Panasonic meets Japan’s domestic demand for PV

• Factory in Kulim, Malaysia, to raise its PV global production capacity to 900 MW 
• Net feed-in-tariff expected to push solar further in Japan

By Stephen Ng

Japan is unique in that residential installations make up about 80% of the total photovoltaic (PV) market. Each installation is only 4 kW but collectively, the PV market size is estimated to be 1 GW in 2010. It was only in recent years that medium (10 kW) to bigger installations started to emerge.

Solar is now the preferred energy source compared to nuclear, but some analysts say it is not the Fukushima accident but Japan’s decision to implement a net feed-in tariff (FiT) system (power utilities buy surplus power from PV systems) that is the catalyst for growth. The net FiT will kick off in July.

Viktoriya Chamata: HIT solar modules doing well for residences (photo credit: GPA Photo)

Viktoriya Chamata, manager, brand management group for Panasonic Asia Pacific Pte Ltd, says the PV market in Japan is expected to grow. “We expect that once grid parity is reached by 2015, the market for PV systems will take off very fast,” she says. 

Panasonic’s market share (of residential installations) in Japan in the financial year 2010 (ending March 2011) was 20%, but for financial year 2011 (ending March 2012), Chamata says the company is aiming for a 25% market share.

Chamata, who is based in Singapore, was involved in the corporate communications of Sanyo’s PV products since 2010, before moving into Panasonic when it took over Sanyo in 2011. She is currently promoting Panasonic’s heterojunction with intrinsic thin-layer (HIT) solar modules. 

The HIT solar PV system was first mass-produced and marketed in 1997. By 2010, the production capacity for HIT had hit 600 MW per year. In 2011, the HIT 240 W solar cell achieved conversion efficiency of 23.7% at the laboratory scale, and 21.6% at the mass-production level. 

“This is why the HIT module is doing well for residences. The highly-efficient HIT can generate a lot of power even on limited roof space. Also, HIT solar panels are good for countries where there is less sunlight,” she says. “Tokyo only has on average 6.5 hours of sunlight a day in summer and much less in autumn and winter.”

Market growth

The solar market in Japan has also expanded from a mere 80 MW in 1994 to over 1 GW in 2010. The cost of generating electricity has also dropped from 2 million yen per kW to only about one-third, or 650,000 yen per kW (see table below).

Although Japan’s climate is not as conducive for solar power generation compared to tropical countries, solar power generation is growing faster in Japan than in the latter. Compared to Thailand with 5.1 kWh per sq m per day of solar irradiation, Japan only has 3.6 kWh. On average, Tokyo enjoys 2,019 hours of solar irradiation a year, with August having the most number of hours at 204 hours (average of 6.5 hours a day) and February with the least, at 166 hours (average of 5.9 hours a day).

“This makes Panasonic’s HIT modules attractive in Japan… because of its highest conversion rate compared to other solar PV modules,” explains Chamata. 

She says that in Japan, besides a high electricity tariff, the growth in solar PV is mainly driven by environmental consciousness. “The Japanese are conscious about preserving their environment,” she says. “This is even more so after the natural disaster that hit Fukushima in March 2011. The Japanese people and their government started to realise that nuclear energy is not safe. Most of them are now focusing on renewable energy, especially solar.”

This is one reason why Panasonic Energy Malaysia Sdn Bhd, which owns the RM1.8 billion solar PV factory under construction at Kulim High Technology Park in the northern state of Kedah in Malaysia, is confident it will be able to start production in December, whereas Bosch GmbH is delaying its PV factory project in Batu Kawan, Penang. During its first year of operation, almost all Panasonic’s PV modules manufactured in Malaysia will be shipped back to Japan to meet domestic demand.

With a new cost structure based on a three-tier production (from wafer to solar cells and modules), and cheaper water and electricity tariffs in the Malaysian PV plant, Panasonic’s group vice-president in charge of solar business, Tetsuhiro Maeda, is confident that the prices of HIT will drop and the market for solar PV will expand further. “We have estimated the solar PV market to exceed 20 GW in 2011,” he said at a press conference held recently, after the groundbreaking ceremony of Panasonic Energy Malaysia plant in Kulim, Malaysia. 

What’s more important to Maeda, as a strategy to compete with rival producers in China, is the research and development carried out to improve the features of the proprietary HIT modules, which, he is confident, will lead to an increase in their demand globally.

Outside Japan, the removal of fuel subsidies and the implementation of power purchase systems has also led to a growth in the sale of HIT modules. However, these countries still have to provide substantial incentives in the form of subsidies and tax breaks to stimulate the growth of the solar PV market. However, apart from Korea, Singapore, Hong Kong and Taiwan, most other Asian economies do not enjoy a high-income economy like Japan. Many Asian economies have a much lower disposable income by comparison.

Japan’s purchasing power

According to Japan’s Ministry of Health, Labour and Welfare, the average household income is about 5.5 million yen per year, one of the highest in Asia. A fresh graduate with an engineering degree, for example, can earn as much as 206,000 yen per month. A Malaysian counterpart earns only one third of that, or RM2,500 (equivalent to 66,256 yen).

Assuming the cost of 4 kW of solar PV panels is 2.6 million yen, for a Japanese fresh engineering graduate, it is 13 months of his pay, whereas for his Malaysian counterpart, it is 39 months, or more than three years, of his pay. Spread over four years, the cost of installation is even more affordable for the average Japanese household.

This is one reason for the growth of the solar PV market in Japan, which, despite not being supported by the FiT, still expanded, whereas in countries with more sunlight such as Sri Lanka, India, Thailand and Malaysia, there is still the need to stimulate growth to reach critical mass.

Chamata says Panasonic will have a global production capacity of 900 MW after the new factory is commissioned and delivers 300 MW. This is 1.5 times its current capacity, and is sufficient to meet global consumer demand. The company has factories in Japan, Hungary, Mexico and the US. “While meeting the domestic demand in Japan, we are marketing the product in other parts of Asia as well, and will further develop our solar business there when the market conditions are right,” she says. She is confident that the specific price needs will be examined based on market trends. “We expect that after the new factory is ready, we will be able to significantly boost the price competitiveness of our products.”