It remains to be seen how much solar will be installed this year in support of the Japanese government’s target of zero-energy homes (ZEHs), under which the Ministry of Economy, Trade and Industry (METI) expects most new homes to be ZEH-compliant by 2030. Research firm RTS Corp believes that the country added about 7 GW of new capacity in 2018, partly due to a “recovery in [the] installation of residential PV systems.” It is unclear how much residential PV capacity was hooked up over the past 12 months, but RTS predicted in early 2018 that the residential market would account for a significant amount of the year’s installations, largely because of rising storage battery deployment and the growing importance of ZEH solutions.
It is safe to say that overall PV deployment in 2018 will have been lower than in the preceding 12-month period, with RTS expecting annual additions to have fallen by as much as 6% year-on-year. In October, Fitch Solutions Macro Research predicted just 14 GW of new PV capacity will be installed to 2027, due to grid constraints, land scarcity and the ongoing shift from a FIT system to auctions. That said, the recent launch of several state-sponsored ZEH demonstration projects focused on apartment buildings will at least partly support residential PV deployment through this year and next.
A significant amount of solar capacity has already been paired with detached homes under the ZEH initiative, in the form of new builds and the addition of rooftop arrays to existing structures. But analysts have thus far refrained from speculating on precisely how much PV could be installed on the back of ZEH. The outlook for deployment is equally uncertain under METI’s relatively new ZEH-M guidelines for multi-unit apartment buildings, which account for a significant amount of the housing stock in Japan’s major cities.
Before diving into ZEH-M – the “m” stands for ‘manshon’, Japanese for apartment building – it’s worth reviewing what the government has been trying to achieve with ZEH over the past decade. It defines ZEH as homes with an annual energy consumption of zero, achieved through the use of insulation, highly efficient appliances, home energy management systems (HEMS) and the generation of electricity through solar arrays. By next year, the government expects more than half of all newly built homes to be ZEH-compliant.
METI says that the roughly 20% decline in energy consumption in the industrial sector over the past four decades has been offset by an approximate doubling of usage in commercial and residential sectors.
In particular, power and lighting accounted for about 36.1% of residential energy consumption in 2013, up roughly 90% from the mid-1960s. The ministry has therefore prioritized development of zero-energy homes and buildings to reduce civilian energy consumption and achieve what it describes as an appropriate supply-demand balance.
In addition to serving the government’s desire to conserve energy, ZEH targets are aligned with the post-2011 push to achieve greater energy self-sufficiency during disasters. “It is important to improve the efficiency of air-conditioning, ventilation, lighting and hot water supply equipment to effectively use energy,” METI says, while acknowledging solar is critical to its ZEH goals.
Engaging the industry
But by 2016, the government had realized that to facilitate PV deployment it needed to encourage home builders and contractors to support its ZEH targets. And the establishment last year of specific ZEH-M guidelines for apartment buildings is the latest example of this effort to engage the private sector.
Subsidies, of course, have been a key part of this equation. And a number of items in the government’s proposed budget for this fiscal year will contribute to the realization of ZEH targets. It has provisionally earmarked ¥3.85 billion ($35 million) to support the installation of residential storage, for example. And it plans to allocate ¥55.18 billion for ZEH-focused energy conservation initiatives. In addition, METI – in cooperation with the Ministry of the Environment (MoE) and other entities – has suggested setting aside another ¥9.7 billion to directly support ZEH, up from ¥8.5 billion in fiscal 2018.
A range of companies are already benefiting from the ZEH program, including PV module suppliers. Mitsubishi Electric, for example, partly attributed the positive performance of its solar business in the first half of the last fiscal year to steady sales of panels for ZEH-related applications. Panasonic also reported that its sales of solar panels and PV systems rose in the first half of the last fiscal year due to greater residential demand connected to ZEH.
Home builders have rushed in recent years to construct new ZEH-compliant detached homes featuring rooftop PV. But the ZEH-M designation, created to bring ZEH standards to apartment buildings, could also give rise to new business models. Early last year, METI and the MoE began asking companies to build ZEH-M demonstration projects. The government said it will subsidize up to two-thirds of construction costs for apartment blocks that meet the ZEH-M standard, which spans four categories, depending on the degree of compliance: ZEH-M, nearly ZEH-M, ZEH-M oriented, and ZEH-M ready.
In July, Daikyo emerged as one of the first home builders to focus on ZEH-M when it acquired “nearly ZEH” status in July for a five-floor block it plans to build in Ashiya, Hyōgo prefecture. It says the 79-unit Lions Ashiya Grand Fort development will feature 8-12 Panasonic solar panels per unit, backed by a 1 kWh battery, upon completion in May.
In August, The Nikkei reported that Nomura Real Estate and Mitsubishi Estate had started planning to build 1,500 ZEH-M flats by 2021. In September, Daiwa House revealed plans to finish building a ZEH-M oriented demonstration in Shizuoka prefecture by February, with LED lighting, high-efficiency water heaters and PV systems in common areas. And in January, Toyota Home said it would complete its first ZEH-M project – with high-efficiency appliances and 2 kW solar arrays – by this month in Sagamihara, Kanagawa prefecture.
Challenges to overcome
Yet the government has acknowledged the challenge of integrating PV into apartment buildings. “Since the area for renewable energy is limited, the realization of ZEH-M in units of buildings is difficult,” says the Sustainable Open Innovation Initiative (SII), which maintains an extensive list of companies building homes under the ZEH program.
However, demonstration projects could give rise to the kinds of new business model seen for detached homes. In October, for example, Tokyo-based YKK AP started a ZEH-M construction company with Huis Ten Bosch, that recently used perovskite solar cells in a BIPV project at one of its hotels. It aims to build ZEH-compliant homes kitted out with solar arrays provided with zero up-front cost for homeowners – similar to the solar leasing model employed by other contractors, such as Shuko Build.
So while it remains to be seen how much solar will be installed under the ZEH-M demonstration projects, it is clear that the initiative will lay the groundwork for future deployment.
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