Market Update & Business Opportunities: Japan’s Fuel Cell & Hydrogen Market

1. Market Update & Business Opportunities: Japan’s Fuel Cell & Hydrogen Market U.S. Commercial Service – Tokyo Takahiko Suzuki – Senior Commercial Specialist takahiko.suzuki@trade.gov US Commercial Service - Japan

2. Japan’s Strategic Road Map For Hydrogen & Fuel Cells • http://www.meti.go.jp/english/press/2014/0624_04.html • Council for Strategy for Hydrogen & Fuel Cells established by METI Phase 2: mid-2020s - 2030 Phase 1: now - 2025 Phase 3: by 2040 • Full-fledged introduction of hydrogen power generation • Establishing a large-scale hydrogen supply system Expanding the scope of FC technology (2014 – 2025) Establishing a CO2-free hydrogen supply system What we cover today: Residential Fuel Cell (Ene-Farm), Industrial Fuel Cell (SOFC), Fuel Cell Vehicle (FCV), Hydrogen Refueling Station, Production & Transportation of Hydrogen Source: Ministry of Economy, Trade and Industry (METI), Government Of Japan (GOJ) US Commercial Service - Japan

3. Why Fuel Cells in Japan? • Fuel Cells have good environmental characteristics • Fuel Cells are utilized as distributed power generation • Fuel Cells have power to pave the way to a “hydrogen energy society” US Commercial Service - Japan

4. Composition of How Electricity is Generated (FY 2012) Renewable 1.6% Nuclear 1.7% Hydro 8.4% Oil 18.3% Coal 26.7% LNG 42.5% US Commercial Service - Japan

5. History of FC Development (Japan) • 1960 Companies conducted individual research on FC (-1965) • 1978 Sunshine Project: GOJ’s first national R&D FC project • 1981 Moonlight Project: GOJ launched systematic FC research • 1983 TEPCO succeeded in generating 4,500 kW PAFC plant • 1987 Moonlight Project: GOJ generated 2 X 1,000 kW PAFC plant • 1991 TEPCO demonstrated 11,000 kW PAFC plant • 1992 R&D on PEFC for FCV began (Sunshine Project) • 1993 NEDO undertook the above R&D (New Sunshine Project) • 1994 NEDO generated 2 large PAFC power plants • 2000 NEDO conducted “FC Infrastructure Millennium Project” (-2004) • 2002 Verification study of residential FC (-2004) • 2002 JHFC Project (-2005) • 2005 Large-scale demonstration tests of residential FC (-2008) • 2006 JHFC2 Project (-2010) • 2009 Residential FC co-generation system “Ene-Farm” began its sales • 2011 JHFC3 Project (-2015) • 2013 NEDO project: SOFC field test for commercial use • 2013 NEDO project: Hydrogen Utilization Technology Development (-2014) • 2013 NEDO project: Technology R&D for PEFC Commercialization (-2014) • 2013 NEDO project: Technology R&D for SOFC Commercialization (-2014) • 2013 “Ene-Farm Partners” established (105 member companies) US Commercial Service - Japan

6. Japan’s New Basic Energy Plan (April, 2014) • Japan aims to materialize a “Hydrogen Society” • Japan is committed to construct the whole supply-chain of hydrogen • Expansion of residential “Ene-Farm” • Laying out infrastructure to promote FCV • New technology development (e.g. hydrogen power generation) • Promotion of manufacture, storage, and transportation of hydrogen • Japan will draw up “Roadmap to Hydrogen Society (by 2030)” Source: GOJ US Commercial Service - Japan

7. Types of Fuel Cells US Commercial Service - Japan

8. Japan’s Fuel Cell Market Projection Unit: US$ million Japan’s “3 Arrows” in FC growth: • “Ene-Farm” • FCV • Hydrogen Supply Chain Source: Marketing Data Bank (2011) US Commercial Service - Japan US Commercial Service - Japan

9. Hydrogen Global Market Projection (Billion US$) $ 71 billion $ 225 billion $ 51 billion Total: $ 370 billion FCV and Residential FC are driving forces Source: Nikkei BP Clean Tech Laboratory US Commercial Service - Japan US Commercial Service - Japan

10. Japan’s Fuel Cell Market Projection Source: Marketing Data Bank (2011) US Commercial Service - Japan US Commercial Service - Japan

11. Fuel Cell Market by Application • Residential Fuel Cell • Portable Fuel Cell • Fuel Cell Vehicle • Industrial Fuel Cell US Commercial Service - Japan

12. Fuel Cell Market by Application Source: Marketing Data Bank (2011) US Commercial Service - Japan

13. Ene-Farm: Residential Fuel Cell US Commercial Service - Japan

14. Residential FC: Market Projection Number of Unit (Accumulated) Japan plans to install 1.4 million units by 2020 Source: Nomura Research Institute (2014) US Commercial Service - Japan

15. Residential FC: Unit Price Projection Establishment of Self-Reliant Market Large Scale Validation Market Creation with GOJ Policy Support (US$) GOJ Subsidy begins GOJ Subsidy ends Source: METI, Nomura Research Institute (2014) US Commercial Service - Japan

16. Portable FC Market expected to emerge: $164 million (2020) Source: Fuji Economic Institute (2014) US Commercial Service - Japan

17. Advantages of Fuel Cell Vehicles (FCV) FCV HV, PHV EV Source: Toyota Motors, GOJ US Commercial Service - Japan

18. FCV Manufacturers (Alliance & Plans) Source: Nikkei US Commercial Service - Japan

19. Hydrogen Refueling Stations (Current) 17 locations Additional 14 locations have been selected (June 23, GOJ) Source: METI, GOJ US Commercial Service - Japan

20. Hydrogen Refueling Stations (Development Plans) 100 locations (2013-2015) Installed on highways 4 major urban areas Source: METI, GOJ US Commercial Service - Japan

21. System Flow Chart of Hydrogen Supply City Gas Hydrogen Refueling Station Hydrogen Reforming Unit Compressor Accumulator Hydrogen Dispenser Hydrogen Dispenser Compressor Pre-Cooling Accumulator Source: HySUT US Commercial Service - Japan

22. 2 Types of Hydrogen Stations [ Off Site Hydrogen Refueling Station ] Hydrogen Refueling Station Hydrogen Shipping Plant Refining Accumulator Accumulate High Pressure Transport Trailer Storage Charge Hydrogen Reforming Compress Compressor Dispenser [ On Site Hydrogen Refueling Station ] Hydrogen Refueling Station Raw Fuel Production (Oil Refinery) Hydrogen Reforming Transportation Accumulator Dispenser Compressor Natural Gas Naphtha Methanol Source: HySUT US Commercial Service - Japan

23. GOJ: Deregulation & Subsidies Location Restrictions Material Restrictions Operation Restrictions • Need to develop safety inspection criteria • Relaxation of “Design Count” • More materials to be allowed (e.g. piping) • Compound vessel to be allowed for accumulators • Need to develop criteria for 70 MPa stands • Need to develop criteria for urban-restricted area • Abolish upper limit of volume of hydrogen • Need to develop criteria for liquid hyd stations • Study on self-service filling • Relaxation of restrictions on charging • pressure (Full filling) Transportation Restrictions Relaxation of vessel pressure; new safety valve Travel Distance Restrictions • Need to establish inter-equipment distance where CNG stands coexist • Gasoline dispenser needs to be installed along with hydrogen dispenser • Needs to build explosion-proof standards around dispensers Other Restrictions Need to develop criteria for public filling Source: METI US Commercial Service - Japan

24. Cost Structure of Hydrogen Refueling Stations Pre-cooling equipment Compressor Current Cost: US $ 5 - 6 million Hydrogen Vessel Valve Hydrogen Manufacturing Device Japan aims at halving the cost Source: METI US Commercial Service - Japan

25. FCV: Forklifts & Buses • Demonstration Project in Kitakyushu City • Kansai International Airport (KIX) Project • 3 demonstration projects completed in 2012 Source: Toyota, HySUT US Commercial Service - Japan

26. Industrial FC: Commercialization (SOFC) in 2017 Source: Fuji Electric, Bloom Energy, NTT DoCoMo US Commercial Service - Japan

27. Hydrogen Production Source: METI, GOJ US Commercial Service - Japan

28. Hydrogen Storage & Transportation Overseas Organic Hydride Hydrogen Station City Gas, LPG LNG Terminal Fossil Fuel (Oil Field Gas, Brown Coal) Pipelines Oil Factories FCV Compressed Hydrogen Renewable Energy Distributed Power Supply Hydrogen Power Generation Liquid Hydrogen Byproduct Hydrogen Liquid Hydrogen Organic Hydride Source: METI US Commercial Service - Japan

29. Hydrogen Storage & Transportation Source: METI US Commercial Service - Japan

30. City Projects • Kitakyushu Hydrogen Town • Kawasaki Energy Frontier: Kawasaki City, Chiyoda Cooperation • KIX • (Kansai International Airport) • Hydrogen Grid • (Osaka) Source: METI US Commercial Service - Japan

31. Market Update & Business Opportunities: Japan’s Fuel Cell & Hydrogen Market U.S. Commercial Service – Tokyo Koji Sudo – Senior Commercial Specialist Koji.Sudo@trade.gov Misa Shimizu – Commercial Specialist Misa.Shimizu@trade.gov US Commercial Service - Japan