1

Study to Evaluate the Cost-effectiveness

of NEDO Projects

Analysis of NEDO Inside Products Survey

Sayaka Shishido, Masaru Yamashita, Yoshiko Yurugi and Mitsuru TakeshitaEvaluation Department

InsideNew Energy and Industrial Technology Development OrganizationHello everyone. I m Sayaka Shishido from NEDO, Japan. Today, I would like to talk about Analysis of NEDO inside ProductsSurvey 1Introduction to NEDO Inside ProductsNEDO inside products are defined as products that incorporate core technologies developed through NEDO project results. NEDO

Pioneer in market creationStrengtheningglobal competitivenessImproving technology in a wide range of sectors

Taking the lead in the creation of new marketsAchieving competitive advantages through world-leading technologiesAddressing social issues through new technology developmentSupporting technological innovation across a wide range of industries through basic technology developmentAddressing social issues

Government funding

R&D

Demonstrationprojects

Management, evaluation and selection by NEDOAt first, we defined the NEDO inside Products which is developed the result of a NEDO project as core technology at the early stage. In this study, we examined the cost effectiveness and a social benefit about the "NEDO inside products.Last year we reported 30 product of NEDO inside. This year we increase the number as 50.And we label these products 4 types. One is Pioneer in market creation. Another is Strengthening global competitiveness. The 3rc type is improving technology in a wide range of sectors. The last is addressing social issues.

NEDO2Overview of NEDO Inside Product ResearchPurpose:Estimate economic effect and social benefits of NEDO projectsTarget:*Most recent annual sales: More than $1.25 billion*Sales between $250 million and $1.25 billion*Low sales, but significant social benefitSummary of economic effect and social benefit: Economic effect: Project budget, most recent annual sales, accumulated sales over the past five years, sales forecast between FY2011FY2020 Social benefit: CO2 reduction effect, ripple effects, employment growth, etc.These are not so different last year. Now we have a review. Purpose: We should estimate economic effect and social benefits of NEDO projects.Target for NEDO inside 50 products.*Most recent annual sales: More than $1.25 billion*Sales between $250 million and $1.25 billion*Low sales, but significant social benefitSummary of economic effect and social benefit: Economic effect: Project budget, most recent annual sales, accumulated sales over the past five years, sales forecast between FY2011FY2020 Social benefit: CO2 reduction effect, ripple effects, employment growth, etc.

We sum up the

201120203Sales calculations:1) Average cost of project (FY): (total cost for a project implementation period) (project period)

2) Most recent FY sales (FY2010): (aggregate sales over the past five years for the target product) (five years)or (single year sales amounts for products with only single year sales estimates) 3)Total future sales forecastcumulative sales from FY2011FY2020 based on FY2020 sales forecastsData basis:Questionnaire completed by companies(Tentatively NEDOs contributing rate is 100%.)Official data: Economic organizations Public institutions, private research institutes In cases of insufficient data, supplemental estimates were calculated using the data aboveData basis are questionnaire completed by companies, and supplemental data is Official data from Economic organizations and Public institutions, private research institutes and In cases of insufficient data, supplemental estimates were calculated using the data above.And sales calculations are as below:

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Waste power generation

Wind power

Solar power

High-efficiency industrial furnaces

Thermal storage air-conditioning systemsLithium-ion batteries for EVs and PHEVs

Sulfur-free light oil

Hybrid shovels

Residential fuel cells

Low-emission diesel cars

High-speed copy machines

Thermal insulation

Industrial heat pumps

Eco-friendly cement

Water treatment plants

CFC reduction technology

NEDO440 mega tons CO2/10 years(FY2011FY2020)Energy saving effect (crude oil equivalent)35 billion gallons/10 years (FY2011FY2020)

Residential heat pumps

Examples of Technological Innovations that Address Environmental and Energy IssuesThese are example for NEDO inside50 mainly effective for environmental and energy field.Total reduction of CO2 emission is 440 million tons for 10 years by new energy and energy conservation occured by solar power or heat pump or so on

5 Sales Performance and Forecasts for NEDO Inside Productspioneer in market creationStrengtheningglobal competitivenessImprovingtechnology across a wide range of sectors*$1=80yenNEDO budget outlaySales performance Accumulated sales forecast (20112020 ) Project costsAccumulated project costsMost recent salesAccumulated sales over the last five years Unit: million $ Cost/year project period Cost/year Photovoltaic power732,16919,80858,053311,691Wind power 51063,2999,12551,341Gas turbines 446653,21414,87350,125Residential HP hot-water supply systems151934,25020,00048,125Residential fuel cell 611,10015037514,546 Blu-ray 15766,35318,12564,423Water treatment241484651,6507,475High-efficiency industrial furnaces 14100304461,329Low-emission diesel cars 853947062,875 MEMS163134761,5268,349 Fine ceramics615413113113,125 Other -2,13111,52849,455252,004Total-7,20849,798174,465825,408This table summarise total sales and sales forecast. These are NEDO budget / total and per year.

6Cost Effectiveness & Employment Growth EffectSales forecast (FY2011FY2020): $825 billionCost effectiveness:

NEDOs budget for 50 products is about $7.2 billion.Corporate income tax is about $12.3 billion. $825 billion X 3.66% (pretax profit rate*) X 40.69% (effective corporate income tax rate)* Based on the Ministry of Finances Business and Investment Survey of Incorporated Enterprises.

Employment effect: Employment growth between 107,000 and 177,000 per year

$49 billion (FY2010 sales) X 13.38%* (ratio of personnel expenses to sales) $64,000 (average employee compensation) = 107,000 employees in FY2011 $825 billion (FY2011FY2020 sales) X 13.38% (ratio of personnel expenses to sales) $64,000 (average employee compensation) = 1.77 million employees between FY2011-FY2020

* Ratio of personnel expenses to sales is based on the Ministry of Finances Business and Investment Survey of Incorporated Enterprises and average employee compensation is based on the National Tax Agencys Pay for Private-sector Employees Survey.

CO2 reduction effect: 12 products contribute to the reduction of CO2 emissions CO2 reduction effect is 440 megatons (FY2012FY2020)Energy saving effect (crude oil equivalent) is 35 billion gallons /10 years (FY2011FY2020)Then total summary about NEDO inside sales is as below:Sales should be 825 billion dallor, input from NEDO are 7.2billion, the income tax from these sales are 9.83 billion dallars.Employment effects are estimated as between 107,000 and 177,000 per year107thousand are in FY2011, 177thousand are average for next 10 years.CO2 reduction effect: are 48 mega ton as already told.

78Residential heat pump hot water supply systemFY1984FY2007 $193 millionOverview:NEDO developed basic heat pump technologies from 1984, like mechanisms for whole heat pump system not only CO2 use.Private companies developed a residential-use heat pump. NEDO support to develop multi-purpose heat pumps, including high-efficiency, compact and cold climate heat pumps.

Project Current status2020Creation of markets through NEDO projectsPioneer in Market CreationKnowledge sharingNEDO ProjectPractical use of heat pump systemsResearch on high-efficiency compressors and high-efficiency power recovery equipmentResearch on air heat exchangerResearch on compact high-performance gas coolersCapital investment

Derivative effectBuilding up basic knowledge was the starting point for developing energy-saving technologiesIdentifying new uses for heat pumps and development of multi-purpose practical applications, including compact and cold climate heat pumps.The introduction of heat pumps has accelerated since FY2007 due to the increase of all-electric homes and price reductionsThe heat pumps are designed for residential use as well as industrial use.

Residential heat pump systemForecast for heat pump market in JapanTotal CO reductions are estimated to be 42 mega tons (FY20112020 )if total heat pump sales reach 10 million by FY2020.Environmental effectThen I want to introduce 4 case and each case are corresponding to type of NEDO inside products.This is the 1st one and it is example of Pioneer in Market Creation . this is heat pump system, so-called eco cute in japan. It supply hot water by heat pump system in home. It is good sales in japan. NEDO had a basic research for heat pump from 1984 and stock the mechanisms and basic knowledge. Then after that, some private companies commercialized in 2001. but it is too big to home use so NEDO support to development the compactizing by high efficiency and cold climate heat pump. Total sales are forcasted as 10 million by 2020 and 42 mega ton.

1984199289Die Bonding FilmAchievement of reduced thickness, and improved flexibility and adhesiveness simultaneously by controlling polymer structures at nano levels. Contributed to size reductions and improved functionality of latest electronic devices such as smartphones, tablets, etc.

NEDOprojectsCurrent status2020Environment:Energy-saving as SSDs consume lower amounts of electricity than HDDs.Technology: Streamlined manufacturing processes multiple processes streamlined to one bonding film process only)Contributed to enhancing Japans competitiveness in semiconductor materials fieldPresence of Japanese companies:Sales: $127 million/year;greater than 50% market share;achieved de facto standardizationStrengthening Global Competitiveness

EffectsFY2001FY2007: $75million

ExampleStacked MCPHS SeriesOverview:Technology development: Development of phase separation control and analysis technology for power inverters and LED light sealants.Film properties:Ultra-thin film (10 m) with strong bonding properties (peeling strength 1.0 kN/m between 60-90angles)Accelerating development of practical application through collaborative R&D of mechanisms between industry and academia.Basic technology makes possible synthesis of materials suitable for requisite properties

Products using die bonding film2nd is die bonding film that belong to category of Strengthening Global Competitiveness. It is used in semiconductor manufacturing process. Each IC chips lap over and bond by this film. It is very tight bonding but very thin, so it is very useful for high quality semiconductor. It is very popular in smart phones, PCs, tablets and so on.It is caused to reduced thickness and improved flexibility and adhesiveness simultaneously by cotrolling polymer structure at nano levels. It is very good example of collaborative R&D between industry and academia. Basic technology is very effective for dramatic improvement of film. Its world share is 50%.

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engineair bagtiremirror

navigation system

Micro Electro Mechanical Systems (MEMS)FY1991FY2012: $319 million Japan is a global leader in micro machining technology as a result of R&D spanning over 20 years .Overview:R&D on MEMS started in the late 1980s. Japan launched a large-scale ten year national project in 1991 to build a technological base for MEMS.R&D has been accelerated recently to develop applications in multiple fields.

NEDO projectsCurrent status2020

Market growth38 billion yen99 billion yenCars Manufacturing

Achievement of high-performance, lightweight devices through micro machining technologyImproving Technology in a Wide Range of Areas Accumulation of basic technologiesDevelopment of multi-purpose applications through crossover activities among different fieldsDevelopment of multi-purpose uses What is MEMS?MEMS is a micro-mechatronics systems using semiconductor processing consisting of miniaturized sensors, actuators, electronic circuits integrated onto chips.

Electronic devicesThen this is example for Improving Technology in a wide range of areas , MEMS. It is a micromechatronics system using as sensors, actuators, gyroscope etc...In japan, R&D on MEMS started in the late 1980s and NEDO launched a large scale project and build a technological base.It is used as a sencer in multi-purpose like air bags and mirrors, tires etc and of course electronic devices and other manufacturing machines .

Micro Electro Mechanical Systems19801011 High-efficiency FurnacesFY1993-FY1999: $102 millionOverview:Achievement of more than 30% energy saving, reductions in NOx and sizeAdopted by steel and aluminum industrials; accounted for more than 1/3 of industrial furnace market in 2005Project consortium composed of 13 companies from the same industryDevelopment of multi-purpose technologies using simulations and databases; heat recovery has nearly reached theoretical limits.Field tests conducted at 167 locations contributing to market growth.

NEDO projectsCurrentstatus2020Development of eco-friendly industrial furnacesCO2reduction effect: 16 million t-CO2/10 yearsNEDO supports the dissemination and promotion of eco-friendly industrial furnaces

Furnace cross-sectionEnvironmental effectAddressing Social IssuesAnd last example is high-efficiency furnace as addressing social issues. This type furnaces save energy 30% and reduce NOx. it is adopted by steel and aluminum industrials and for more than 1/3 accounted in 2005.NEDO project consortium composed of 13 companies and base technology like simulation and database of combustion. After that, Field tests conducted at 167 locations contributing to market growth.

111. Solar power Wind power

new energy 1981

2. Gas turbines

high-efficiency1980

4. Nano-ion products

healthy living, eco-friendly 20015.Reduction of CFCs

address global warming 19967. High density devices (HDD)

new markets 19958. Blue-ray

new media19989. Die bonding films

streamlining 2001

10. Residential fuel cells

cogeneration 1992

11. Fine ceramics

new materials198114. Water supply (MBR,UASB)

global business1997

13. EV batteries

load leveling1992NEDO Inside Product Stars!6. Furnaces

energy saving19933. Residential heat pump system

heat pumps 1984

Pioneer in market creationStrengthening global competitivenessImproving technologyAddressing social issues

12. MEMS

multi-purpose1991

There are NEDO Inside Stars, the big sellers in NEDO inside. 3 stars are the best, and a star is the smallest. The big sellers R&D is starting from 1980s , it has really hard and long walk.

12Future outlookChallengesMore than half of NEDO inside products are viewed as addressing social issues and should not be evaluated in terms of economic profitability only.In particular, as NEDOs mission is to address energy and global environmental problem, we need to carefully consider in-depth evaluation methods for these products.As the number of materials and components in the supply chain increases, it become more difficult to calculate the value of each unit.

NEDO not only supports individual companies, but also aims to improve Japans technological strength, therefore we should conduct evaluations in terms of value-added to Japans technology base. We should implement evaluation methods based not only economical viability and energy efficiency but also include benchmarks such as reductions in environmental burdens (e.g., hazardous materials), and improvements in user-friendliness, quality of life, levels of happiness, etc.

Basic and infrastructure technology development is expected to become broader and we are striving to develop evaluation methods that are compatible with such change. Currently, we are examining interview methods related to combustion and polymer chemistry.Our future outlook is here.ChallengesMore than half of NEDO inside products are viewed as addressing social issues and should not be evaluated in terms of economic profitability only.In particular, as NEDOs mission is to address energy and global environmental problem, we need to carefully consider in-depth evaluation methods for these products.As the number of materials and components in the supply chain increases, it become more difficult to calculate the value of each unit.

NEDO not only supports individual companies, but also aims to improve Japans technological strength, therefore we should conduct evaluations in terms of value-added to Japans technology base. We should implement evaluation methods based not only economical viability and energy efficiency but also include benchmarks such as reductions in environmental burdens (e.g., hazardous materials), and improvements in user-friendliness, quality of life, levels of happiness, etc.

Basic and infrastructure technology development is expected to become broader and we are striving to develop evaluation methods that are compatible with such change. Currently, we are examining interview methods related to combustion and polymer chemistry.

13Thank you!///CAT-CVDDRAMDynamic Random Access MemorySiC,GaNMEMS16NEDO504XCTSCR(UASB)MBRVOCIT16

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