1. Takahiro Yamada Assistant Chief METI Agency for Natural Resources and Energy 26th APEC EGNRET April 4, 2006 Auckland, New Zealand Private Sector Activities in Domestic New and Renewable Energy Technologies in Japan Hiroyuki Kato-Deputy Director Ken Johnson-Advisor NEDO International Projects Management Division

2. 1 New & Renewable Energy Utilization Targets New energy sum total (MKOE) Biomass Bioenergy 9.2 19.1 4.7 4.8 1.5 2.1 5.5 PV 2002 410 2.2% 2030 425 4.5% Year: Total Energy Consumption: N&RE Share: (excluding hydroelectric generation) Wind Power 10.5 (Unit: MKOE: Million Kiloliter Oil Equivalent)

3. 2 Cumulative Installed PV Capacity IEA/PVPS Task 1,“Trends in Photovoltaic Applications,” Sept. 2005 US 365MW (14%) Photovoltaics:

4. 3 Production Capacity and Overseas Development Manufacturers (materials) Domestic cell production capacity (MW)Overseas module production 200020012002200320042005After 2006 SHARP Corporation (Single crystal Si, polycrystal Si, thin-film Si solar cells) 5494200248 315 ↓ 400 500 Currently planning U.S.: 20MW (2003)→40MW( 2004)→120MW England: 20MW (2003)→50MW (2005)→110MW (2006) Kyocera Corporation (Polycrystal Si, spherical Si solar cells) 72 100150240 Currently planning China: 15MW (2003)→30MW(2004) Mexico: 12MW (2004)→36MW (2005) Czechoslovakia: 12MW (2005)→60MW (2006) SANYO Electric Co., Ltd. (a-Si/single crystal Si, thin-film Si solar cells) 23313568160 250 (2007) 1,000 (2010) Mexico: 10MW (2003)→12MW (2005) Hungary: 50MW (2005)→100MW (2006) Mitsubishi Electric Corporation (Polycrystal Si solar cells) 1525355090135 230 (2006) - Kaneka Corporation (Thin-film Si solar cells) 20 70 - Mitsubishi Heavy Industries, Ltd. (Thin-film Si solar cells) -Pilot10 50 - Hitachi, Ltd. (Single crystal Si solar cells) ---6 – 8 10 Currently planning - Showa Shell Sekiyu K.K. (CIS solar cells) ------20 (2007) - Honda Motor Co., Ltd. (CIS solar cells) ---2.8 27.5 - Fuji Electric Holdings Co., Ltd. (Thin-film Si solar cells) ----33 15 (2006) 30 (2008) - Source: RTS Corporation, PV Activites in Japan, Vol. 16, No. 1 Photovoltaics: Japanese Solar Cell Manufacturers

5. 4 Photovoltaics: Private Sector Activities/Challenges Sharp Corporation Strengthen marketing to domestic industrial users, increase industrial sales from 10%  30% Expect total PV sales of $1.67B in 2006 Kyocera Corporation Developed low-cost granular-silicon solar cells (Silicon granules <1mm in diameter) Sanyo Electric Co. Expand investments to increase PV production capacity Domestically: 160MW (2005)  250MW (2007) Internationally: 50MW (2005)  100MW (2006) Mitsubishi Electric Corporation Developed system to forecast PV generation by monitoring cloud movement with camera; Benefits: effective use of backup power, less impact on power grids Tokuyama Corporation Largest Japanese producer of polysilicon (#2 worldwide) Researching feasibility of Vapor to Liquid Deposition (VLD) technology to overcome worldwide shortage of polysilicon supply Showa Shell Sekiyu Will commence silicon-free, thin-film CIS (Copper, Indium, Selenium) PV cell production in 2007 Source: RTS Corporation, PV Activites in Japan, Vol. 16, No. 1

6. 5 Photovoltaics: Showa Shell Sekiyu: CIS Solar Cell Modules

7. 6 Photovoltaics: Main Elements of CIS Solar Cells Cu ・・・・ Copper In ・・・・ Indium Se ・・・・ Selenium ･ ･ ･ ･ ･ →Thin-film CIS Solar Cell Modules

8. 7 Photovoltaics: Categories of Solar Cells Solar cell Bulk Thin-film Silicon Compound Silicon Compound Single crystal Polycrystal Gallium arsenic, etc Amorphous CIS solar cell （ For special use: e.g. space technologies; most efficient ） (Outdated but relatively high efficiency) (Widely disseminated and most common; More easily manufactured than single crystal ） （ Requires fewer materials but several performance challenges remain) （ Simple manufacturing process, high performance anticipated ） Manufactured by carving out of thick material Thin-film created on substrate Most utilized

9. 8 Photovoltaics: Advantages of CIS Solar Cells CIS Performance: ・ Highest energy conversion efficiency among all thin-film solar cells ・ Highest light absorbance of all semiconductors ・ Excellent durability Performance: ・ Highest energy conversion efficiency among all thin-film solar cells ・ Highest light absorbance of all semiconductors ・ Excellent durability Technology developed by Showa Shell Sekiyu K.K. ・ 13 years of R&D experience (NEDO entrusted research activities) ・ Top performing thin-film solar cells in the world ・ Patented technology Technology developed by Showa Shell Sekiyu K.K. ・ 13 years of R&D experience (NEDO entrusted research activities) ・ Top performing thin-film solar cells in the world ・ Patented technology Potential to be the mainstream of the next- generation of solar cells: ・ Stable supply of raw material (not dependant on silicon) ・ Highly productive manufacturing process ・ Further development anticipated under NEDO’s “Development of Advanced Solar Cells and Modules” project Potential to be the mainstream of the next- generation of solar cells: ・ Stable supply of raw material (not dependant on silicon) ・ Highly productive manufacturing process ・ Further development anticipated under NEDO’s “Development of Advanced Solar Cells and Modules” project Low cost potential: ・ Simple module structure/manufacturing process ・ Low raw material utilization ・ Integrated manufacturing: from raw materials to end products Low cost potential: ・ Simple module structure/manufacturing process ・ Low raw material utilization ・ Integrated manufacturing: from raw materials to end products

10. 9 Photovoltaics: Solar Cell Structure Light Anti-reflective coating n type silicon p type silicon Electrode Crystalline-Si Solar Cell (Conventional type) Crystalline-Si Solar Cell (Conventional type) Thickness: 200 ～ 300μm vs. 2~3μm Transparent electrode Buffer CIS compound Electrode + － －－－ + + － + + － －－ － ++ － + CIS Solar Cell Light

11. 10 Photovoltaics: Comparison: CIS vs. Crystalline Silicon CharacteristicsCISEvaluation Crystalline silicon Advantages of CIS Silicon usageA ＞ D Not dependant on silicon AppearanceA ＞ C Black color stands out less Manufacturing costA ＞ B Possible cost reduction anticipated Manufacturing process B ＞ C Simple manufacturing process: integrated manufacturing process possible Environmental friendliness A ＞ B Exceeds others in environmental friendliness Energy Payback Time (EPT) A ＞ B Less energy consumption during manufacturing Conversion efficiency B ＜ A

12. 11 Photovoltaics: Appearance of CIS Solar Cells CIS Solar Cells Conventional Crystalline Silicon Solar Cells

13. 12 Wind Power Generation in Japan Generating capacity (kW) Turbines

14. 13 Wind Power Players in Japan Private Sector Farms MW Euras Energy9 184 EcoPower 10 70 Green Power2 39 WindTech 4 38 Rokkasho Mura Wind Pwr 1 33 Toyota2 31 Minami Kyushu Wind Pwr 2 26 Nigaho Kogen Wind Pwr 1 25 J Wind2 24 Horonobe Wind Power1 21 Esashi Wind Power 1 21 Others 156 326 Total: 134 players 191 838 Public Sector Farms MW 49 Cities 56 53 10 Prefectures 13 20 NEDO 25 11 JOGMEC 1 1.5 (Japan Oil, Gas & Metals Nat ’ l. Corp.) Ministry of Land, Infra. & Trans. 1.3 Total: 62 players 96 86

15. 14 Wind Power Generation System Introduction (Total number of imported/domestic turbines) Fiscal year Turbines

16. 15 Wind Power Generation System Introduction (Total generation capacity of imported/domestic systems)

17. 16 Wind Power Generation Systems  Total generation capacity of domestic makers' systems in Japan increased sharply in 2004.  Most domestically supplied turbines were produced by Mitsubishi Heavy Industries (MHI) Japan. MHI was #8 in turbines worldwide in 2004. *  Fuji Heavy Industries developing new 2MW system to obtain share in Japanese market. Features:  Downwind rotor for typhoon conditions  Blade and Nacelle transportable in pieces  Japanese makers increasingly capable of manufacturing 2MW turbines. *http://www.earthscan.co.uk/news/printablearticle.asp?sp=636487402740206174292&v=3 &UAN=431

18. 17 Biomass Resources and Biomass Energy Utilization Wood Food Agricultural, livestock, fishery Construction waste Household waste Pulp & paper Biomass Resources Dry Moist Others Woody biomass Forestry waste Scrap timber Agricultural waste Rice straw Maize Rice husks Wheat straw Construction waste wood Sewage sludge Excreta Garbage Used cooking oil Bagasse Food industry waste water/food waste Seafood processing waste Black liquor Scrap wood Cellulose (recycled paper) Bagasse Livestock excrement Cattle/hogs/poultry Fisheries waste Sugar/starch Rapeseed Palm oil Biomass Energy Utilization Direct combustion Biochemical conversion Thermo-chemical conversion Power generation / Transportation Crushed into chips or pelletized for boiler combustion Methane/Ethanol/ Hydrogen generation via fermentation, etc. Fuel generation by gasification/esterifica- tion/slurrying through high-temperature and high-pressure process, etc.

19. 18 Biomass Utilization—Chugai Ro Woody Biomass Gasification and Co-generation System (1/2)  Japan’s first co-generation system incorporating a gas engine generator.  Effective use of woody biomass resources while reducing CO 2 emissions.

20. 19 Biomass Utilization—Chugai Ro Woody Biomass Gasification and Co-generation System (2/2) Benefits: Efficient thermal decomposition and gasification Efficient electric power recovery Recovery of thermal energy Gas reforming tower for tar removal Enables effective use of by-products 1100 ℃ Gasification kiln Oxygen External heat type multi-retort kiln 700 ～ 850 ℃ Residue (Char and ash) Preheated air Hot-air generator Air preheater Gas engine generator Electric Power 176kW (20.1%) Hot Water 73kW (8.4%) Steam 201kW (23.0%) Biomass Material 5t/d Hopper Gas reformer Gas filter Gas holder Waste heat boiler Gas Cooler Gas filter 900 ℃

21. 20 Bio-ethanol Demonstrative Projects in Japan [MOE] 3. Sakai-city, Osaka (Taisei Corporation, Marubeni Corporation, Osaka municipal government) 2. Shinjyo-city, Yamagata Pref. [MOAFF] 4. Kuse-cho, Okayama Pref. (Mitsui Engineering & Shipbuilding Co., Ltd.) [METI] 6. Miyako-island, Okinawa Pref. (Ryuseki) 5. Ie island, Okinawa Pref. (Asahi Breweries, Ltd.) 1. Tokachi, Hokkaido (Tokachi Zaidan, etc.) [METI / MOE] [METI / MOAFF / MOE / CAO] Ethanol manufacturing from substandard wheat and maize/E3 (gasohol) demonstration Ethanol manufacturing from sorgum/ E3 (gasohol) demonstration Ethanol manufacturing from construction waste/ E3 (gasohol) demonstration Demonstrative manufacturing of ethanol from mill ends Ethanol manufacturing from sugarcane/E3 (gasohol) demonstration Ethanol manufacturing from sugarcane/ E3 (gasohol) demonstration [METI / MOAFF / MOE / CAO]

22. 21 Biomass Utilization—Mitsui Engineering and Shipbuilding Bioethanol Demonstration Plant Cellulosic ethanol demonstration plant using wood-based feedstock (June 2005) Feedstocks derived from wood chips and waste wood collected from forestry industry Sugar mixed with yeast for fermentation MES ’ Zeolite membrane used to obtain absolute ethanol Production capacity: 250kg of absolute ethanol/day Capable of processing 2 tons of wood waste/day

23. 22 BIOMASS: Oil Industry Efforts for Bioethanol Introduction Japanese Government announced (January 18, 2006) implementation of “Utilization of Biomass Fuels for Transportation,” as part of its “Kyoto Protocol Target Achievement Plan,” under the following policies/conditions: 1)Members of the Petroleum Association of Japan shall be actively engaged in blending bioethanol fuel for transportation. Target  blend 20% of gasoline (bioethanol ETBE) by 2010. (Approximately 360,000KL/year = approximately 210,000KL/year crude oil equivalent) 2)Bioethanol introduction shall not: a) negatively impact air quality, or b) compromise safety or automobile performance. 3)Risk assessments necessary for mixing ETBE with gasoline must be conducted prior to bioethanol introduction, since ETBE is designated as one of the “TYPE Ⅱ Monitoring Chemical Substances” of “the Chemical Substances Control Law.”

24. 23 BIOMASS : ETBE Introduction Scale (1/3) - For a stable and long-term supply 1)Ethanol, a raw material for ETBE, is limited in supply Brazil is the only major ethanol exporter ↓  Other countries such as U.S. and China can only meet domestic consumption  Scant ethanol production in Japan Ethanol Producing Countries (2004/2005) Production capacity Brazil15,000,000 kl U.S.14,000,000 kl China3,000,000 kl Europe2,000,000 kl Others7,000,000 kl World production capacity41,000,000 kl

25. 24 ETBE Introduction Scale (2/3) - For a stable and long-term supply 2) ETBE is limited in supply a) Japan’s maximum domestic production capacity if 4 existing, idled MTBE* plants were converted to ETBE production: 400,000 kl/year  MTBE was produced until 2001  Maximum domestic isobutene production: approx. 630,000 tons/year b) Potential overseas supplies of ETBE:  Europe: domestic production and consumption of ETBE, but no overcapacity  U.S.: MTBE plants exist that could possibly be converted to ETBE production? *MTBE: methyl tertiary-butyl ether, a fuel synthesized from methanol (from natural gas) and isobutene Enables maximum annual production of ETBE of 1,500,000kl

26. 25 ETBE Introduction Scale (3/3) - Issue: E conomic efficiency relative to conventional fuels Ethanol vs. gasoline  Ethanol* is 20 to 30 yen/l more expensive than gasoline** when calculated by calorific value equivalence (based on recent import price) (*Ethanol price: import price (excluding custom duty) of ethanol for industrial and beverage use calculated on an equivalent calorific comparison versus gasoline (60%)) (**Gasoline price: domestic market price excluding taxes (gasoline tax, oil/coal tax and crude oil tax)  Issues: agricultural produce  unstable; transportation costs

27. 26 Thank you for your attention!