Japan has the largest Photovoltaic installed capacity in the world as a result of the sustained investments made by the country through carefully coordinated Photovoltaic R&D and deployment, leading to a ‘‘virtuous cycle’’ among R&D, market growth, and price reduction. By the end of 2000, the total installed capacity in the country was 317 MW, of which on-grid distributed generation accounted for more than 252 MW. In 2000, Japan produced 128 MW of PV cells and 136 MW of modules, both of which were well over half of the global production.
The Japanese PV program was initiated in 1974 after the oil crisis as part of the ‘‘Sunshine Project’’ to develop alternative forms of energy. It has been under the direction of the New Sunshine (NSS) project since 1993. The overall target of the NSS is to install 5000 MW of Photovoltaic capacity by 2010.
The NSS program is directed by the Ministry of Trade and Industry (MITI). On the R&D front, the government has been investing heavily in PHOTOVOLTAIC R&D; between 1991 and 1998, government spending on PHOTOVOLTAIC R&D exceeded $480 million. Approximately 40% of the MITI’s Photovoltaic R&D budget went to the eight leading Japanese PHOTOVOLTAIC firms, with the remainder going to national research institutes, universities, and other industries. The government support for PHOTOVOLTAIC R&D induced vigorous R&D expenditures in industry; by 1995, industrial expenditures on PHOTOVOLTAIC R&D were about twice those of the government. The MITI also established an R&D consortium for PHOTOVOLTAIC development that had 65 participating firms by 1996. The main focus areas of R&D were cost reduction of PHOTOVOLTAIC systems, silicon feedstock for PHOTOVOLTAIC panel cells, and PV deployment.
The MITI is also implementing a demonstration program that involves PV field tests for industrial use, where half of the PHOTOVOLTAIC installation costs are subsidized. This follows the successful completion of a demonstration program on field tests for public facilities that was completed in 1998. The aim of this program is to install trial PHOTOVOLTAIC systems to introduce industry to PV use, demonstrate and analyze long-term operation of PHOTOVOLTAIC systems, and standardize and introduce PV applications toward full-scale deployment.
The PV deployment program also has a number of components, with the main one being the residential PV dissemination program that aims to promote, through subsidies, the installation of PV systems by individuals. Other components include programs to support efforts established by regional governments and to support industrial entrepreneurs who are involved in introducing PV systems. A number of government ministries, local governments, municipalities, and utilities are also involved in this deployment effort. In addition, solar cell manufacturers and housing firms have organized the Japan Photovoltaic Energy Association to carry out public relations and dissemination in cooperation with the government. This deployment effort has led to learning in regard to both the PV modules and the balance of system components. Between 1993 and 1998, the government subsidies for this program totaled approximately $200 million but stimulated market actors to provide additional learning investments of $300 million. It is estimated that by 2007, PV commercialization can become self-sustaining. By that point, market investments in learning will be about 5.7 times the government support.
