The document discusses smart city initiatives and market trends in Japan. It provides details on government policies promoting smart cities, key demonstration projects, and the market structure. The Japanese government aims to create a clean and inexpensive energy society through smart communities and other measures. Major initiatives include expanding smart meter use and fuel cell adoption. Representative smart city demonstration projects are taking place in four cities, including Yokohama. The smart city market is predicted to reach $282 trillion globally by 2030, with Japan well positioned in areas like smart grids but facing competition from growing projects in emerging markets.

1. Further Research on
Smart City Market in Japan

2. Organization Members
Research and Consulting Division,
Japan Research Institute
2-18-1 Higashi-gotanda, Shinagawa-ku
Tokyo 141-0022 JAPAN
PHONE :+81-3-6833-0900
FAX :+81-3-6833-9480
Project Leader
Koji YAMAURA (Associate Senior Consultant)
yamaurakoji@jricojp +81-3-6833-5369
Adviser
Hideyuki ASAKAWA (Senior Consultant)
asakawahideyuki@jricojp +81-3-6833-2815
Project Members
Yohei KOTAKE (Consultant)
kotakeyohei@jricojp +81-3-6833-6333
Yuki KUWABARA (Consultant)
kuwabara.yuuki@jri.co.jp +81-3-6833-6587
Assistant
Takako IMAI (Assistant)
imai.takako@jri.co.jp +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 sectors
and especially promotes cooperative and risk-intensive projects. Tekes’ current strategy puts strong
emphasis on growth seeking SMEs.

3. 2
Macro
Analytics:
Government
policy
Smart City is one of the subtopics of the
growth strategy of the government
policy, "Abenomics". So, in Japan, it is
regarded as an important theme.
Specifically, in the "Realization of clean
and economic energy supply-demand
plan", Japan’s government aims to
create industries related to environment
and energy, and build a clean and
inexpensive energy society through
various and bidirectional networking.
Its concrete measures are "Expansion
of smart community and establishment
of energy management industry",
"Enhancing energy-saving standards for
buildings" and "International
standardization".
In the "Expansion of smart community
and establishment of energy
management industry plan", Japan’s
government aims to introduce smart
meters to all households by 2020. In
addition, in order to apply various
charge menu, experiments are carried
out in the four key demonstration areas.
In the "Enhancing energy-saving
standards for buildings plan", Japan’s
government aims to introduce fuel cells
to 5.3 million households by 2030. That
is 10% of all households in japan.
In the "International standardization
plan", international standardization of
battery and charge control will be
promoted.
[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 where
clean and
economical
energy is
supplied
2.Society where
efficient energy
distribution is
achieved
through
competition
3.Society that
consumes
energy wisely
problem Direction of the
resolution
Since the Great
East Japan
Earthquake,
energy costs
have gone up
No competition
between power
companies
(regional
monopoly)
Infrastructure
with high
consumption
efficiency is still
developing
Strict use of
renewable energy
Power system
reform
(Fundamental
reform for the first
time in 60 years)
Energy supply and
demand
management
through the
proactive
participation and
contribution by
consumer
Three social
images
Realization of clean and economic energy supply-demand
Japanese government aims to create industries related to environment and energy, and build a clean
and 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 energy
management industry
* Enhancing energy-saving
standards for buildings
* Development and maintenance
of fuel cell, next-
generation vehicles, the hydrogen
infrastructure
* International standardization
DetailLocation
* 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

4. 3
Macro
Analytics:
Ministry
policy
In Japan, many innovative projects
about Smart City have received
financial supports from the government.
To commercialize the results of those
projects, government supports are still
needed. Therefore, in order to predict
the Smart City future trends in Japan, it
is necessary to understand the
concepts 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 (Ministry
of Education, Sports, Science and
Technology), MLIT (Ministry of Land,
Infrastructure and Transport), Ministry of
the Environment are making various
efforts 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
Cabinet
Office
MIC
MAFF
EV・PHV Town
(2009)
Smart
Community
(2009)
Concept
(Year)
Environmental
Future City
(2011)
ICT Smart Town
(2012)
Smart Village
Widespread use of EV and
PHV
Construction of a system for
managing overall energy
including Electricity, Heat,
Transportation
Goal
Creation of best practices to
overcome aging and
environmental issues as an
environment future city
To solve problems by ICT
disaster risk reduction and
disaster prevention
Regional issues
Building an integrated
management system for
renewable energy in units of
local area
about 200
million euro per
year (Clean
energy vehicles)
about 100
million euro per
year
Budget
about 5 million
euro per year
***
***

5. 4
Macro
Analytics:
Policy of the
Cabinet
Office
"Environmental Future City" by Cabinet
Office plays a major role to drive Smart
City demonstration projects in Japan.
In 2008, the Cabinet Office selected 13
cities as "Environmental Model City"
which would challenge the progressive
approach to realize a low carbon
society. Currently, about 50 cities have
been selected.
In 2011, the Cabinet Office selected 11
cities as "Environmental Future City"
which would create human-centered
new values to support the environment
and ultra-aging society.
Environmental Future Cities are
intended to create unique and best
practice in the world whithin the
domains of technology, socio-economic
system, service, business model and
town development. After that, the best
practices will be expanded onto
domestic and international market to
achieve sustainable development of
economy and society in Japan.
The government provides strong
support for the "Environmental Future
Cities". In particular, centralizing
government budgets and reforming
regulations are provided.
By creating successful cases
continuously, the government aims to
establish ecosystems that are not
dependent 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
Environmental
Future City
Environmental
Model 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 advanced
cases and international
expansion
indirect supports
for self-motivating
efforts of the city
In 2008, The government selected 13 cities as "Environmental Model City" which address
environmental issues as pioneers, in order to realize low carbon society, for example
reduction of greenhouse gases emissions.
In 2011, The government selected 11 cities as "Environmental Future City" which would
create human-centered new values to support the environment and ultra-aging society.
40 to 50
Concept of Environmental Future City
<<Environmental Model City >>

6. 5
Macro
Analytics:
Market Trend
It is predicted that the total Smart City
market in the world in 2030 will reach
282 trillion euro. The investment ratios
for EV/PHEV, Stationary storage battery
and Power transmission equipment are
large.
The increase of the number of Smart
City projects in the world and the
expansion of its market will continue
until 2030. The number of Smart City
projects in emerging countries is larger
than that in advanced countries.
Because Smart City market will spread
mainly in emerging country, it is difficult
to say that Japanese market will be
attractive.
For this reason, the final goals of these
Smart City projects are often overseas
expansion.
[Table] Smart City market size and number of projects in the world
（Source） The World Smart City Pandect, Nikkei BP, Oct. 2011

7. 6
Macro
Analytics:
Market
Structure
In Japan, Smart City projects are
enforced by the cooperation of multiple
players.
For example, in the Yokohama Smart
City Project (YSCP), which is one of the
largest Smart City demonstration
projects in Japan, various players of
public and private sectors are in it, and
"YSCP Company" integrates them.
In 2009, organization called "Smart City
Project" was launched by eight
companies in private sector. Under the
"Smart City Project", participating
companies will collaborate with each
other based on the open innovation
system established to help the
companies freely share information and
exchange opinions. Through this
system, the companies will establish a
“one-stop total solution” for the total
optimization of the city.[Figure] Market structure in Smart
City (key players)
(Source) The Japan Research Institute summarized from public information

8. 7
International
Standardizati
on:
In Abenomics, international
standardization is described in various
locations, so it is regarded as one of the
most important themes. Japan’s
government aims to expand
infrastructure exports to 30 trillion yen.
Three pillars of efforts for expanding
infrastructure exports were presented.
The pillars are top sales, strategic
economic cooperation, and international
standardization.
Specifically, Japan’s government leads
the international standardization of
smart grid and energy-saving
infrastructure etc. Japan has strength in
these areas.
Ministry of Economic, Trade and
Industry (METI) aims to increase the
budget to drive international
standardization drastically.
METI would like to make 2014 the step-
up year for strengthen the efforts for the
international standardization through
public-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
Location
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
Reference

9. 8
International
Standardization:
Institutional
Change and the
Result
In order to strengthen the efforts of
international standardization, domestic
system has changed. The name of this
system is "Top Standard System".
Under this system, the results are
beginning to appear.
Under the traditional system, a lot of
time was needed in order to propose
the international standardization,
because there was necessity to build a
consensus of the industry in Japan.
To solve this problem, this scheme has
been modified to make it possible to
propose without industry consensus.
TOSHIBA and HITACHI utilized this
system, as a result, a TC (Technical
Committee) on Electrical Energy
Storage (EES) Systems has been
approved.
[Figure] Efforts of international standardization（2）
(Source) The Japan Research Institute summarized from public information

10. 9
Case Study:
Examples of
Demonstration
Phase Project
In Japan, demonstration projects in four
cities below are representative.
However, demonstration experiment
has been carried out in many areas.
The number is 150 or more.
These projects are getting lots of
assistances from the government.
These four projects have been
promoted from the time Japan’s
government began to focus on Smart
City project. They were selected as
"Next-generation energy and social
system demonstration area" by METI in
2010, and "Environmental Future City"
by Cabinet Office in 2011.
Smart City demonstration will be
promoted with focuses on these four
projects 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 Science
City
City of Kitakyushu
Area 434.98km2
(August
2012)
918km2
(April 2012) 150km2
(April 2012) 488.78km2
(October
2011)
Population 3,697,426 (August
2012)
422,830 (April 2012) 244,872 (April 2012) 971,924 (August 2012)
Locations for
the operational
experiments
City of Yokohama as a
whole, with a focus on
three districts
- Minatomirai 21
- Kohoku New Town
- Yokohama Green
Valley
The Higashiyama and
Takahashi districts for
trials of HEMS and
EDMS, and Toyota City
as a whole for trials of
a low-carbon transport
system
The Seika and Nishi
Kizu districts
- Kyotanabe City
- Kizugawa City
- Seika Town
The Higashida area in
Yahata-Higashi ward
Area covered
by the
operational
experiments
435km2
(August 2012) 918km2
(the entire area
of Toyota City)
7.7km2
(April 2012) 1.2km2
Number of
households
involved in the
operational
experiments
* 2 housing complexes
(16 and 24 houses),
one apartment
complex (177
apartments), 83
houses for technology
verifications
* 4,000 houses and
apartments for social
verifications
* 67 newly
constructed
residences
* 160 existing
residences
* 102,024 (April 2012) * 225 households
(August 2012)
Number of
workplaces
involved in the
operational
experiments
* 4 office buildings
* 2 commercial
buildings
* 1 large-scale factory
* 2 commercial
buildings
* 1 distribution center
* 1 Toyota Ecoful
Town (showcase)
Introduction of BEMS:
1 facility (Keihanna
Plaza; April 2012)
* 50 (August 2012)
Other
perspectives
Number of EV/PHV
involved in the
operational
experiments
Targets for
introduction of PV
generation, etc.
Number of
households
involved in the
operational
experiments
Number of smart
meters installed
* 50 EV for demand
response verifications
* 61.2% rate of
renewable energy
* 4,000 next-
generation vehicles
* 14 households for
HEMS
* 100 households for
systems to render
energy use visible
* 700 households for
power demand
response
(April 2012)
* 225 (August 2012)
Target for
introduction of
photovoltaic
generation, etc.
*** Number of EV/PHV
involved in the
operational
experiments
Level of
introduction of
photovoltaic
generation, etc.
* Photovoltaic
generation: 27MW
* HEMS: 4,000
households;
* EV: 2,000 vehicles
* 60 (April 2012) * Storage batteries:
800 kW;
* Photovoltaic : 400
kW;
* Fuel cells: 110 kW

11. 10
Case Study:
Examples of
Commercial
Phase
Project
At the Panasonic’s factory site in the
Fujisawa, Kanagawa Prefecture, a
Smart City will be started in the spring
of 2014. The project name is "Fujisawa
Sustainable Smart Town".
Fujisawa has been prepared to build a
Smart City by "basic design" and "basic
study" from 2011.
Characteristic of the city is that the
generation-storage linked systems are
installed to all households.
"Fujisawa Sustainable Smart Town"
which sells 1,000 single-family houses
is one of the largest projects at this
time. ("Smart City Kashiwa-no-ha"
which sells 2,000 houses is also one of
the largest projects, but it sells multi-unit
family houses.)
In the future, the number of commercial
phase projects like Fujisawa city might
increase.
[Figure] Smart City project at the stage of practical use "Fujisawa Sustainable Smart Town"
(Source) The Japan Research Institute summarized from Panasonic webpage

12. 11
Case Study:
Project of the
stage of
practical use
"Smart House", "Smart Community
Solar", "Smart Spot", "Smart Next Town
Area", "Smart Station" is located in the
Fujisawa Sustainable Smart Town.
[Figure] Images of "Fujisawa Sustainable Smart Town"
(Source) The Japan Research Institute summarized from Panasonic webpage

13. 12
Suggestions
in Smart City
Market
Japanese companies and Finnish
companies should develop cooperative
relations for the purpose of global
development rather than development
in Japan.
For foreign companies that do not have
bases in Japan, it is difficult to obtain
the assistance of the Japan’s
government.
In many cases, the purposes of
acquisition or alliance between
Japanese companies and foreign
companies are global expansion.
The best way for Finnish company that
plans to get a presence in Japan would
be contacting JETRO (Japan External
Trade Organization). It promotes
matching between domestic and foreign
companies.
For example, in "International Smart
Grid EXPO", JETRO provides the
"JETRO Zone" to hold business
meetings that foreign companies can
seek Japanese companies as business
partners through the introduction of their
products and technologies.
[Figure] Suggestion for Finnish Company in Smart City market
(Source) The Japan Research Institute summarized from public information
Company Date Formation Company Content Target
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 Formation Exhibition 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
Singleentryby
Finnish
companies
Collaboration
withJapanese
companies
Entryway
Japan Global
Target Market
* Participationof foreign
companiesislessinJapanese
demonstration experiments
* Cases areless
* JETRO is attractingforeign
companies
***
* Many cases
+++
-