Leading innovation in PV and energy storage products

SHARP CORPORATION

9th, Nov. 2016

Factors to be considered in promoting wider use of PV and battery market

1 Confidential

１ Growing interest in Zero Energy Houses (ZEH)

2 Growing demand for Disaster Preparedness

3 Growing demand for self-consumption of PV electricity

4 Preparation for “After-FIT-Issues”

2 Confidential

1. Growing interest in Zero Energy Houses (ZEH)

3 Source: METI: Documents of ZEH Roadmap Exploratory Committee

Mandatory energy-saving standards for newly built houses

2020年 2030年

Achieve zero emission on average

in newly built houses.

ZEH will be a standard for newly built houses.

（More than half of newly built houses will be ZEH）

Japanese government committed at the COP21

26% Reduction of greenhouse gases by 2013

39.3％ reduction in the residential sector is required to achieve this target.

Until 2020 • Making the energy-saving standards mandatory for newly built houses. • Making zero-emission house be a standard in newly-built houses. Until 2030 • Achieving average zero emission in newly-built houses.

Government's target

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Target of the Japanese Government

4

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

2016 2017 2018 2019 2020

Source: Estimation by Sharp

容量(G

W)

Proportion of ZEH in newly build houses will significantly increase.

新築

既築

non-ZEH

ZEH

Market estimation of residential PV systems

Over 10kW

Less than 10kW

Cumulative capacity

Year

ly in

stal

led

cap

acit

y (G

M)

Cu

mu

lati

ve c

apac

ity

(GM

)

Market Trend : Domestic PV demand forecast（JPEA）

5

Source: Japan Photovoltaic Energy Association

Over 10kW：Demand will remain steady till 2017, then decrease Less than 10kW：Steady growth is expected

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2. Growing Demand for Disaster Preparedness

Recent Natural Disasters in Japan

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Aug. 2014：A terrible hurricane hit Hiroshima area, causing a huge mudslide

133 houses collapsed and 122houses were partially destroyed by this

mudslide.

A blackout occurred：59,100houses, for more than 2days.

Sep. 2015：Tochigi area was hit hard by a terrible hurricane

75 houses collapsed and 3,851 houses were partially destroyed due to

a massive flooding.

A blackout occurred：69,100houses, for more than 2days.

Apr. 2016：An earthquake disaster in Kumamoto

8,257 houses collapsed and 30,952 houses were partially destroyed.

More than 180,000 people evacuated.

A blackout occurred：476,600houses, for more than 4days.

Oct. 2016： An earthquake disaster in Tottori

More than 3,000 people evacuated.

A blackout occurred：77,100houses, for more than 3 hours.

Aug. 2016：A terrible hurricane hit Tohoku and Hokkaido

447houses collapsed and 2,243 houses were partially destroyed.

A blackout occurred： 96,913 houses were affected in Tohoku area

153,938 houses were affected in Hokkaido area

© 2016 SHARP CORPORATION, All Rights Reserved. SHARP Confidential

Growing demand for PV and batteries in public buildings

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Source：Google map

An installation example (a house for the elderly)

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3. Growing demand for self-consumption of PV electricity

15.00

20.00

25.00

30.00

35.00

40.00

2010 2011 2012 2013 2014 2015 2016 2017

Change of the business environment: FIT price decline and electricity price increase

Average residential electricity price

FIT price of surplus electricity

(yen/kWh)

10

Trend of FIT price and residential electricity price

surplus electricity can be sold to utility.

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Self-consumption will make more sense than selling, to maximize the profit.

At present,

In the near future,

Residential electricity price will be higher than the FIT price.

※Residential electricity price shows the average value of 10 major electric companies in Japan (meter rate lighting more than 300kWh, not including fuel adjustment cost and the renewable energy surcharge) .

Residential Energy System in the future

Increase of Electricity bill

Decrease of FIT price

In the near future, it will make more sense to

Spread of ZEH

Changes of business environment surrounding the energy systems at residential buildings

instead of selling it to an electricity company.

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In order to achieve Zero Energy System in a house,

“high-efficiency PV modules” and ”Smart storage

and smart use of electricity“ are necessary.

“store the PV electricity and use it in-house”

12 Confidential

4. Preparation for “After-FIT-Issues”

Japan’s FIT scheme started in 2009. Selling price of surplus electricity will decrease significantly after 10 years of the initial purchase period.

In the near future, it will be more profitable to store the surplus electricity for self-consumption than to sell it at a lower price.

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Selling price: 48yen/kWh

Selling price will drop significantly.

After 10 years…

For the first 10 years after the installation

Installation of a battery

Lower selling price

In the case of a PV system installed in 2009

What a decline of

profits!

It makes more sense to use it at

home by installing a battery

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Home Appliances

Surplus electricity

Self-Consumption

Home Appliances

What is “After-FIT-issues”?

14

0

5

10

15

20

25

0

2

4

6

8

10

12

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

“After-FIT-issues” → Business opportunity！

PV system installation in Japan

Annual In

stallation(G

W)

Accum

ula

ted In

stalla

tion(G

W)

Potentially interested in installing battery systems at home

FIT started

Total number of installation:

500 thousand houses (Sharp’s Installation is for

190 thousand houses)

In 2019: A new market for “after-FIT”

15 Confidential

5. Direction of R&D in promoting RES systems

Improve PV module efficiency

Providing “Home energy solution” for ZEH

Develop a range of disaster-resilient-products

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Current top-class conversion efficiency is 19.6％

NQ256AE(256Ｗ）: released in Aug, 2016

Keeps upgrading

17.0%

18.0%

19.0%

20.0%

Efficiency

2012 2013 2014 2015

16.9% (195W)

17.2% (198W)

17.6% (203W)

18.2% (210W)

19.6% (256W)

19.1% (220W)

2016

NQ-256AF

Among the few best in the

industry

Further improvement of PV module efficiency

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Good Design Award

Photovoltaics

Batteries Energy saving

appliances

Energy generation

Energy storage

Energy conservation

● high-efficiency PV modules (BLACKSOLAR)

● Smart control of batteries using a cloud network

● Appliances that utilize the electricity from PVs and Batteries efficiently

Toward the era of ZEH and self-consumption, Sharp will provide a residential total energy system that uses electricity more efficiently, by utilizing PVs, Batteries and energy saving appliances.

18 Confidential

Residential Energy System in the future

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Remotely control the home appliances with a smartphone from outside

PV

HEMS

Battery

Air-conditioner EV&V2H

Washing machine

Refrigerator Heat pump water heater

LED lighting

ZEH with an integrated

control

Automatic control to achieve both energy saving and comfortable life simultaneously by connecting PV, battery and appliances altogether

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Residential Energy System in the future

20 Confidential

Sharing various information

Weather forecast

Linking

Electricity price plan

Provide an optimal option by studying the past practices and

information

Smart energy life can be

achieved by utilizing various information received from the cloud server and controlling

the battery adequately.

Optimal Control

Smart control of electricity consumption by linking various information together

Cloud server

14時

Blackout starts

Weather warning

Blackout ends (Warning cancels)

It won’t discharge until blackout

happens or warning disappears

Start Discharging

Battery returns back to the normal mode

Our cloud HEMS orders the battery to start charging and prepare for a blackout, when it receives an official announcement of weather warnings.

Cloud HEMS receives

information

Blackout starts! Blackout may happen…

Start charging

Warning mode is working Blackout

Order

Blackout ends

I feel relief even during blackout!

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Smart control by the Cloud HEMS : utilization of weather warnings

To achieve energy self-consumption and ZEH

SHARP, as a total home appliance company, offers energy-solutions with HEMS controlled system, composed of “PV(energy creating)”,

“battery(energy storing)” and “energy saving appliances”.

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• Energy saving appliances • DC power appliance

LED lighting

refrigerator Air-conditioner

•Energy saving control of appliances •Liked with battery

Cloud ＨＥＭＳ

EcoCute Battery

PV system

0:00 7:00 19:00 23:00 12:00

Self-

consumption

Surplus electricity

PV generation

Energy consumption

Cloud HEMS maximizes surplus electricity and pursue

out-and-out energy saving

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As a first step, Sharp is planning to commercialize DC Hybrid Air-Conditioner

An innovative system which makes it possible to send DC electricity from the battery directly to the air-conditioner’s outside-unit.

Cloud-HEMS controls the system and utilize AC/DC power optimally.

Battery-linked DC Hybrid Air-Conditioner

Economical! DC Power stored in battery during night-time (off-peak hours) can be directly used for appliances without

conversion.

Air-conditioner outside unit

Energy saving appliance

Energy

conservation Battery Storage

DC power

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First step to achieve a battery/appliance linked system: DC Hybrid Air-Conditioner

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Router Cloud battery

Cloud HEMS

Hybrid PCS

DC hybrid air-conditioner (indoor unit)

分電盤

DC hybrid air-conditioner (outdoor unit)

Air conditioner’s outside-unit uses DC electricity from the

battery directly.

Intelligent Control

PV system

Our smart system uses both DC power stored in a battery and AC power from the grid as appropriate

DC Power

Multi Energy Monitor

Cloud-HEMS switches DC/AC power automatically, depending

on PV generation, remaining battery level and electricity price.

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Overall picture of DC Hybrid Air-Conditioner installation

Morning Evening

Midnight

Afternoon

DC DC operation= More efficient

Uses electricity from the battery (Stored during the night)

Uses power generated by PV ( AC operation）

Elec. Price = Zero

Uses low price midnight electricity（AC operation)

Taking advantage of the half price

elec.

Elec.

Low price Midnight elec.

Cloud-HEMS switches DC/AC power automatically to achieve the most optimal and economical operation

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Operations of DC Hybrid Air-Conditioner

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PCS PV

〈 Simulation condition 〉 ・PV（4.2kW） ・Battery（4.2kWｈ）

Cloud battery

Cooling only in this area(192L)

Reduction of the cooling area enables 10 days of preservation only with electricity from the battery.

Blackout！

Sharp commercialized a refrigerator with blackout mode in June, 2016 . (Volume size : 551L)

The technology of reducing cooling area achieved the further energy saving and enhanced the preservation capacity of food for a longer time even at a time of blackout.

This preservation area can also be used as “Mega Freezer ” which features a large freezer compartment at normal time.

Battery-Connected-Refrigerator with blackout mode

PV Modules

「BLACKSOLAR」

LED light

Battery

Standalone system with PV modules and battery, for charging mobile phones / smart phones

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Charging box

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The solar charger “CITY CHARGE” make clean energy shareable, like new infrastructure.

“SOLAR CHARGER” New product <LN-CA2A>

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Sharp has participated “Tokyo City Charge project”,

promoted by Tokyo Environmental Public Service Corporation.

Tokyo CITY CHARGE has been in service at three locations of Tokyo Tower, Toranomon Hills, Toshimaen since October 2015. (Service at Toranomon Hills are continued to end of October

2016)

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“Tokyo CITY CHARGE” The demonstration model

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Thank you for your attention!