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Further Research onSmart City Market in Japan
Organization MembersResearch and Consulting Division,Japan Research Institute
2-18-1 Higashi-gotanda, Shinagawa-kuTokyo 141-0022 JAPANPHONE :+81-3-6833-0900FAX :+81-3-6833-9480
Project LeaderKoji YAMAURA (Associate Senior Consultant)yamaurakoji@jricojp +81-3-6833-5369
AdviserHideyuki ASAKAWA (Senior Consultant)asakawahideyuki@jricojp +81-3-6833-2815
Project MembersYohei KOTAKE (Consultant)kotakeyohei@jricojp +81-3-6833-6333Yuki KUWABARA (Consultant)[email protected] +81-3-6833-6587
AssistantTakako IMAI (Assistant)[email protected] +81-3-6833-1562
Contact information
Tekes – the Finnish Funding Agency for Innovation
Tekes is the main public funding organisation for research, development and innovation in Finland.Tekes funds wide-ranging innovation activities in research communities, industry and service sectorsand especially promotes cooperative and risk-intensive projects. Tekes’ current strategy puts strongemphasis on growth seeking SMEs.
2
MacroAnalytics:
Governmentpolicy
Smart City is one of the subtopics of thegrowth strategy of the governmentpolicy, "Abenomics". So, in Japan, it isregarded as an important theme.
Specifically, in the "Realization of cleanand economic energy supply-demandplan", Japan’s government aims tocreate industries related to environmentand energy, and build a clean andinexpensive energy society throughvarious and bidirectional networking.
Its concrete measures are "Expansionof smart community and establishmentof energy management industry","Enhancing energy-saving standards forbuildings" and "Internationalstandardization".
In the "Expansion of smart communityand establishment of energymanagement industry plan", Japan’sgovernment aims to introduce smartmeters to all households by 2020. Inaddition, in order to apply variouscharge menu, experiments are carriedout in the four key demonstration areas.
In the "Enhancing energy-savingstandards for buildings plan", Japan’sgovernment aims to introduce fuel cellsto 5.3 million households by 2030. Thatis 10% of all households in japan.
In the "International standardizationplan", international standardization ofbattery and charge control will bepromoted.
[Figure] Government policy on Smart City (Smart Community)
(Source) The Japan Research Institute summarized from“The Reconstruction Strategy in Japan (JAPAN is BACK)”, The Cabinet Office
1.Society whereclean andeconomicalenergy issupplied
2.Society whereefficient energydistribution isachievedthroughcompetition
3.Society thatconsumesenergy wisely
problem Direction of theresolution
Since the GreatEast JapanEarthquake,energy costshave gone up
No competitionbetween powercompanies(regionalmonopoly)
Infrastructurewith highconsumptionefficiency is stilldeveloping
Strict use ofrenewable energy
Power systemreform(Fundamentalreform for the firsttime in 60 years)
Energy supply anddemandmanagementthrough theproactiveparticipation andcontribution byconsumer
Three socialimages
Realization of clean and economic energy supply-demand
Japanese government aims to create industries related to environment and energy, and build a cleanand inexpensive energy society through various and bidirectional networking.
concrete measure
* Feed-in Tariff Scheme* systemic reforms* upgrading of the Grid
* Changing the electrical power system* Development of storage batteries* Development of power devices
* Expantion of Smart community,establishment of energymanagement industry
* Enhancing energy-savingstandards for buildings
* Development and maintenanceof fuel cell, next-generation vehicles, the hydrogeninfrastructure
* International standardization
Deta
ilLo
catio
n
* Monetary policy* Fiscal policy* Growth strategy
Three arrows
* Industry Revitalization* Strategic Market Creation* Strategy of Global Outreach
Three action plans
* Extension of "healthy life"* Clean and economic energy supply and demand* Construction of the next generation infrastructure
that is safe, convenient and economical* Implementation of regional community
Four themes
Abenomics
Large policy
3
MacroAnalytics:
Ministrypolicy
In Japan, many innovative projectsabout Smart City have receivedfinancial supports from the government.
To commercialize the results of thoseprojects, government supports are stillneeded. Therefore, in order to predictthe Smart City future trends in Japan, itis necessary to understand theconcepts of the ministries and agencies.
Especially, "Environmental Future City"by Cabinet Office plays a major role.
In addition to the ministries below,Reconstruction Agency, MEXT (Ministryof Education, Sports, Science andTechnology), MLIT (Ministry of Land,Infrastructure and Transport), Ministry ofthe Environment are making variousefforts to Smart City projects.
[Figure] Policy of the ministries related to Smart City
(Source) The Japan Research Institute summarized from public information
METI
METI
Ministry
CabinetOffice
MIC
MAFF
EV・PHV Town(2009)
SmartCommunity(2009)
Concept(Year)
EnvironmentalFuture City(2011)
ICT Smart Town(2012)
Smart Village
Widespread use of EV andPHV
Construction of a system formanaging overall energyincluding Electricity, Heat,Transportation
Goal
Creation of best practices toovercome aging andenvironmental issues as anenvironment future city
To solve problems by ICTdisaster risk reduction anddisaster preventionRegional issues
Building an integratedmanagement system forrenewable energy in units oflocal area
about 200million euro peryear (Cleanenergy vehicles)
about 100million euro peryear
Budget
about 5 millioneuro per year
***
***
4
MacroAnalytics:
Policy of theCabinetOffice
"Environmental Future City" by CabinetOffice plays a major role to drive SmartCity demonstration projects in Japan.
In 2008, the Cabinet Office selected 13cities as "Environmental Model City"which would challenge the progressiveapproach to realize a low carbonsociety. Currently, about 50 cities havebeen selected.
In 2011, the Cabinet Office selected 11cities as "Environmental Future City"which would create human-centerednew values to support the environmentand ultra-aging society.
Environmental Future Cities areintended to create unique and bestpractice in the world whithin thedomains of technology, socio-economicsystem, service, business model andtown development. After that, the bestpractices will be expanded ontodomestic and international market toachieve sustainable development ofeconomy and society in Japan.
The government provides strongsupport for the "Environmental FutureCities". In particular, centralizinggovernment budgets and reformingregulations are provided.
By creating successful casescontinuously, the government aims toestablish ecosystems that are notdependent on subsidies.
[Figure] Smart City policy of the Cabinet Office
(Source) The Japan Research Institute summarized from public information
2008
2011
Environmental Model City<Large city> Kitakyushu, Kyoto, Sakai , Yokohama, Niigata, Kobe<Local city> Iida, Obihiro, Toyama, Toyota, Tsukuba, Amagasaki, Matsuyama<Small > Shimokawa-cho, Minamata, Miyakojima, Yusuhara- cho
Mitake-cho, Nishiawakura Village
Environmental Future City<Affected areas of the earthquake>* Ofunato, Rikuzentakata, Sumita-cho* Kamaishi, Iwanuma* Higashi-Matsushima* Minami Soma* Shinchi Town<other areas>* Shimokawa-cho* Kashiwa * Yokohama * Toyama * Kitakyushu
EnvironmentalFuture City
EnvironmentalModel City
<<Environmental Future City>>
Careful selection
* Environment(Low-carbon, waste ,natural)* Low birthrate and longevity(Medical, nursing care, child care)*Economic growth* International expansion
* Low carbon* Local revitalization
supports for advancedcases and internationalexpansion
indirect supportsfor self-motivatingefforts of the city
In 2008, The government selected 13 cities as "Environmental Model City" which addressenvironmental issues as pioneers, in order to realize low carbon society, for examplereduction of greenhouse gases emissions.
In 2011, The government selected 11 cities as "Environmental Future City" which wouldcreate human-centered new values to support the environment and ultra-aging society.
40 to 50
Concept of Environmental Future City
<<Environmental Model City >>
5
MacroAnalytics:
Market Trend
It is predicted that the total Smart Citymarket in the world in 2030 will reach282 trillion euro. The investment ratiosfor EV/PHEV, Stationary storage batteryand Power transmission equipment arelarge.
The increase of the number of SmartCity projects in the world and theexpansion of its market will continueuntil 2030. The number of Smart Cityprojects in emerging countries is largerthan that in advanced countries.
Because Smart City market will spreadmainly in emerging country, it is difficultto say that Japanese market will beattractive.
For this reason, the final goals of theseSmart City projects are often overseasexpansion.
[Table] Smart City market size and number of projects in the world
（Source） The World Smart City Pandect, Nikkei BP, Oct. 2011
6
MacroAnalytics:
MarketStructure
In Japan, Smart City projects areenforced by the cooperation of multipleplayers.
For example, in the Yokohama SmartCity Project (YSCP), which is one of thelargest Smart City demonstrationprojects in Japan, various players ofpublic and private sectors are in it, and"YSCP Company" integrates them.
In 2009, organization called "Smart CityProject" was launched by eightcompanies in private sector. Under the"Smart City Project", participatingcompanies will collaborate with eachother based on the open innovationsystem established to help thecompanies freely share information andexchange opinions. Through thissystem, the companies will establish a“one-stop total solution” for the totaloptimization of the city.[Figure] Market structure in Smart
City (key players)
(Source) The Japan Research Institute summarized from public information
7
InternationalStandardization:
In Abenomics, internationalstandardization is described in variouslocations, so it is regarded as one of themost important themes. Japan’sgovernment aims to expandinfrastructure exports to 30 trillion yen.Three pillars of efforts for expandinginfrastructure exports were presented.The pillars are top sales, strategiceconomic cooperation, and internationalstandardization.
Specifically, Japan’s government leadsthe international standardization ofsmart grid and energy-savinginfrastructure etc. Japan has strength inthese areas.
Ministry of Economic, Trade andIndustry (METI) aims to increase thebudget to drive internationalstandardization drastically.
METI would like to make 2014 the step-up year for strengthen the efforts for theinternational standardization throughpublic-private sector joint efforts.
[Figure] Efforts of International Standardization（1）
(Source) The Japan Research Institute summarized from public information
Four themes of "Industry Revitalization plan"Enhancement of science technology innovation-> Strengthening of the intellectual property strategy and standardization strategy-> Reforming of the standardization and certification system for international expansion
* Establishment of strategic trade relations and Promotion of strategic economic partnership* Strategic initiatives to gain overseas markets* Development of infrastructure related to financial and human resources
Three themes of "Strategy of Global Outreach plan"
* Monetary policy* Fiscal policy* Growth strategy
Three arrows
* Industry Revitalization* Strategic Market Creation* Strategy of Global Outreach
Three action plans
Abenomics
Large policy
Loca
tion
17億円
64億円
2013年 2014年（概算要求）
12.1
45.7
0
10
20
30
40
50
2013 2014
(million euro)
Policy budget for international standardization
10兆円
2013年 2020年
30億円
71.4
214.2
0
50
100
150
200
250
2013 2020
(billion euro)
target amount of infrastructure system for export
Refe
renc
e
8
InternationalStandardization:
InstitutionalChange and theResult
In order to strengthen the efforts ofinternational standardization, domesticsystem has changed. The name of thissystem is "Top Standard System".Under this system, the results arebeginning to appear.
Under the traditional system, a lot oftime was needed in order to proposethe international standardization,because there was necessity to build aconsensus of the industry in Japan.
To solve this problem, this scheme hasbeen modified to make it possible topropose without industry consensus.
TOSHIBA and HITACHI utilized thissystem, as a result, a TC (TechnicalCommittee) on Electrical EnergyStorage (EES) Systems has beenapproved.
[Figure] Efforts of international standardization（2）
(Source) The Japan Research Institute summarized from public information
9
Case Study:
Examples ofDemonstrationPhase Project
In Japan, demonstration projects in fourcities below are representative.However, demonstration experimenthas been carried out in many areas.The number is 150 or more.
These projects are getting lots ofassistances from the government.
These four projects have beenpromoted from the time Japan’sgovernment began to focus on SmartCity project. They were selected as"Next-generation energy and socialsystem demonstration area" by METI in2010, and "Environmental Future City"by Cabinet Office in 2011.
Smart City demonstration will bepromoted with focuses on these fourprojects in Japan, in the future.[Figure] Representative
Demonstration projects in Japan
(Source) The Japan Research Institute summarized from Japan Smart City Portal
Name of city City of Yokohama Toyota City Kansai ScienceCity
City of Kitakyushu
Area 434.98km2 (August2012)
918km2 (April 2012) 150km2 (April 2012) 488.78km2 (October2011)
Popu lation 3,697,426 (August2012)
422,830 (April 2012) 244,872 (April 2012) 971,924 (August 2012)
Locations forthe operationalexperiments
City of Yokohama as awhole, with a focus onthree districts - Minatomirai 21 - Kohoku New Town - Yokohama GreenValley
The Higashiyama andTakahashi districts fortrials of HEMS andEDMS, and Toyota Cityas a whole for trials ofa low-carbon transportsystem
The Seika and NishiKizu districts - Kyotanabe City - Kizugawa City - Seika Town
The Higashida area inYahata-Higashi ward
Area coveredby theoperationalexperiments
435km2(August 2012) 918km2(the entire areaof Toyota City)
7.7km2 (April 2012) 1.2km2
Number ofhouseholdsinvolved in theoperationalexperiments
* 2 housing complexes(16 and 24 houses),one apartmentcomplex (177apartments), 83houses for technologyverifications* 4,000 houses andapartments for socialverifications
* 67 newlyconstructedresidences* 160 existingresidences
* 102,024 (April 2012) * 225 households(August 2012)
Number ofworkplacesinvolved in theoperationalexperiments
* 4 office buildings* 2 commercialbuildings* 1 large-scale factory
* 2 commercialbuildings* 1 distribution center* 1 Toyota EcofulTown (showcase)
Introduction of BEMS:1 facility (KeihannaPlaza; April 2012)
* 50 (August 2012)
Otherperspectives
Number of EV/PHVinvo lved in theoperationalexperiments
Targets forintroduction of PVgeneration, etc.
Number o fhouseho ldsinvolved in theoperationalexperiments
Number of smartmeters installed
* 50 EV for demandresponse verifications
* 61.2% rate ofrenewable energy* 4,000 next-generation vehicles
* 14 households forHEMS* 100 households forsystems to renderenergy use visible* 700 households forpower demandresponse(April 2012)
* 225 (August 2012)
Target forintroduction o fphotovoltaicgeneration, e tc.
*** Number of EV/PHVinvolved in theoperationalexperiments
Level o fintroduction ofphotovoltaicgeneration, e tc .
* Photovoltaicgeneration: 27MW* HEMS: 4,000households;* EV: 2,000 vehicles
* 60 (April 2012) * Storage batteries:800 kW;* Photovoltaic : 400kW;* Fuel cells: 110 kW
10
Case Study:
Examples ofCommercialPhaseProject
At the Panasonic’s factory site in theFujisawa, Kanagawa Prefecture, aSmart City will be started in the springof 2014. The project name is "FujisawaSustainable Smart Town".
Fujisawa has been prepared to build aSmart City by "basic design" and "basicstudy" from 2011.
Characteristic of the city is that thegeneration-storage linked systems areinstalled to all households.
"Fujisawa Sustainable Smart Town"which sells 1,000 single-family housesis one of the largest projects at thistime. ("Smart City Kashiwa-no-ha"which sells 2,000 houses is also one ofthe largest projects, but it sells multi-unitfamily houses.)
In the future, the number of commercialphase projects like Fujisawa city mightincrease.
[Figure] Smart City project at the stage of practical use "Fujisawa Sustainable Smart Town"
(Source) The Japan Research Institute summarized from Panasonic webpage
11
Case Study:
Project of thestage ofpractical use
"Smart House", "Smart CommunitySolar", "Smart Spot", "Smart Next TownArea", "Smart Station" is located in theFujisawa Sustainable Smart Town.
[Figure] Images of "Fujisawa Sustainable Smart Town"
(Source) The Japan Research Institute summarized from Panasonic webpage
12
Suggestionsin Smart CityMarket
Japanese companies and Finnishcompanies should develop cooperativerelations for the purpose of globaldevelopment rather than developmentin Japan.
For foreign companies that do not havebases in Japan, it is difficult to obtainthe assistance of the Japan’sgovernment.
In many cases, the purposes ofacquisition or alliance betweenJapanese companies and foreigncompanies are global expansion.
The best way for Finnish company thatplans to get a presence in Japan wouldbe contacting JETRO (Japan ExternalTrade Organization). It promotesmatching between domestic and foreigncompanies.
For example, in "International SmartGrid EXPO", JETRO provides the"JETRO Zone" to hold businessmeetings that foreign companies canseek Japanese companies as businesspartners through the introduction of theirproducts and technologies.
[Figure] Suggestion for Finnish Company in Smart City market
(Source) The Japan Research Institute summarized from public information
Company Date Formati on Company Content Ta rget
Market
Fuji Electric
Holdings
February
2011
Joint
venture
General Electric(USA) Development and sale of Mart meter Japan
Toshiba May
2011
Acquisition Landys+Gyr(Germany) Completion of energy management
technology
Global
June
2011
Alliance Hewlett-Packard(USA) Joint business and joint research
and development in the field of
smart community
Global
January
2014
Acquisition Vijai(India) Manufacturing base of the power and
distribution transformers and
switchgear
Global
Hitachi February
2012
Alliance Silver Spring
Networks(USA)
Providing solutions in smart grid
business
Global
December
2013
Joint
venture
Johnson Controls(USA) Combine the advanced technology
and sales network in the field of
commercial air-conditioning
Global
Hitachi
Consulting
November
2011
Alliance Living PlanIT
(Switzerland)
Acquisition of Smart City-related
business, based on Infrastructure
software to support M2M
Global
Mitsubishi
Electric
May
2013
Alliance Echelon(USA) Strengthen overseas development of
smart meter business
Global
Agency Date Formati on Exhi bi ti on Content Target
Market
JETRO February
2014
Matching 4th International Smart
Grid EXPO
(JETRO attract
Promotion Division)
Matching of Japanese company and
foreign company in the Renewable
energy, energy management, element
technology
Japan
Single entry byFinnishcompanies
Collaborationwith Japanesecompanies
Entr
yw
ay
Japan Global
Target Market
* Participation of foreigncompanies is less in Japanesedemonstration experiments
* Cases are less* JETRO is attracting foreigncompanies
***
* Many cases
+++
-
