Smart Grid Implementations - Case of Japan -

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Smart Grid Implementations - Case of Japan - Yoshito SAKURAI (Hitachi, Ltd. ) ITU Centres of Excellence Network for Asia-Pacific Region Training on Green ICTs and Smart Grids 15-18 September 2015 Bangkok, Thailand

Contents Introduction Japan s Electricity Market Deregulation Real Use Case of Smart Grid Conclusion 2

Blackout time/year in Japan (min.) (numbers) Time (minutes) Numbers / house Due to natural disasters min. min. 1966 1975 1985 1995 2007 International Telecommunication Union 3

Blackout time/year in the World (min.) 0 Japan US US Germany France UK (New York) (California) 4

Situation in Japan The electric supply system in Japan has been already very Smart as far as electric transmissions and distributions. The smart grid in Japan is not a technology issue but a policy/regulation issue. It will re realized by the Market Deregulation that will introduce here after. International Telecommunication Union 5

Contents Introduction Japan s Electricity Market Deregulation Real Use Case of Smart Grid Conclusion 6

201506EMR_in_Japan.pdf 7

Contents Introduction Japan s Electricity Market Deregulation Real Use Case of Smart Grid Conclusion 8

Kashiwa-no-ha Smart City Kashiwa-no-ha Smart City locates 25km north-east from Tokyo metropolitan area (It takes about 30 minutes by train) that is equipped AEMS (Area Energy Management System) etc. It is a real city people live in. There are residential areas, hospitals, universities, etc. 9

Area Energy Management System Kashiwa-no-ha Smart City optimizes energy usage for the entire city. AEMS plays a pivotal role in this setup, drawing on an independently operated power grid and enabling area expansion as well as enhancing functions. This system is designed to contribute to smart grid progress that underpins lifestyles and innovations. 10

AEMS Operation Center Energy management system that is central to Kashiwa-no-ha Smart City. The Kashiwa-no-ha Smart Center oversees energy operations, management, and control for the entire town. The center uses wheeling throughout the area to cut peak power consumption by 26%, helping to conserve energy and cut CO 2 emissions. 11

12

Emergency electricity sharing 13

Power Generation Facilities Solar power generation facilities Wind power generation facilities 14

Transportations Instead of individually owning electric vehicles, electric scooters, and bicycles, residents share them to help cut overall carbon dioxide emissions and travel more conveniently. During emergencies, residents can share power from electric vehicles. 15

HEMS displays energy consumption so residents can become more aware of their contributions to power conservation, thereby fostering environmentally friendly lifestyles. Dedicated tablets, PCs, smartphones, and other devices show CO2 emissions from residences. This setup uses artificial intelligence for such purposes as advising on energy usage and ranking the effectiveness of energy-saving approaches. HEMS enhances disaster management through its demand response function, which solicits residents help in using less power during emergencies. Residents can control lighting and air conditioning settings while away from home. 16

Conclusion The smart grid in Japan will be realized by the policy; (1) Securing a stable supply of electricity (2) Suppressing electricity rates to the maximum extent possible (3) Expanding choices for consumers and business opportunities Real smart grids are introducing in rather Smart Cities than nation wide such as Kashiwa-no-ha city. 17

Thank you for your attention Yoshito Sakurai Hitachi, Ltd. Japan yoshito.sakurai.hn@hitachi.com 18

Japan s Electricity Market Deregulation June, 2015 Electricity and Gas Market Reform Office Agency for Natural Resources and Energy (ANRE)

Japan s Electricity Market Outline 10 Vertically Integrated Electricity Power Companies (EPCOs) TWO frequencies, 50Hz and 60Hz Frequency in West: 60Hz Frequency in East: 50Hz Okinawa Chugoku [2012] 10.85 GW 5.57 GW 2.4 GW Kyushu [2012] 15.21 GW DC Direct Current, FC Frequency Conversion 16.66 GW Shikoku [2012] 5.26 GW Kansai [2012] 26.82 GW 5.57 GW DC Tie line 1.4GW 5.57 GW Hokuriku [2012] 5.26 GW Chubu [2012] 24.78 GW BTB 0.3GW FC 1.2GW Hokkaido [2012] 5.52 GW Tohoku [2012] 13.72 GW Tokyo [2012] 50.78 GW DC Tie line 0.6GW 12.62GW 1

Japan s Electricity Market Outline (cont.) 2 Market volume (Total): 982.4TWh / 289 GW Market volume (10 big EPCOs): 848.5TWh / 209GW / 18.2 trillion (=$ 151.7bn, 134.8bn) (2013) Retail competition for over 50kW customers (62% of the market in 2013) - Share of non-epcos: 4.2% (2013) - 1.3% of the total retail market sales is transacted at JEPX (2013) Current retail market *JEPX: Japan Electric Power Exchange

History of Electricity Market Reforms in Japan No competition in the electricity market before 1995: 10 vertically integrated EPCOs dominated and controlled the market. METI embarked on a series of reforms... No. Year enforced Overview 1 1995 Opened the IPP (Independent Power Producer) market Allowed specified-scaled and vertically integrated power generators 2 2000 Introduced partial retail competition (over 2,000kW in 2000 [26%], over 500kW in 2004 [40%]) Introduced regulation of third party access to grid lines 3 2005 Expanded retail competition (over 50kW [62%]) Established the wholesale power exchange (JEPX) and its supporting body for transmission in wider areas Improved regulation of third party access to grid lines, and introduced accounting separation of transmission/distribution sector 4 2008 Modified the rule of wheeling rates 3

Problem revealed by 3.11 Negative aspects of regional monopoly system with 10 big and vertically integrated EPCOs were revealed in the Great Earthquake on March 11, 2011: 1. Lack of system to transmit electricity beyond regions 2. Little competition and strong price control 3. Limit in handling the change in energy mix including the increase in renewables 5.57GW Chugoku [2012] 10.85 GW Kyushu [2012] 15.21 GW Frequency in West: 60Hz * DC direct current, FC frequency conversion 16.66GW 2.4GW 5.57GW Kansai [2012] 26.82 GW Shikoku [2012] 5.26 GW DC Tie line 1.4GW Hokuriku [2012] 5.26 GW BTB 5.57GW 0.3GW Chubu [2012] 24.78 GW Frequency in East: 50Hz DC Tie line FC 1.2GW Hokkaido [2012] 5.52 GW Tohoku [2012] 13.72 GW Tokyo [2012] 50.78 GW 0.6GW 12.62GW 4

Expert Committee on Electricity System Reform Agency for Natural Resources and Energy organized the Expert Committee on Electricity System Reform in February 2012. Based on the discussions over 12 meetings, the Committee compiled a final report on February 8, 2013. <Chairman> Motoshige Ito <Deputy Chairman> Junji Annen The Members of the Expert Committee of Electricity System Reform Professor at Graduate school of Economics, The University of Tokyo Professor at Law School Academy, Chuo University <Members> Toshinori Ito Representative Director and analyst at Ito Research and Advisory Co., Ltd. Hiroko Ohta Professor, National Graduate Institute for Policy Studies Junichi Ogasawara Chief Research fellow and Manager at The Institute of Energy Economics, Japan, Electric Power Group Takao Kashiwagi Specially appointed professor at Tokyo Institute of Technology Hiroshi Takahashi Chief researcher at Fujitsu Research Institute of Economics Co., Ltd. Kikuko Tatsumi Regular adviser, Public Corporation, Nippon Association of Consumer Specialists Tatsuo Hatta Special visiting professor, Gakushuin University Toshihiro Matsumura Professor at The Institute of Social Science, The University of Tokyo Akihiko Yokoyama Professor at Graduate School of Frontier Sciences, The University of Tokyo 5

Electricity Market Reform in Japan: Roadmap April 2, 2013, Cabinet decided the Policy on Electricity System Reform to realize three objectives in Japan s market with a three-step approach. 3 Objectives (1) Securing a stable supply of electricity (2) Suppressing electricity rates to the maximum extent possible (3) Expanding choices for consumers and business opportunities (1 st Bill) 2013 (2 nd Bill) 2014 (3 rd Bill) 2015 1 st Step 2015.4.1 2 nd Step 2016 3 rd Step 2020 Apr. 2, 2013 Cabinet Decision 1 st reform 2 nd reform 3 rd reform Cabinet Decision on the Policy on Electricity System Reform Nov. 13, 2013 The 1 st Bill Jun. 11, 2014 The 2 nd Bill Jun. 17, 2015 The 3 rd Bill Establishment of the Organization for Crossregional Coordination of Transmission Operators (OCCTO) Full retail competition ( At around 2015:Transition to new regulatory organizations) Period of transitional arrangement for retail tariff (Review the competition situation by the government) Abolishment of retail tariff (At the same time as or after the unbundling) Legal unbundling of transmission /distribution sector 6

1 st step: Establish the OCCTO The 1 st Bill Established the Organization for Cross-regional Coordination of Transmission Operators (OCCTO) in Apr. 2015 Main functions of OCCTO 1. Aggregate and analyze the EPCO s supply-demand plans and grid plans, and order to change EPCO s plans such as tie lines construction 2. Order EPCOs to reinforce generations and power interchanges under a tight supply-demand situation Kyushu 5.57GW JEPX Generation TDSO Retail Frequency in West: 60Hz 16.66GW 2.4GW OCCTO (Power Exchange) (Coordination of TDSOs ) Chugoku Generation TDSO Retail Generation TDSO Retail 5.57GW Kansai Generation TDSO Retail DC Tie line 1.4GW Shikoku 5.57GW Chubu * DC direct current, FC frequency conversion, TDSO Transmission and Distribution System Operator Hokuriku Generation BTB Generation TDSO Retail TDSO Retail 0.3GW Frequency in East: 50Hz Hokkaido Generation TDSO Retail DC Tie line 0.6GW Tohoku Generation TDSO Retail 12.62GW Tokyo (TEPCO) Generation TDSO Retail FC 1.2GW 7

2 nd step: Full Retail Competition The 2 nd Bill Expand retail competition to the residential sector in 2016, opening a new market Maintain regulated tariffs to 10 big EPCOs until the same time as or after the unbundling Liberalized Sector (50kW~) Market Volume ; 10.1 trillion (=$ 84.2bn, 74.8bn) Share of total power supply : 62% Large factory Large building Building Medium factory Small Factory Regulated Sector (~50kW) Market Volume ; 8.1 trillion (=$ 67.5bn, 60.0bn) Number of contracts Residential Customers : 77.3m Small shops and offices: 7.3m Share of total power supply : 38% Small shop Residential Customer 8

2 nd step: Full Retail Competition Revision of Business License Categories The 2 nd Bill Business License categories under the Electricity Business Act, such as General Electricity Utilities (GEU) and Wholesale Electricity Utilities, will be revised in line with the full retail choice. Current categories New categories (after 2016) GEU (10EPCOs) Supply for customers, including those in regulated sector with obligation to supply, regional monopoly and rate regulation Secure stable frequency and voltage Generation Obtain 3 licenses (not necessary to change corporate organization) Transmission & Distribution Retail PPS (Power Producer and Supplier) Supply for customers in liberalized sector (more than 50kW) Generation Retail Wholesale Electricity Utilities, etc Supply for GEU Generation Notification Permission Registration Regulation based on the level playing field of competition Operate and maintain transmission /distribution lines Regional monopoly and rate regulation Supply for customers Obligation to secure the capacity of power supply Regulation based on the level playing field of competition 9

3 rd step: Unbundle the T/D sector Unbundle the transmission/distribution sectors of big EPCOs by legal unbundling style in 2020 Holding company style Affiliated company style The 3 rd Bill <Note> Big EPCOs will be required to unbundle transmission and distribution companies from generation ones or retail ones, in legal unbundling. Both the holding company style and the affiliated company style, in which a generation and retail company has a transmission and distribution company as a subsidiary company,are allowed. 10

Future Design of Japan s Electricity Market Hydroelectric plant Thermal plant Nuclear power plant Wind farm,etc. Generation companies JEPX Contract with retailer to sell electricity Transmission/ Distribution companies Regional monopoly, tariff regulation Wheeling contract 220-500kV 66-154kV 220-500kV Super high voltage substation 154-220kV Primary substation 220-500kV 154-220kV Substation for distribution 6.6kV 66kV Receive electricity from various power companies 6.6kV Transmission Distribution Retailers Not necessary to have assets 100/200V Meter Meter Meter Meter Meter Retail contract with consumers Large factory Large building Building Medium factory Small factory Shop Household Consumers 11