Renewable energy market opportunities harnessed by Japan and New Zealand
A networking breakfast was held for Wellington’s business community as part of the inaugural Asia:NZ-organised Japan Festival of Wellington on Friday 10 July in the Wellington Town Hall. Action Asia Business was there to hear two speakers make presentations on business opportunities in the renewable energy sector.
Tatsuya Kawase, Senior Vice President of Mars and Company, a strategic consulting group with offices in USA, Europe and Asia, spoke about recent growth in the global solar energy market and the increasing competition Japan faces in this sector from other countries. K.J. Dillon, Electric Vehicle Team Leader at Meridian Energy spoke about the company’s electric vehicle programme - a venture partnership between Meridian and Mitsubishi Motors Japan.
Government subsidies key to solar energy uptake
Tatsuya Kawase, Senior Vice President of Mars and Company
Mr Kawase concludes government subsidies are a key driver for investment in renewable energy. It is, he says, clearly evident that the withdrawal of incentives in the form of government subsidies for R&D in the field of solar energy equipment has led to Japan falling behind in this market.
The most important factors for solar energy equipment to become affordable for consumers are ‘feed-in’ tariffs’ provided by government, steady reductions in the manufacturing cost of panels - expected to reach a point of widespread affordability within 10 years - and the rate at which firms react to latent market demand for solar energy harnessing equipment.
At NZ$10.20 per watt, or an over NZ$30,000 total cost, the total cost for most consumers installing solar panels in their homes is still very high.
Official funding is a more important factor than sunshine levels. Europe’s investments in this area are mainly due to government subsidies, designed to foster investment in solar energy. Germany for example, which has some of the lowest amounts of sunshine, is second only to Spain in investing in solar energy because of generous government incentives. The USA and China – whose governments also provide incentives for investment in solar power - are also investing more in this area.
Up until five years ago Japan led the world in developing solar power, but has since fallen behind. To illustrate how Japan is losing ground to Europe, the US and China in the solar energy investment stakes, Mr Kawase pointed out how in 2002 Sharp was the number one investor and Kyocera was number three in the world.
By 2008 however Sharp had fallen to number three and Kyocera to number eight. In the intervening years non-Japanese firms, Q-cells (Germany), Suntech (China) and First Solar (US) have become the leading investors in solar energy equipment. This is due in part to the withdrawal of subsidies to support solar energy investment by the Japanese government. Incentives for such investment were not included in the Japanese Government New Green Deal Programme announced 9th April 2009.
Despite these set-backs however, Mitsubishi Electric, a division of one of Japan’s largest companies, has demonstrated its faith in solar power by investing heavily in the development of solar energy generating equipment.
Mr Kawase pointed out that the Prius is the bestselling car in Japan in large part due to the generous subsidies of purchases of hybrid vehicles initiated by the Japanese government under Prime Minister Aso.
Perseverance, humility and strong relationships key attributes for succeeding in Japan
K.J. Dillon, Electric Vehicle Team Leader at Meridian Energy
According to Ms Dillon, key attributes required for successfully managing partnerships in Japan include: perseverance, tenacity, having the humility to ask for help from various quarters and an understanding of the importance of building strong relationships.
Key lessons learnt from the partnership with Mitsubishi were “the power of relationships” and the need to demonstrate long-term commitment to their Japanese business partners. “Knocking on the wrong doors” and not visiting the market enough were mistakes made by Meridian in the early stages of marketing their capabilities to Japan. Another discovery made by the Meridian team was that the agencies of the New Zealand government in Japan are very helpful. “There is good support available to business if you ask for it.”
Recognising the market opportunity presented by relatively inexpensive electricity produced here, Meridian set about pitching New Zealand to Mitsubishi Motors Japan as an ideal market for testing the car maker’s prototype electric car, the iMiev. Key considerations that led to New Zealand becoming the second iMiev test market were: low cost supply of electricity; optimal supply of 230 volts for overnight recharging; high per capita car ownership; and the short distances Kiwi commuters travel.
Meridian’s objective for the project was to get New Zealanders excited about electric vehicles and for New Zealand to become one of the first countries to adopt them once they go into mass production. Meridian assisted Mitsubishi in evaluating the vehicle for local conditions in February and March 2009 from the perspective of energy supply and infrastructure.
Mitsubishi began commercial production of the iMiev in March 2009 and plans to introduce the car to the New Zealand market in 2012. The bulk of the iMievs from Japan are however not likely to be new because of their high cost and the tendency of New Zealand consumers to buy second-hand cars.
The four-door hatchback has a maximum speed of 130 km/h and a driving range of up to 100 kilometres once fully recharged. Its fuel costs are one-third of a petrol vehicle, costing around NZ$3 to recharge an iMiev. This amounts to an 80 per cent fuel cost saving compared with equivalent vehicles running on petrol.
Mitsubishi is currently doing research into the recycling of the vehicles’ batteries in order to reduce the whole costs to the environment of switching to electric vehicles. It is expected that the batteries will be available for use as electricity storage devices once they are removed from vehicles.
