sustainability in Japan

Aggregation business in Japan

Nowadays it is extremely important to use energy smartly and efficiently. Renewables, cogeneration systems are great solutions for this task. Adjusting demand and response to real situation, covering gaps by private electricity sources, solar panels, cogeneration systems, batteries help to build intelligent and up-to-date energy system. Using private sources of energy is effective way to react on demand response imbalance and is a great help for cities.

Aggregation business plays one of the main role in electricity deregulation and was implemented in Japan in 2000 for extra high voltage facilities, and 2016 for low voltage and households.
Aggregators are operators, who integrate all those resources into one system, and provide this service to transmitters, retailers and consumers with a help of Virtual Power Plant (VPP), that accumulate energy resources with the help of Internet of Things (IoT).

According to the Japan Ministry of Economy, in 2020 mostly used private consumers energy resources  were BEMS (building energy management system), HEMS (home energy management system), and cogeneration and solar plants in less extend. Electric vehicles (EV)/ Plug-in-Hybrid (PHV) and plants energy management systems are less used, but it is expected significant surge in EV percentage by 2030. As well as HEMS will be on of the main private consumers energy resources too.

Ending of FIT (Feed-In-Tatiff) system, and changing it to FIP (Feed-in-Premium) in April 2022 will have a positive impact on aggregation business, as there would be more chances for new business models and integration to the market, since purchasing obligation and imbalance rule will be removed. Renewables generators will sell electricity via market and negotiated transactions, as well as adjust electricity generation plan with real demand and response with the help of aggregator.   

Types of aggregation services could be grouped as the next:

For transmitters: to supply demand response adjusting power via market and contribute to energy grid stabilizing
For retailers: to supply electric energy, negawatts by market or negotiated transactions and contribute into adjusting demand and response
Usual consumers: reducing electricity costs by energy saving and energy management
Renewables generators: while energy curtailments, to generate demand by using batteries, so as to avoid energy curtailments for renewables.

Japan Ministry of Economy, Trade and Industry (METI) implemented in 2016 experimental VPP (Virtual Power Plants) Construction project and Advanced Demand Response Control System Experimental Project . The aim of these projects is to investigate, develop, test and connect  VPP aggregator for all participants to spread Demand and Response adjusting system, as well as utilizing advanced energy management technology to control grid resources and build and implement new aggregation business model.  

Currently, these systems evolved into VPP aggregation projects for which Japanese government proposes support and subsidies. Universities, power plants, operators, transmitters and other stakeholders formed more than 10 consortiums with more than 94 participants, among which there are famous Waseda University, TEPCO, KEPCO, Kyushu Electric Power,  ENERES (energy-distribution services for power retailers and corporate power consumers), SB Energy (renewables), Azbil (building solution, industrial automation) and such foreign-affiliated companies  Hanwha Q CELLS Japan (Korea).

In October 2021 NEC joined consortium, which consists from 17 companies and leaded by Next Kraftwerke Toshiba Corporation. This aggregation project aim is to combine distributed Energy Resources such as  solar, wind electric power and test equipment for demand response adjusting and resource controlling. NEC will set up by December 2021 1.7MWh large-scale power storage system and test it for demand response adjusting. Cooperated with TOKYU LAND CORPORATION, NEC will connect with outside electric power facilities and test the system for effective avoidance of supply-demand imbalances. As well as NEC will use its own solar power facilities ad test market transaction technology. All these systems will be collected and tested under NEC Energy Resource Aggregation Cloud Service.

2022 is important year for Japan for aggregator business that will show how effectively this system works and how well it would be integrated into new FIP system. In the next articles we will discuss early results and Japan experience.

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