JSPMI-ERI 21-1
Strategy for Developing Domestic Industrial Agglomeration toward aDecarbonized Society- Centering on the Status of Entry by Medium- and Small-sized Manufacturers
into the Renewable Energy Sector –Executive Summary

1. Objective and Perspective of This Research(1) Objective of this research
In this research, a research committee was organized by experts from industrial agglomeration andSMEs with the aim of studying industrial clusters in Japan through three approaches: (1) keeping
track of the potential of renewable energy and trends in each field based on a literature survey; (2)analyzing the actual situation of new business development by SMEs toward a decarbonized society
based on a questionnaire survey; and (3) having a multifaceted study of the relationship between
renewable energy and the regional economy and industry by each member of this researchcommittee. Finally, we present the conditions for revitalizing industrial agglomeration centeredaround the renewable energy sector.
(2) Perspective of this researchTwo viewpoints underlie the perspective of this research. One is the viewpoint of regional
commitments to decarbonization. Specifically, it refers to various commitments to reducing CO2
emissions, commitments to establishing a sound material-cycle society, and the construction ofrenewable energy bases. The other is the viewpoint of commitments by companies involved inmachinery in regions to renewable energy equipment, and commitments to forming renewableenergy industrial clusters.
2. Findings Obtained from a Questionnaire Survey(1) Status of entry by medium- and small-sized manufacturers into the renewableenergy equipment market
A questionnaire survey conducted by the Economic Research Institute of small- and medium-sized
manufacturers revealed that they are less willing to enter the renewable energy equipment market.
Contrary to it, 13 %, 9.3 %, and 7.9 % of the respondents mentioned three fields, photovoltaic power
generation equipment, wind power generation equipment, and medium- and small-scalehydroelectric power generation equipment, respectively, as markets they have already entered or areplanning to enter.
(2) Challenges to entry by medium- and small-sized manufacturers into therenewable energy equipment market-1-As described above, the questionnaire survey showed that most of the medium- and small-sized
manufacturers do not enter the renewable energy equipment market. The factors contributing to it
are i) internal issues in selling and receiving orders for renewable energy equipment (internal factor)and ii) support and measures to expand sales and orders for renewable energy equipment (externalfactor). We analyzed these two factors using a co-occurrence network diagram. As a result, first,
many medium- and small-sized manufacturers consider mass production to be difficult on therenewable energy equipment market. Second, many medium- and small-sized manufacturers find it
difficult to enter the market because they lack their own management resources, such as knowledge
about the renewable energy sector and the human resources necessary for it. We focused on thesetwo points. And we reached the conclusion that the “perception gap” of medium- and small-sized
manufacturers in the growing renewable energy equipment market was attributable to a lack ofinformation about the market, technology, measures, regulations, and other factors related to therenewable energy market.
3. Points of Measures to Revitalize Industrial Agglomeration Centered Around theRenewable Energy Equipment Sector(1) Relationship between the renewable energy sector and the effect of industrial
agglomeration
Based on the results of the study conducted by the committee for this research, a diagram of therelationship between the renewable energy sector and the effect of industrial agglomeration is shownin Figure 0.1. As shown in this diagram, we reached the conclusion that many programs in the
renewable energy sector still face challenges but have the potential for bringing about a positiveeffect on domestic industrial agglomeration.
Figure 0.1 Relationship between the renewable energy sector and the effect of industrial
agglomeration
Renewable energy
base type

Large-scale wind power generation (offshore)
Large-scale photovoltaic power generation (mega solar)
Large-scale wind power generation(onshore)
Medium-scale wind power generation(onshore)
Effect of industrial agglomeration(small)Effect of industrial agglomeration(large)Geothermal
Biomass power
power generation
generation
Small-scale wind power generation

Photovoltaic power generation for industrial use
Medium- and small-scale hydroelectric power generation

Photovoltaic power generation for household use
Local-production-forlocal-consumption type(2) Basic conditions for revitalizing industrial agglomeration centered around therenewable energy sector-2-Finally, as a conclusion of this research, we presented the basic conditions for each revitalizing
industrial agglomeration centered around the renewable energy sector in each region as follows:< Basic conditions for revitalizing industrial agglomeration centered around the renewableenergy sector >[1] Selecting and combining programs of the renewable energy sector consistent with industrial andemployment policies of communities[2] Building a supply chain for the manufacture, operation, etc. of renewable energy equipment[3] Promoting cooperation between regional industries, such as agriculture, fisheries, and forestry,
and the renewable energy sector[4] Establishing the profitability of renewable energy businesses using the FIP scheme[5] Developing human resources for renewable energy by universities, technical colleges, technicalhigh schools, etc.
[6] Providing local medium- and small-sized companies with information on renewable energy
businesses, product development subsidies, etc.
[7] Forming industrial clusters for promoting the sustainable growth of the renewable energy
industry[8] Establishing a management strategy with an eye on creating shared value (CSV) for the entire
industry, including medium- and small-sized companies

4. Future Research Issues
In this research, we studied industrial agglomeration through three approaches, [1] literature survey,[2] questionnaire survey, [3] multifaceted study of the relationship between renewable energy andthe regional economy and industry by each member of this research committee, and presented thebasic conditions for revitalizing industrial agglomeration centered around the renewable energy
sector. This time, however, it was not possible to conduct an interview survey in each region due tothe COVID-19 pandemic. Thus, we desire to conduct in the future an interview survey on theprogress of renewable energy equipment and the promotion of industry in each region with the aid ofrenewable energy equipment, while keeping an eye on the status of the containment of the COVID19 pandemic. We also desire to conduct a survey of efforts by medium- and small-sized companies
toward decarbonization management and CSV with emphasis placed on mainly “commitments byregions to decarbonization” of the perspective of the research shown on the left side of Figure 0.2.

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Figure 0.2 Perspective of this research

Regional economic society
Commitments by regions todecarbonization

Shift of industrial agglomeration
to renewable energy equipment

Shift of industrial agglomeration to renewable energy equipment
Regional companies (leading, medium leading, medium and small)
Development of renewable energy equipment and energy saving
equipment
Manufacture and sale
Cooperation with universities, research institutes, support organizations,etc. in regions

CO2 reduction targets and measures
CO2 reduction and introduction of renewable energy byhouseholds
Waste reduction, dissemination of EVs, etc.
Introduction of renewable energy to public facilities,
maintenance and conservation of forests
Decarbonization management of companies
Introduction and promotion of CCS and CCUS
Establishment of new regional electric power projects
funded by municipalities and other projects

Formation of renewable energy
industrial clusters
Creation of regional industries and jobs

Sound materialcycle society
Utilization of regionalrenewable energy sources

Outside of region

Sale of equipment

Renewable energy
baseElectric power supply(transmission)

Outside of region

Notes) CCS: Stands for Carbon dioxide Capture and Storage. CCS means separating and capturing CO2 discharged from industrial activities before release into the atmosphere and storing it in a stable manner for a long time by segregating it in theground, seabed, etc.
CCUS: Stands for Carbon dioxide Capture, Utilization and Storage (separation, capture, effective use, and storage of carbon dioxide). CCUS means separating and capturing the carbon dioxide contained in the emissions discharged from thermal
power plants, factories, etc. and making effective use of it as a resource or storing it in a stable underground layer.
Source) Prepared by the Economic Research Institute by reference to “Nikkei Glocal” No. 413 (2021), p. 6, and Minoru Hosaka (2022), p. 35.

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