Making the business case for solar-plus-storage with heat-pumps in Japan
AI Analysis
Summary
A Japanese research team has evaluated the affordability of photovoltaic-battery systems featuring heat-pump water heaters and air conditioning units across nine regions of Japan. They analyzed three price policies and two loan types, identifiying a tradeoff between net demand and cost according to the capacity of the solar-plus-storage system.
<p class="p1"><span class="s1">A Japanese research team has evaluated the affordability of photovoltaic-battery systems featuring heat-pump water heaters and air conditioning units across nine regions of Japan. They analyzed three price policies and two loan types, identifiying a tradeoff between net demand and cost according to the capacity of the solar-plus-storage system.</span></p><p>Researchers from Japan’s <a href="https://www.pv-magazine.com/2024/11/14/indium-free-chalcopyrite-solar-cell-achieves-12-25-efficiency/" rel="noopener" target="_blank">National Institute of Advanced Industrial Science and Technology</a> have conducted an economic analysis on the use of a photovoltaic-battery (PV-BT) system with heat-pump water heaters (HPWHs) and air conditioning (AC) units installed at detached houses in Japan.</p>
<p>The system was analyzed across nine regions of Japan – Kansai, Kyushu, Shikoku, Chubu, Chugoku, Tokyo, Tohoku, Hokuriku, and Hokkaido – against differing pricing policies and loan types.</p>
<p>The results are presented in the research paper “<a href="https://www.sciencedirect.com/science/article/pii/S0360544225041131" rel="noopener" target="_blank">Economic analysis of a photovoltaic battery system for an electrified detached house with a heat-pump water heater: Effect of time-variable electricity pricing</a>,” published in the journal <em>Energy</em>.</p>
<p>The research paper says the affordability of PV-BT systems has not previously been evaluated in detail, particularly when incorporated with HPWH and AC units. The researchers investigated the affordability of PV-BT systems based on a 20-year operation period. The electricity cost and peak power demand were determined based on the net demand, and an economic analysis was conducted by considering electricity costs and PV-BT system prices over a one-year period.</p>
<p>The analysis was based on real data from smart meters that collect power usage and usage time. A total of 5,751 one-year datapoints measured between 2017 and 2023 were collected from the households. Across the nine regions, the households were assumed to possess a 10 kW PV system and a 10 kWh battery. The results were compared to a reference case without a PV-BT system. In addition, different PV values ranging from 5 kW to 10 kW and different BT values ranging from 0 kWh to 12 kWh were tested.</p>
<p>All houses were analyzed under three price regimes: time of use (TOU), real-time price (RTP) and progressive rate (PR). Japanese electric power companies have changed TOU regimes per region, consisting of two or three price periods per day. In the RTP system, electricity is sold to consumers based on transmission charges and service fees based on the Japan Electric Power Exchange trading price, which changes every 30 minutes. The prices of the PR system also vary by region, with the lowest rate available for monthly usage of less than 120 kWh, a medium rate for usage of 120 kWh to 300 kWh and a high rate for usage exceeding 300 kWh.</p>
<figure class="wp-caption aligncenter" id="attachment_317110" style="width: 600px;"><img alt="" class="size-medium wp-image-317110" height="459" src="https://www.pv-magazine.com/wp-content/uploads/2025/09/1-s2.0-S0360544225041131-gr13_lrg-600x459.jpg" tabindex="0" width="600" /><figcaption class="wp-caption-text">Yearly electricity cost per household using the TOU <p><i>Image: National Institute of Advanced Industrial Science and Technology, Energy, CC BY 4.0</i></p>
</figcaption></figure>
<p>The analysis considered two types of loans. Loan A was aimed at new construction, with a 1% interest rate per year and a repayment period of 30 years, while loan B was aimed at retrofit operations and consisted of a yearly interest of 4% and a repayment period of 20 years.</p>
<p>The study also considered both current and future target costs. The base and target costs for the installation of a rooftop PV system was estimated at JPY 255,000 ($1,731)/kW and JPY 150,000/kWh, while for the installation of a battery it was estimated at JPY 134,000/kWh and JPY 70,000/kWh. Maintenance cost was assumed at JPY 35,000 per four years, and the feed-in-tariff (FIT) was JPY 16/kWh for the first 10 years and JPY 7/kWh for the subsequent 10 years.</p>
<p>The researchers found that electrified houses based on HPWH and solar-plus-storage systems only reach affordability under certain circumstances defined by the loan, FIT, instalment costs and maintenance costs.</p>
<p>“Higher PV and battery capacities improved the self-sufficiency of the electrified household, but increased the overall costs due to the interest associated with repayment of the PV-BT system loan,” the researchers said. “In addition, the peak demand was reduced by shifting the HPWH and AC operations to correlate with PV generation.”</p>
<p>The researchers said these findings suggest that installing a PV-BT system can mitigate the net demands of households, and added that low PV-BT system installation costs and low interest rates for repayment render the PV-BT system affordable.</p>
<p>The research paper concludes that the high installation costs associated with PV-BT systems represent a barrier for many households.</p>
<p>“Thus, the aggregate demand for electrified houses should be explored in the context of the electric power company to promote carbon neutrality, since the current findings raise new questions regarding the overall demand profiles achieved by shifting the HPWH and AC demands,” the paper adds.</p>