New Era of a Hydrogen Energy Society

27th February 2018Ministry of Economy, Trade and Industry

JAPAN

①Energy SavingUse of fuel cells enables high energy efficiency.

②Energy SecurityHydrogen can be produced from various primary energy sources, including unutilized energy sources such as by-product hydrogen, flaring gas, and brown coal; and renewable energy sources.Procuring these energy sources from areas of relatively low geopolitical risk leads to enhancing energy security, and using renewable energy promotes energy self-sufficiency.

③Environmental Load ReductionHydrogen does not emit CO2 when consumed.Applying Carbon Capture and Storage (CCS) technology to hydrogen production or using renewable energy enables a completely CO2-free system.

④Industrial PromotionJapan is ranked first in patent applications regarding fuel cells and is strong in this field.

Significance of Realization of a Hydrogen Energy Society

1

Direction of Activities to Realize a “Hydrogen Society”

Domestic fossil fuels

Production

Overseas unused energy

Renewable energy

pp yTransportation and supply

（supply chain） Use

Byproducthydrogen

Fuel cell cogeneration（e.g. Ene-Farm）

City gas pipeline/LPG supply networkReforming

Reforming

Hydrogen station

Byproducthydrogen

Gasification

Fuel cell vehicles（FCV, FC bus, etc.）

Power

generation

Solar power

Wind power

Waterelectrolysis

Transportation

Overseasrenewable energy

Hydrogen power generation（CO2-free thermal power plants）

City gasLP gas

Brown coalCCS

Waterelectrolysis

Future

Future

• Entered service in Tokyo in March 2017

• 100 buses by 2020

• Combined heat and power supply using hydrogen cogeneration in Kobe in early 2018

• 40,000 vehicles by 2020

• Demonstration of the worldʼs first international hydrogen supply chain in 2020

*Use hydrogen as a means of energy storage (absorb fluctuations in intermittent RES)

Hydrogen pipeline

Use in the industrial sector（Power-to-X）

Other

• Installation of 100 stations nationwide

• Promotion of regulatory reform for cost reduction

Large-scale hydrogen oceanTransportation network

• Demonstration of large-scale power-to-gas @Fukushima/aiming for use in the 2020 Tokyo Olympic and Paralympic Games

Liquefied hydrogen lorry

2

Basic Hydrogen Strategy1st Ministerial Council on Renewable Energy, Hydrogen and Related Issues (11th April 2017)Prime Minister Shinzo Abe stated "Japan will be the first in the world to realizea hydrogen-based society. I request relevant ministers to formulate the basicstrategy within this year.”

In particular, he request relevant ministers toaccelerate the establishment of hydrogen refuelling stationsstreamline regulationsformulate a common scenario toward the building of supply chains and the

full-scale introduction of hydrogen power generation.”

3Japanese government have formulated the strategy on December 26, 2017.

Points of the Basic Hydrogen Strategy

①②Supply side ③Utilization side

○ Vision on 2050＋Action plan by 2030○ Position hydrogen as a new carbon-free energy option lined up with renewable

energy ⇒ Lead global decarbonization by hydrogen technologies of Japan○ Hydrogen cost target … Present: \100/Nm3 ⇒ ʼ30: \30/Nm3 ⇒ Future: \20/Nm3

○Procure massive amounts of hydrogen by developing international supply chains Develop the technologies (gasification, large-scale

transportation, etc.) by demonstration of international supply chain between Japan-Australia/Japan-Brunei for commercialization around 2030

○Accelerated dissemination of FCV/FC bus / Hydrogen station

Self-sustaining business of Hydrogen stations by the late 2020s

Expansion of hydrogen utilization, not only FCV but also bus, forklift, truck and ship.

○Commercialized hydrogen power generation (Mass consumption of hydrogen) Worldʼs first hydrogen power plant started demonstrated

operation from January 2018 in Kobe. Promotion of demonstration and technological development for

commercialization around 2030.

○Large-scale hydrogen production from inexpensive resources

Use Brown coal or overseas renewable energy

① inexpensive resources② Establishing large scale hydrogen supply chains③ Mass usage of hydrogen（FCV ⇒ Power Generation ⇒ Industry）

【Supply side】

【Utilization side】・・・

＜3 conditions for cost reduction of hydrogen＞

○Utilizing regional renewable energy One of the largest scale Power-to-Gas demonstration in

Namie town (Fukushima Pref.) 4

Scenario for Basic Hydrogen Strategy

Supply

Use

Cost

Mob

ility

Present picture 2030 Target future picture

Pow

er

gene

ratio

n

Fossil fuel-based hydrogen (by-product hydrogen, natural gas reformation)

Developing international hydrogensupply chains

Establishing technologies for renewable-based hydrogen production in Japan

CO2-free hydrogen(Brown coal combined with CCS, utilizing renewable energy)

30 yen/Nm3 (1/3 or less)

~100 yen/Nm3 (hydrogen station price)

20 yen/Nm3 (1/5 or less)

FCV

Scale-upSubstantial cost cuts

800,000 units40,000 unites2,000 units

17 yen/kWh (Commercial

operation stage)

－(Technological

development stage)

12 yen/kWhReplacing gas power generation

(2020) (2030)

Forklifts 40 units 500 units 10,000 units

Hydrogen stations 100 locations 160 locations some 900 locations

Profitability improvement will allow hydrogen stations to replace gas stations

FC buses 2 units 100 units 1,200 units

(Present)

FCV/Hydrogen stations

becoming independent

* 2nd half of the 2020s

FC stack technology development and cost cuts allowing FCVs to replace gasoline

Introducing large FCVs

Supply chain development and demonstration, scale-up

Halving hydrogen station costs

Hydrogen volume 200 t 4,000 t 300,000 t ~10 million t + α

(depending heavily on consumption for power generation)

Roadmap targets

(2020)(Present)

(commercial supply chain capacity)

(Reference) 5-10 million t represents 15-30 GW in power generation capacity

(Reference) 300,000 t in hydrogenconsumption represents some 1 millionkW in power generation capacity

Natural gas imports: 85 million t/y

Natural gas import price:

16 yen/Nm3**Conversion based on hydrogen’s calorific value

(Reference comparison)

Number of gas station: 31,500

Number of passenger cars:

62 million

Unit LNG power generation cost: 12 yen/kWhFossil power

generation capacity: 132GW

Demonstrating hydrogen power generation, establishing an environmental value assessment system

Strategic hydrogen station development, regulatory reform, technological development

Relevant government organizations cooperating in developing hydrogen supply networks

5Utilization of fuel cells 220,000 unitsEne-Farm 5.3 million

unitsEne-Farms becoming

independent

Ene-Farms replacing traditional residential energy systems

Number of households: 53 million 5

Ongoing ProjectsInternational H2 Supply Chain Power-to-gas

Australia

Brunei

Japan-Australia H2 Supply Chain Project CO2-free H2 Production Project

H2 Power Generation H2 Mobility

H2Station NetworkH2Co-combustion Generation Demo

Off-gas

Brown Coal Liquefied H2 Carrier

Dehydrogenation Plant

Power-to-gas Plant

FC Bus

FC Truck Demo

Electrolyzer

R&D of H2Burner Systems

Hydrogen Gas Turbine

BurningSimulation

Dem

andSupply Japan-Brunei H2 Supply Chain Project

Fukushima

Tokyo

2018～

2020～ 2020～

2013～

JV by11 companies

*101 Stationsby April 2018

H2 Applications

× 100 in 2020

H2Olympic Flame

6

Revised Points of the Hydrogen / FC Strategy RoadmapPhase 1: Installation Fuel Cell (Current-)1. Stationary FC

Clarifies price targets of residential FCs ⇒ disseminates without government support by around 2020 ■ PEFC: 800,000 yen by 2019 ■ SOFC: 1,000,000 yen by 2021

2. Fuel Cell Vehicles Sets the goals of market introduction

■About 40,000 FCVs by 2020, 200,000 by 2025, 800,000 by 2030 Aims at introducing FCVs in main market segment (price range) by around 2025

3. Hydrogen Refueling Stations Sets the goals of installations and self-sustaining business

■About 160 stations by FY2020, 320 by FY2025 *Needs around 900 stations in case of 300Nm3/h refueling capacity by 2030■Self-sustaining business of HRSs by the late 2020s

Thereafter establishes adequate amount of stations in response to the spread of FCVs

Phase 2: H2 Power Plant/ Mass Supply Chain (Realized in the late 2020s)4. Hydrogen Power Plant

reflects a report by study group on H2 power plant (March 2015) , embodies the description

Phase 3: CO2-free Hydrogen (Realized in around 2040)5. Hydrogen derived from Renewable Energy

States to launch a working group which handles technical and economic issues regarding introduction of CO2-free Hydrogen and come to conclusion by March 2017.

Describes the promotion of advanced initiatives such as the reform 2020 project and Fukushima new energy society initiative 7

Step by Step approach to realizing a Hydrogen SocietyHydrogen / FC Strategy Roadmap

Phase:1 Phase:2 Phase:3

2020

Installation Fuel Cell H2 Power Plant/Mass Supply Chain CO2-free Hydrogen

2009: Residential FC2014: FCV2017: Stationary FCaround 2020: ・PEFC;800 thousand yenSOFC;one million yen

・FCV fuel cost ≦ HEV fuel costHS; About 160 in totalFCV; About 40 thousand in totalaround 2025:・FCV toward volume zone・FCV cost competitive ≧ HEVHS; About 320 in totalFCV; About 200 thousand in totalaround 2030:FCV; About 800 thousand in total

2nd half of 2020ʼs:-H2 Cost (CIF) : JPY30/Nm3

-Enhance Supply Chain in Japan

around 2030:-Import H2 from overseas-Full Scale H2 Power Plant

around 2040:-Full Scale CO2-free H2(w/ Renewable Energy,

CCS, etc)

- Accelerate RD&D- Realize reasonable

H2 PriceTokyo Olympic/Paralympics

FCV: Fuel Cell VehicleHS:Hydrogen StationHEV: Hybrid Electric Vehicle

2030

2040

8

Goals in the road map Progress• Establish the self-sustaining market of “Ene-Farms” at

the early stages, and disseminate 1.4 million units by 2020, and 5.3 million units by 2030.

Over 233,000 units diffused.(*As of January 2018)

• For the retail price of “Ene-Farms” (including construction cost for installation), aim at the price that can recover the investment within 7 or 8 years (PEFC: 0.8 million yen, SOFC: 1 million yen) by 2020, and within 5 years by 2030.

Average retail price of Ene-Farms (Including construction cost for installation) is about 1,140,000 yen.Payout time is about 12 years.* Excluding support by subsidized charge

Residential Fuel Cells

Changes in the diffusion number and retail price

2 550  9 998 19 282 

37 525 

71 850 

115 455 

154,059 

193 587 

233 164 

303 298

260

210 165

149 145 121 114

0

50

100

150

200

250

300

350

0

50 000

100 000

150 000

200 000

250 000

2009fy 2010fy 2011fy 2012fy 2013fy 2014fy 2015fy 2016fy 2017fy

Installed units Selling price

* Based on determination subsidization base （As of the end of January 2018）

Diffu

sed

num

ber o

f Ene

-Far

ms

[Uni

t]

Reta

il pr

ice

[10,

000

yen]

9

• Major Ene-Farms manufacturers in Japan have been proceeded exploitation of overseas market through alliance with boiler manufacturers in Europe and others, and 600 units have been installed to date.

• Dissemination is promoted by utilizing political supports for installation overseas in the future.

① Panasonic: residential fuel cell system jointly-developed with Viessmann was released in Europe from April 2014. And they launched New model corresponding to wider gas types in April 2016.

② Toshiba: In the spring of 2014, Toshiba announced about development of residential fuel cell system and marketing alliance with BAXI Innotech (an affiliate company of BDR Thermea). They will provide PEFC fuel cell unit. They started distribution in Korea in March 2015.

③ Aisin Seiki: Provides home fuel cell unit of SOFC for Bosch in Germany as a part of Enefield Project*. Aiming at installation of 70 units.(Until September, 2016)

[Source] Created by Nomura Research Institute and the Agency for Natural Resources and Energy based on materials disclosed by companies and hearing

Trend in overseas deployment in Japanese manufacturers

[Residential Fuel Cells] Trend in Overseas Deployment

* Enefield Project is a promoting program to disseminate micro fuel cells for CHP by installing about 1000 units of micro fuel cells for CHP into residential house in 11 participating countries of Europe on a trial basis and validating its usefulness and economic efficiency from 2012 to 2017. EU capitalizes 26 million Euro.

10

Goals in the Roadmap Progress• Launch FCVs onto the market by 2015,

and aim at the market introduction as around 40,000 FCVs by 2020, 200,000 by 2025, 800,000 by 2030.

• Toyota began selling its Mirai in December 2014. • Honda began selling its Clarity Fuel Cell in March 2016. • In September 2015, Toyota announced the estimated global sales of FCVs

around 2020 as 30,000 or higher.

• Aim at realizing the price of FCVs having price competitiveness equivalent to that of hybrid vehicles at the same class by around 2025.

• The retail price of Toyota Mirai and Honda Clarity Fuel Cell are both around 7million yen. Further efforts to reduce costs for FC system and platinum catalyst are promoted.

Auto manufacturer Honda MotorCar's name Clarity Fuel Cell

Retail price (including tax) 7,660,000 yenLaunch March 2016

Hondaʼs Clarity Fuel Cell

700 2 000  3 000 

30 000 

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

2015 2016 2017 around 2020

Toyotaʼs expected global sales of FCVs (Single year)

Goals of Fuel Cell Vehicles for Dissemination

（Vehicles）

11

H2

H2H2

H2

H2

H2H2H2H2H2H2H2H2H2H2

H2H2H2H2H2

H2H2H2

H2H2H2H2H2

H2 H2 H2H2H2H2

H2H2H2H2H2H2H2H2H2H2

H2H2

H2H2H2H2

H2

H2H2H2H2H2H2H2H2H2

H2

Goals in the Roadmap Progress

• Ensure about 160 HRSs in FY2020 and 320 in FY2025. • 92 HRSs are commercially available and 9 in process.（*As of January 2018）

• For the price of hydrogen, aim at offering at the same or lower price as compared with the fuel cost of gas vehicles in 2015, and as compared with the fuel cost of hybrid vehicles by around 2020.

• In HRSs currently opened, the price of 1,000-1,100 yen/kg, which is close to the fuel cost of hybrid vehicles, is strategically set.

Progress of Hydrogen Refueling Stations for Goals

* As of January 2018.

Map of Hydrogen refueling stations

[Tokyo area]40 Stations

[Chukyo area]26 Stations

[Kansai , Shikoku area]15 Stations

[Chugoku , Kitakyusyu area]16 Stations

Open 92 Stations(In process 9 Stations )

12

[Hokkaido, Tohoku area]4 Stations

Establishing an Inexpensive, Stable Supply System

Production of hydrogen:

Gasification,reforming of steam, etc.

Refinement of hydrogen

Lignite

By-producthydrogen

Associated gas

Hydrogen sources in foreign countries

Conversion into hydrogen carriers

MCH

Liquefied hydrogen

Hydro-gen

Liquefaction

Combined with toluene

Technology has beenestablished.

● Transportation under normal temperature and normal pressure

→ Use of chemical tankers

Production of hydrogen:Conversion into

hydrogen carriers

CH３

Storage of hydrogen carriers

Takeout of hydrogen

Use of hydrogen:

Hydrogen power generation,

fuel cells,

Industrial gas, etc.

Organichydride

Liquefied hydrogen

It is necessary to develophydrogen ships.

Technology has beenestablished.

● Storage under normal temperature and under normal pressure→ Use of petroleum tanks, etc.

Technology has beenestablished.

It is necessary to adopt large-scale hydrogen tanks and to

reduce boil off.

It is necessary to adopt large-scale dehydrogenation

equipment and to achieve high efficiency in dehydrogenation.

Hydrogen is combined with toluene into methylcyclohexane.→ Hydrogen in this state can be compressed to a volume equal to 1/500 of the volume under normal pressure.

Hydrogen is liquefied by being cooled to -253C.→ Hydrogen in this state can be compressed to a volume equal to 1/800 of the volume under norm pressure.

Transportation of hydrogen carriers

13

Characteristics of Power to Gas (P2G) Technology〜Hydrogen Derived from Renewable Energy〜

It is considered that a complex system of water electrolysis and hydrogen tank has high potential of application to the area of large scale and prolonged energy storage for the good reason that the complex system has small loss over time and high expandability such as hydrogen tank as compared with competing storage battery technologies in terms of advantage.It is expected that P2G can be a promising item as a countermeasure against problems related to power system interconnection during introduction and expansion of renewable energy in Japan in the future.

[Source] Fuji Keizai

Positioning of various electric power storage technologies

Characteristics of energy storageusing hydrogen (P2G)

・ Advantageous to large scale and prolonged energy storage

・ Impact from environmental conditions such as geography and geology is small.

CAES・・・Compressed air energy storage

Storage period

Storage scale

flywheel

Redox flow

Lithium‐ion battery

Waterpumping

Hydrogen

methane

14

Support HRS installations and promote creating new FCV demand.

Installation Fuel Cell

Phase 1H2 Power Plant/

Mass Supply Chain

Phase 2CO2-free Hydrogen

Phase 3

Focus on implementation from the present Realized in the late 2020s Realized in around 2040

Disseminate stationary FCs Disseminate FCVs

Subsidies for Stationary FCs [7.7 billion yen]

Promote the accelerated introduction and cost reduction of Ene-farm.From FY 2017, support for stationary FC for business and industrial use is added .

Subsidies for HRSs[5.6 billion yen]

Support for FCVs[Included in 13.0 billion yen]

R&D of FCs[2.9 billion yen]Conduct R&D for better performance and lower costs of FCs, and demonstrate stationary FCs for business use

Stationary FC for business use

R&D of FC, etc.

Develop technologies for lower costs and safety of HRSs, and collect data for reviewing regulations.

Build a H2 supply chain

Demonstrate how hydrogen can be produced from untapped overseas energy resources, transported in the form of liquefied hydrogen or organic hydride, and used to generate power. Implement P2G field tests, etc.

R&D of H2 production, transport and storage

R&D for producing, transporting and storing H2 derived from renewable energy

[0.9 billion yen]Develop technologies of high efficiency water electrolysis units, tanks for storing liquefied hydrogen, etc. with the use of renewable energy sources.

R&D of HRSs[2.4 billion yen]

Demonstrations for global H2 supply chain [8.9 billion yen]

Draft Budget for Hydrogen and Fuel Cells in FY 2018

15