 10.4

Japan

US

California

EU

Germany

France

Note: Residential electricity price (2007) Source: DOE/EIA (USA), Eurostat (EU), ANRE/METI (Japan)

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Fluctuation of Solar Energy

Output comparison (power output / rated output) (%) 70 Sunny

Change in photovoltaic power generation by climate

60
50 40 Rainy 30 20 10 0 5 6 7 8 9 10 11 12 13 14 15 16 17 (time) 18 19 Cloudy

Source: METI
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The Grid As It Stands: USA

Since 1982, growth in peak demand for electricity has exceeded transmission growth by almost 25% every year.
The typical power plant was built in the 1960s using even older technology. The average age of a substation transformer is 42, two years more than their expected life span.
(Source) DOE, The Smart Grid: An Introduction.
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The Concept of Smart Grid

Central Power Plant
Office House
Chip Micro-turbine

Storage

Fuel Cells
Industrial Plant Virtual Power Plant
(Source) IBM

Wind Turbine

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Thank you for your attention!

(Source) NEDO

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