Current Status of RE Integration in Japan

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1 Current Status of RE Integration in Japan ~ Challenges and Measures for the Penetration of RE ~ Atsushi Noda, WEC Japanese MC June 16, 2015 Asia Regional Meeting Manila, Philippines

2 Table of Contents 1. RE Integration Updates in Japan 2. Challenges and Strategies for the Large-scale RE Integration (1) Distribution System (2) Regional System (3) Bulk and Wide-area System 3. Future Effort and Conclusion

3 International Comparison of RE Energy Japan has announced that it will set up a target share of RE to be 22-24% in 2030, in terms of energy production Basic Energy Plan, 2014 [TWh] 6, , , ,000 Amount of RE Generation in 2011 by Country Others Municipal wastes Biogas & liquid biomass Biomass Solar PV Geothermal power Wind power Hydro power (w/o pumped-storage) 29.8% Share of RE generation in the total amount of power generation 27.6% 55.9% 200 2, % 20.4% 11.6% 9.4% 100 1, % 0 0 Japan Germany Spain France Italy UK Sweden USA 3 Source: ENERGY BALANCES OF OECD/NON-OECD COUNTRIES, 2013 EDITION, IEA

Overview of the Feed-in Tariff (FIT) RE power has been purchased at a fixed price from July, 2012. Cost has been imposed on end-users tariffs as a surcharge.

tariff for a government specified period Compensation of purchase cost Report of purchase amount Collection of surcharge with the electricity charge Submission of collected surcharge Geothermal power

4 Overview of the Feed-in Tariff (FIT) RE power has been purchased at a fixed price from July, Cost has been imposed on end-users tariffs as a surcharge. Renewable Power Producers Sales of electricity from RE Electricity supply Customers Solar photovoltaic Electric Power Companies Wind power Small & medium hydropower Purchase of electricity at a tariff for a government specified period Compensation of purchase cost Report of purchase amount Collection of surcharge with the electricity charge Submission of collected surcharge Geothermal power Cost bearing adjustment organization (Organization to collect and distribute the surcharge) Biomass RES at residences Specification of fixed feed-in price and period Certified facilities Government of Japan Procurement Price Calculation Committee (Appointment of five committee members requires consent by the Diet) Decision of surcharge unit price per kwh

5 Design of the FIT Incentive After FIT incentive has been introduced, rapid increase of RE becomes a social problem. PV purchase price is reduced in FY2014, while other remains at the same level from the previous year. Energy source Purchase category Tariff [JPY/kWh] Tax Period [years] FY2012 FY2013 FY2014 Solar PV <10kW double generation Inclusive 10 10kW Exclusive 20 Wind power <20kW Exclusive 20 Small / medium hydro power utilizing existing facilities 20kW off-shore wind Exclusive <200kW Exclusive kW and <1MW Exclusive 1MW and <30MW Exclusive Geothermal power <15MW Exclusive 15 15MW Exclusive Biomass Wood fired (recycled wood) Exclusive 20 Wastes (w/o woody wastes) Exclusive Wood fired (timber from forest thinning) Exclusive Wood fired (other woody materials) Exclusive Biogas Exclusive

6 RE Power Output Curtailment Compensation is necessary if the curtailment ofspec specific RE generation occurs more than 30 days within each year. Generation is expected to exceed the demand of electricity. Take avoidance measures described below, at first. Avoidance Measures Reducing outputs from available resources for Utilities except for Solar, Wind, Nuclear, Run-of-River, and Geothermal (Reducing from the scope of threatening Security of Supply) Pumped-Storage Operation of Pumped-Storage Hydro Plants Selling surplus generation at wholesale market JEPX It is available to reduce outputs from PV Solar Resources and Wind Turbines whose capacities are more than 500kW, when the outputs are expected to exceed the demand after taking avoidance measures. To order the reduction of outputs until day ahead in principle Needed to reduce outputs from Solar PVs and Wind Turbines owned by Utilities as well. Within 30days a year No compensation to generation owners (within the tolerable limit) More than 30days a year Compensation to generation owners for the income loss by the curtailment (exceeding the tolerable limit) 6

Technical Concerns of RE integration A lot of problem became apparent after the large integration of RE Distribution : upper voltage limit violation, protection difficulties Regional : uneven

7 Technical Concerns of RE integration A lot of problem became apparent after the large integration of RE Distribution : upper voltage limit violation, protection difficulties Regional : uneven distribution of RE to overload network facilities Bulk / Wide-area : supply/demand balancing becomes difficult during off-peak RE connection was temporarily suspended in some areas due to surplus generation. Grid connection of RE in 9 electric utilities Issues by large integration of RE Lack of regulating capacity at low demand period [Priority of output suppression] Demand Normal day [1] thermal, pumped-storage [2] renewables (PV, wind) [3] hydro, nuclear, geothermal, etc. Demand Low demand day Source: METI, Japan Shortage of capacity at transmission lines, transformers, etc. Needs of upgrade current PVs Kyushu Shikoku Chugoku Kansai Hokuriku Chubu Tokyo Tohoku Hokkaido HV system Substation MV system Hokuriku & Hokkaido include hydropower stations. Source: METI, Japan

8 Challenges in Distribution System Voltage Control and Reverse Current Protection is a key approach Increase of solar PV output <Countermeasure> Measurement of reverse current at a distribution substation Voltage rise at a distribution line <Countermeasure> Dispersion of Pole Tr. Replacement with new SVR Increase of reverse current to a distribution substation Voltage rise at the substation Further voltage rise Deviation from voltage tolerance Reverse current Distribution S/S Step Voltage Regulator (SVR) MV voltage control Conventional Countermeasure 8

9 Voltage Control in Distribution System Step Voltage Regulator (SVR) RE Integration Countermeasures in the Distribution System: Introduction of additional transformers for LV system (100V) Introduction of voltage regulators for MV system (6 kv) Chosen by cost-benefit performance Voltage of LV system 107V MV (6600V) LV (100V) Output curtailment LV (100 V) Countermeasures Introduce small capacity transformers Introduce d voltage regulator SVR, SVC for DG MV (6 kv) Countermeasures 95V 107V 95V 107V 95V 9 9

10 Voltage Control Operation at Distribution S/S Basic Approach Updating the voltage control relay to handle the reverse flow Changing from scholar-type to vector-type <Relay characteristics (Two-step Z characteristics)> Voltage Reverse Power Flow Zone Dead band Dead band Current <Setting values > V MAX : High demand voltage [kv], V MID : Middle demand voltage [kv], V MIN : Low demand voltage [kv] I MAX : High demand current [A], I MIN : Low demand current [A] I RMIN : Low reverse current [A], I RMAX : High reverse current [A]

Challenges in Regional System In order to guarantee the stable supply of electricity atare a reasonable price, voltage level is usually reduced from bulk generators side to end-users side, ensuring

11 Challenges in Regional System In order to guarantee the stable supply of electricity atare a reasonable price, voltage level is usually reduced from bulk generators side to end-users side, ensuring the just-and-reasonable investments on network facilities. Network upgrades are required to cope with the capacity shortage problem due to huge expansion of RE in the end-users side. Local Network Constraints (System Design WG, METI, 2014) <Shortage of carrying capacity> Conventional power system Present power system Shortage of S/S capacity Transmission lines Substations Distribution lines Shortage of T/L capacity Transmission lines Substations Distribution lines Shortage of D/L capacity Carrying capacity (upper limit of facilities in consideration of the technical criteria) Huge expansion of renewable power generation

12 DATATEPCO RE integration updates Certified RE Capacity and Commercially operated Capacity (as of Apr. 2014) Gunma Yamanashi Shizuoka Saitama Kanagawa Tochigi Tokyo Shizuoka includes service area of Chubu Electric Power Company, besides TEPCO 12 Ibaraki Chiba Symbol Source: METI Certified RE Capacity PV WP Hydro Commercial Operation Capacity Biomass

Regional Capacity Constraints Due to the rapid increase of RE, regional capacity constraints have occurred in the following area: <Tochigi, Gunma, Ibaraki, Chiba & Yamanashi>

13 Regional Capacity Constraints Due to the rapid increase of RE, regional capacity constraints have occurred in the following area: <Tochigi, Gunma, Ibaraki, Chiba & Yamanashi> Northern Gunma Area Gunma Tochigi Yamanashi Saitama Tokyo, Tama Kanagawa Ibaraki Chiba As of Jun Shizuoka Shortage of capacity presently Shortage of capacity in the near future

14 RE integration in Northern Gunma Area Total 600MW, 500 sites have been applied as of Mar RE of 170MW can be connected without transmission upgrades, while remaining 430MW requires major upgrading of transmission facilities. i.e. 154kV Joetsu Trunk Line Impact of RE to the network Current Status (Kanai) Bulk Network S/S Hydro G S/S G Hydro RES Integration After RE integration Overloading S/S S/S PV G Hydro PV G Hydro JR Gunma Kanai 1-6 HV proposal MV proposal Enhancement of carrying capacity (154kV Joetsu trunk line 39.8km) Shin-Okabe

15 Problems of the Current Procedure NOW Problem Cost-minimum plan optimized by the single project is selected upon the firstcome first-served basis. All the cost is initially attributed to the first project, and then, additional projects are requested to share the partial cost later on, within 3 years after the construction. Cost burden for the original project is very big and the perspective of the cost recovery is poor (business risk). With the multiple projects, it will far from the total optimization Optimizing the T&D upgrading project to make use of economies of scale. Single connection G Present scheme Several connections G G Step by step enhancement Newly applied scheme Planning in consideration of plausible applicants G G G G

16 Network Upgrade Project in Gunma Original Plan Minimizing the cost of 154kV Joetsu Trunk Line Construction Projects Additional Capacity is small, and expenditure pays little per kw basis. revised Revised Plan 154kV Joetsu Trunk Line Upgrade Changes the network topology at the 154kV Gunma Trunk Line intercrossing point. 66kV circuit breaker Reducing the Power Flow of 154kV Joetsu Trunk Line (increasing the capacity)

17 Cost of Network Upgrade Project In the results of considering the lack of capacity for 154kV Joetsu Trunk Line based on the development plans of RE, revised plan described below is developed to make less cost and to be capable to connect more by utilizing existing available capacities. 154kV Joetsu Trunk Line Upgrade and installation of 66kV Circuit Breaker. Total cost: 3bil.JPY, Available Capacity: 310MW Original Plan 154kV Joetsu Trunk Line Partial Upgrade Cost of Upgrading 1.9bil JPY Available Capacity About 70MW Term About 3years Unit Price in kw JPY/kW Main Point for Upgrading Aiming to upgrade a minimum span to minimize the cost Unit Price is high because of small amount of available capacity after upgrading. Revised Plan Upgrade154kV Joetsu Trunk Line Upgrading Cost of Upgrading Available Capacity Term 2.7bil JPY About 200MW About 3years Upgrade 66kV Circuit Breaker Cost of Upgrading 110mil JPY Available Capacity About 110MW Term 1.5 years Unit Price in kw JPY/kW Unit Price in kw 1000 JPY/kW Revised Aiming to upgrade the system to be able to make available capacities after the Upgrading, based on the movement for development of RE. Available to expand the integration of RE and to make cost less ( ): Starting Operation (Planed) 17

18 Perspective of the Network Congestion To integrate all of 430MW RE, it is necessary to implement the additional local system upgrade. However, Unit Price in kw, about 32kJPY/kW, is relatively expensive for increased capacity of 120MW(310MW=>430MW). Therefore, physically acceptable additional capacity is restricted up to 310MW in total, and the capacity is distributed among each sub-regional areas, shown in the table. Bidding Area I Area II Bidding area Area I (Sub-area) (yellow) (gray) (green) (blue) Area II (pink) Minakami District Part of Numata, etc. Part of Shibukawa, Nakanojyo, etc. Part of Numata, Shibukawa, etc. Part of Maebashi Capacity to be Tendered 70MW 60MW 30MW 40MW 110MW 18 Total 200MW

19 Scheme of Public Tender to connect RE Scheme of Public Tender Tendering opportunity is presented for RE developers in the designated zone, to share the per-unit cost burden (i.e., contribution for construction to secure 1kW capacity) to upgrade the 154kV Joetsu Trunk Line. Minimum offering price is calculated as follows: Construction Cost Capacity Volume The connection priority is determined by the order of bidding price. The cost of the upgrading project will be basically allocated among the successful bidders (Capacity Volume Offered Price per Unit) Criterion of project formation Tendering process is cleared on condition that the summation of the shared cost among successful bidders can cover the whole project cost. Area I (Joetsu trunk line upgrade) Lowest bid: 13,500JPY/kW End in failure (Re-consultation or re-bidding) Total amount of offering Upgrade cost Excess over the upgrade cost Contract at the upgrade cost (reducing the excess) Area IIInstallation of 66kV switchgears Lowest bid: 1,000JPY/kW Success Execution of measures 19

Expansion of the transmission lines is needed due to unequal distribution of resources.

20 Challenges in Bulk and Wide-area System Expanding Installation of Renewable Energy Sources Back-up Resources are needed to compensate the fluctuation of RE outputs. Expansion of the transmission lines is needed due to unequal distribution of resources. Capacity ratio Solar PV output Sunny Area of large integration of Wind Turbines Rainy Cloudy Source: Energy White Paper, METI, Japan Time The Biggest Load Center 20 20

21 National Burden over RE National burden associated with RE is recovered ere from the surcharges added on the tariff. Additional cost from purchasing RE energy by utilities is to be paid by the customers directly in addition to the electricity charge. Customers should pay the Hidden Costs which are necessary for the output curtailments compensation, T&D upgrading cost e and regulation and balancing operation cost. Renewable Energy Business Electric Utility Additional Purchasing Cost by purchasing energy from RE Compensation cost for RE output curtailment T&D cost Short-term Regulation Cost Customer Surcharge of FIT Addition to the Electricity Charge Electricity Charge 21

22 Data Fit Surcharge and National Burden Feed-In-Tariff System FY 2012 FY 2013 FY 2014 Total Purchased cost 250bil. JPY 480bil. JPY 900bil. JPY Avoidable Cost 120bil. JPY 170bil. JPY 250bil. JPY Cost to be recovered through Charge 130bil. JPY 310bil. JPY 650bil. JPY Unit Price of Charge 0.22JPY/kWh 0.35JPY/kWh 0.75JPY/kWh System of purchasing surplus electricity from PV Additional Unit Price Total Total Unit Price 0.06JPY/kWh 0.28JPY/kWh Amount of Charge in a 84JPY/month general household Current electricity charge8,100jpy/month 0.05JPY/kWh May 2013Mar JPY/kWh May 2013Mar JPY/month May 2013Mar JPY/kWh Finished in Sep. 0.8JPY/kWh as of Sep. 240JPY/month as of Sep. Modeled Charge for general household in TEPCO area) The charge of System for RE is equivalent to 3% of Electricity Charge. 22

23 Data Surcharge based on installed capacity If all FIT-certified facilities are in service immediately, amount of surcharge will be 2,700 bil. JPY. Additional costs, such as upgrade cost of power grid, are excluded in the estimation. Table 1 Facilities in service at present All facilities in service Annual surcharge *1 650 bil. JPY 2,700 bil. JPY Surcharge unit price 0.75 JPY/kWh 3.12 JPY/kWh Monthly surcharge *2 225 JPY/month 935 JPY/month *1 Assumption setting aside the construction period of facilities (all facilities in service immediately) *2 In the case of monthly consumption of 300MWh/month Table 2 Amount of electricity and surcharge by RE after all FIT certified facilities in service Amount of electricity Amount of surcharge *4 Solar PV (residences) 4.8 TWh 155 bil. JPY Solar PV 75.5 TWh 2,217 bil. JPY Wind power 6.5 TWh 78 bil. JPY Geothermal power 0.1 TWh 3 bil. JPY Hydropower 2.2 TWh 35 bil. JPY Biomass 16.9 TWh 213 bil. JPY 23 Source: METI, Japan *4 Except operating cost of the cost bearing adjustment organization

24 Future direction & cost for Stabilizing Power System Measures stabilizing power system are political issues. (ex. Batteries to address the surplus of energy in low demand and output reduction for PVs etc.) it is important to minimize the burden for Citizens. Not only FIT cost burden, but also additional cost should be recovered to implement the T&D upgrading and supply/demand balancing. Estimated Construction Cost to integrate about 5.9GW of RE in Hokkaido & Tohoku Area Hokkaido2.7GW Wind Turbine & Mega PV Length Cost Term 730km 200bil. JPY 5~15 years +2700MW Wind, PV Hokkaido Tohoku: 3.2GW Wind Turbine 350km Expansion of Interconnection & Bulk Power System 70bil. JPY 900bil. JPY 5~10 years Total 1.2tril.JPY 2100MW 3200MW 4700MW Tohoku HVDC route 600MW 3 500kV route Tohoku Area Tokyo 500kV route Tokyo-Tohoku Source: Draft of Interim Report by Research Group for Master Plan concerning to the expansion of Interconnection, METI 24

25 Expanding installation of REConclusion Expanding Installation of RE RE is purely domestic energy and no GHG emission resource. It is necessary to cooperate with the Government, Industries, and Citizens, and address to expand the installation of RE with attention to the Security of Supply. Economy Reduction of Generation Cost with innovation of technology necessity of growth without grant Effective Development of power system Security of Supply Major premise is to keep Security of Supply in the whole system Needed to stabilize the power system to accept great amount of RE Compatible Needed some political support such as grant, FIT, etc. in transition with burden of Citizens Needed to develop and demonstrate the technology such as Battery technology, to stabilize the power system Public Acceptance Needed public acceptance including burden of cost 25

26 Thank you for your attention If you have comments or questions, please sent them to Mr. Hideaki Tanaka (SG, WEC Japanese MC) at

29 International Comparison of Generation Mix Generation Mix is optimized in each country, reflecting respective strategy. In Germany and Italy, RE accounts over 10% in terms of energy. In Japan, RE is still only 5%. International Comparison of Energy Sources(2011) 100% 90% 80% 70% 60% 50% 40% 30% Generation Mix in 2011 by Country Oil Gas Coal Nuclear Hydro Renewables, etc % 10% 0% France Canada Japan Italy UK Germany Korea USA China India 29 IEA, ENERGY BALANCES OF OECD/NON-OECD COUNTRIES, 2013 EDITION

Obligation of RE Purchase and Connection It is prohibited for the electric utilities to deny the specific contract (power purchase agreement of RE) and the connection.

30 Obligation of RE Purchase and Connection It is prohibited for the electric utilities to deny the specific contract (power purchase agreement of RE) and the connection. In case of denial, utilities have obligation to explain the reason for denial. Power producers Power Purchase Agreement An electric power company shall pay a fixed price corresponding to the amount of electricity sent. Electric power companies Grid Connection Contract Electricity generated from renewable energy sources shall be connected to and set via the power transmission line of an electric power company. 30 Source: METI, Japan

Voltage Control Operation at Distribution S/S Exsisting voltage control relay in the distribution S/S does not detect the direction of the current, which leads the voltage control to be activated

31 Voltage Control Operation at Distribution S/S Exsisting voltage control relay in the distribution S/S does not detect the direction of the current, which leads the voltage control to be activated toward the opposite direction, leading the voltage limit violation. Ordinal voltage control (no reverse power flow) Distribution S/S (1 bank) Voltage control logic MV line voltage 90L dead band Transformer Setting value Upper threshold Voltage controller (90Ry) voltage 90R dead band Voltage A line B line A line B line C line Lower threshold C line current S/S Distance D/L terminal Voltage control during reverse power flow Distribution S/S (1 bank) Voltage control logic MV line voltage 90L dead band Transformer Setting value Upper threshold A line Voltage controller (90Ry) A line Mega PV B line C line voltage 90R dead band Voltage S/S Lower threshold Distance B line C line D/L terminal

32 Situation of RE connection in Gunma TEPCO announced the necessity of bulk transmission facilityity upgrading, which is very costly (1.9 bil. yen) for developers to accept additional capacity of only 70MW and the construction period of more than 3 years. TEPCO received lots of inquiries and complaints, leading local news media to announce this issue with a sensational headline. Currently (Apr ~), application is suspended until the countermeasure is determined. It is an urgent issue. Voices from Businesses We cannot help giving up the project due to the T&D upgrade charge. Already, PV panels were installed and monetary compensation is needed. Local News Headlines Yomiuri News and Jyomo News released several articles concerning the issue.(2014) Suspension in 6 cities, Shortage of Network Capacity in TEPCO. Prefecture, City, Town, and Village call for Network Upgrading Effort against World Energy Council the 2014 Government and TEPCO.

33 Outline of the bidding procedures Bid opening (Briefing) Bidding period (5 months or more) Evaluation of bid Execution of countermeasures Grid connection with RE Application guidebook Schedule Requisite Requirements for power system operation Burden charge Treatment of excess offering Application Compensation contract Clearing the burden charge, etc. TEPCO Power Producers Evaluation of each offer Application Result Technical offer (Application of grid connection) Acceptance Offering burden charge Financial offer Total amount of offering Failure Reducing the excess Upgrade cost Success PPA Burden charge contract Compensation contract Receipt <Execution of countermeasures> Clearing the burden charge after completion Clearance Re-consultation Payment of burden charge In order to apply the new scheme to other areas, discussion with relevant authorities is in progress.

34 Increase of Interconnection Capacity by HVDC Increase East (50Hz) West (60Hz) Interconnection capacity by utilizing HVDC technology. Increase East West Interconnection capacity from 1,200MW to 2,100MW. New interconnection will be on-line in FY East-West Interconnection (900MW) 60Hz System (West) Echizen Etsumi Line Minami-Fukumitsu Shin-Takasegawa Kaga Gifu Shinano Chushin Nanshin Joetsu Shin-Hokusin Toshin Shin-Shinano Saku Azumi Line Kashiwazaki-Kariwa Nishi-Gunma Shin-Haruna Shin-Chichibu Line Current East-West Interconnection (Frequency converter station ) Sakuma (J-Power) 300MW Shin-Shinano (TEPCO) 600MW Higashi-Shimizu (Chubu EPCO) 300MW Total 1,200MW Shin-Chichibu 50Hz System (East) Shin-Tama Reinan Hokubu Higashi-Yamanashi Shin-Hatano Kita-Omi Higashi-Omi Toyone Toei Sakuma Suruga Shin-Fuji Suruga Higashi-Shimizu Shizuoka Sun-en Source: Recommendations on the enhancement of the interconnection between Tokyo and Chubu. (ESCJ, 2013) Shin-Shinano No.2FC thyristor t valves

Renewable Energy Policy in Japan

Renewable Energy Policy in Japan Kenji Kimura February 6, 2018 Researcher, New and Renewable Energy Group The Institute of Energy Economics, Japan IEEJ Feb. 2018 Table of Contents 1 Ⅰ. Status of Japan