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Japanese Energy Market - Optimum Use of
Distributed Energy Resources for Demand-side Response -
Yasuhiro SAKUMA
Deputy Director, Advanced Energy Systems and Structure Division
Agency for Natural Resources and EnergyMinistry of Economy, Trade and Industry, Japan
22 April 2021
0
2000
4000
6000
8000
10000
12000
55606570 1975 1980 1985 1990 1995 2000 2005 2010 2015 2017
新エネ等
石油等
LNG
水力
石炭
原子力
(TWh)
(FY)
3.1%
8.7%
39.8%
32.3%
7.9%
8.1%
1952
100
294
485
738
940
1056
1150Renewables (excl. hydro)
Oil
LNG
Hydro
Coal
Nuclear
Source: Energy White Paper 2019 in Japan
Power generation and supply
1,200
1,000
800
600
400
200
Based on “Outline of electric power development (METI)” and “Outline of power supply plan (METI)” Based on “Comprehensive energy statistics (METI)”2
80% Thermal power, 8% Hydro, 8% RE and 3% Nuc.
Hokkaido5GW
Tohoku14GW
Kansai25GW
Hokuriku 5GW
Kyushu15GW
Chugoku10GW
Shikoku5GW
5.6GW
Chubu 24GW
Tokyo50GW
Frequency: 60Hz
Frequency: 50Hz
16.7GW
5.6GW
5.6GW
2.4GW 1.4GW
12.6GW(Installed capacity)
0.6GW
5.6GW
0.3GW
Frequency Converter
1.2GWOkinawa
2GW
*The figures below indicates the maximum electricity demand in 2016.
3
0.6GW→0.9GW by2019
(Total Capability)5.7GW→10.28GWby2027
1.2GW→2.1GWby2020
2.1GW→3.0GWby2027
Power Grid
10 TSOs/DSOs manage grid stabilization.
Two frequency areas exist
Japan’s Responsibility for Energy Transition
4
Mission/ Background
Measures;
3”Es” + Safety
Energy trilemma
Energy security
Environment (Sustainability)
Economic affordability (Cost)
Energy Efficiency
Renewable energy
Nuclear energy
CCS + Fossil fuels
Hydrogen
5
1. Lower Cost, 2. Strengthen Grid, 3. Flexibility system
(FY)
(GW)
10.4%10.0%
10.9%
12.5%
14.3%14.6%
16.0%
0%
3%
6%
9%
12%
15%
18%
0
20
40
60
80
100
120
2011 2012 2013 2014 2015 2016 2017
Solar PV
Wind
Geothermal
Biomass
Hydro
Renewable generation ratio (right axis)
Capacity Renewablegeneration ratio
More Renewable requires 3 key actions
Interactive supply system based on both BERs and DERs
<Electricity>Interactive supply by DERs, using IoTtechnology
<Heat>Flex. and sharing energy consumption
<Players>Liberalization encouraging various companies to enter the market
Energy system reform
Non-interactive supply systembased on bulk electricity resources (BER) and large-scale transmission
<Electricity>One-way supply by thermal power generation, varied with demand
<Heat>Not consumed enough
<Players>Vertically integrated companies
Past Current and Future
6
Consumer
Generator
Retail
Generator
Retail
Consumer
Transmit/Distribute
Transmit/Distribute
0
500
1,000
1,500
2,000
2,500
3,000
3,500
0
100
200
300
400
500
600
700
800
900
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
1st half(Left)
2nd half(Left)
Cumulative capacity(Right)
7
Steady growth of DER’s market in Japan
Existence of post FIT solar PV in 2019 happened. 2GW solar PV in household graduated from FIT in 2019. Residential PV in Post-FIT will reach 7GW in 2023.
Lithium-Ion battery storage in behind the meter marked market record of annual additions, 800MWh in 2019. Cumulative battery storage-BTM reached 3GWh at the end of 2020.
LiB market (Behind the Meter BS)
(MWh)
0.5
0.7
1.0
1.3
1 Million
0.4 Million
0.2 Million
0.6 Million
0.8 Million
1.2 Million
1.4 Million
1.6 Million
Cumulative No.
1 GW
2 GW
3 GW
4 GW
5 GW
6 GW
7 GW
8 GW
Cumulative Capacity 1.7
Household Solar PV (Post FIT)
EV × V2X
Local governments
Residents
TSO
V2H
Repurposing Batteries. V2G
Offices/Bus Com./Transport Com.
V2B
3. Solar PV Prosumers
5. Flexibility resources for grid stabilization
1. Emergency power sources for blackout
V2B
6 EVs/PHEVs in V2G site
80 EVs/PHEVs in Kansai
4. Reducing peak demand
2. Smart charging with price signal (Dynamic Prc.)
Combination of EV and V2X enhances their values. 1.Emergencypower sources, 2.Smart charging, 3.Solar prosumer, 4.Reducingdemand, 5.Grid stabilization. Key element is EV Aggregation business.
8
0.0
2.0
4.0
6.0
8.0
10.0
12.0
0:0
0~
0:3
0
1:0
0~
1:3
0
2:0
0~
2:3
0
3:0
0~
3:3
0
4:0
0~
4:3
0
5:0
0~
5:3
0
6:0
0~
6:3
0
7:0
0~
7:3
0
8:0
0~
8:3
0
9:0
0~
9:3
0
10:0
0~
10:3
0
11:0
0~
11:3
0
12:0
0~
12:3
0
13:0
0~
13:3
0
14:0
0~
14:3
0
15:0
0~
15:3
0
16:0
0~
16:3
0
17:0
0~
17:3
0
18:0
0~
18:3
0
19:0
0~
19:3
0
20:0
0~
20:3
0
21:0
0~
21:3
0
22:0
0~
22:3
0
23:0
0~
23:3
0
システムプライス 九州エリアプライス
9
Recent transaction prices in Kyushu area
Renewables are installing rapidly in Kyushu, traded by lowest prices. Need to use lower electricity.
Source: JEPX
11:00~15:000.01JPY/kWh
[円/kWh]
System price Kyushu area price
System price and area price in Kyushu, as of 24 Feb. 2019
DR providing reserve power in severe peak time
Source: Energy Pool Japan
DR dispatched in Jan. 2021
1.8 GW Demand-side Response (DR) was awarded in TSO’sauction of reserve power.
Major resources: Large-scale loads of factories in industry sector.Requirement: 3 hours duration, 3 hour response, 12 times/year.
DR (Load curtailment) provided huge contributions in severe peakperiod in January 2021. Energy Market welcomes more activeparticipants of DR. Challenges are how to encourage large-scaleloads in industry sector to DR businesses.
4GW DR won auction in Capacity Market, which will deliver in 2024.
Source: EGC
Total DR Capacity in TSO’s auction
10
95.8 96.1 89.3
128.9
175.9
0
50
100
150
200
2017年度 2018年度 2019年度 2020年度 2021年度
960 960 890
1,300
1,800(MW)
500
1,000
1,500
2,000
Aggregation Communication Structure- protocol and cyber security -①Transmission System Operator (Demand Response Application Server) ②Retailer
Resource Aggregator
HEMS
BACnet,FL-net等
Proprietary standard
OpenADR
Proprietary standard
GW
Output control (one way)
Output control(two way)
controllerECHONET Lite
Output control
GW
Aggregation Coordinator
GW GW GW BEMS
R3
R2
R5
R4
R1
R4
R4R4
R5R5R5R5R5R5
R5
Aggregator
controller
11
TSO TSO
12
12
Third Party Aggregators enhancing DERs values
Current business model in Japan
– Major resources: Large-scale loads in industry sectors
– Major business area: Demand response in sever peak time
New business models in Japan
– New resources: Small-scale DERs (EVs, Battery Storages, Fuel Cells in Households), Solar PV, Wind, Grid-scale Battery Storages. DERs need to be cost down and market entrance.
– New business area: Balancing Market, Capacity Market, JEPX(FIP Scheme for REs), and Local Residents in Micro-Grid
Large Loads in industries
Elec. Retailers (FIP)
CHP Fuel Cells
PV Wind Grid Scale Batteries
EVs BS(FTM or BTM)
Near future
Current
Micro-grid
CHP BS
VPP national demonstration project (2016-20)
Aggregation Coordinators
Resource Aggregators
13
About 100 participants joined.
Major Resources: BTM Battery, CHP, EV, HP. Total Capacity: 60MW
Outcomes: Demand response for Replacement Reserves for FIT, Demand shift by dynamic pricing, EV aggregation (V2H or V2G)
VPP flattening demand load
VPP can reduce use during peak generation (kWh) (which is costly) and reduce the need for investment in peak operating capacity (kW) by reshaping the demand load flat.
3.8GW
Source: METI
ll7.5%
ofPeak
demand
電力供給設備量(イメージ)
×
0 8,760hHour
GW
Top 88 hours
50GW
Reduction of peak generating time (kWh value)
Reduce investment in peak capacity (kW value)
||1% of annual hours
0 8,760hHour
GW
Top 88 hours
Peak generation
Middle generation
Base-load generation
50GW
Flattening duration curves
14
Base-load generation
Middle generation
Solar PV output produced 73% of demand in Kyushu. VPP can help solar PV to generate electricity by shifting
demand to necessary times, similarly pumped hydro storage
Demand Pumping
Solar PV output: 5.65 GW (73% of demand)
Pumped storagegeneration
Thermal
Nuclear, Hydro and Geothermal
Pumped storagegeneration
00:00 06:00 12:00 18:00 24:00
12
10
8
6
4
2
0
[GW]
15
VPP helping PV to generate power in low-demand period
Aggregators provide reserve power by controllingmultiple distributed energy resources.
VPP shifts electric power to necessary time for gridstabilization.
VPP provides new reserve power sources
16Source : KEPCO
Baseline
Demand
Dispatch Command
Resources: Thermal power, Industrial Battery, Household Battery, A/C
(kW)
Power Controlled by Aggregators
17
Market Reform Schedule
Energy market reform has been progressed. Replacement Reserves for FIT in Balancing market has opened in April 2021.
FIP scheme, new business license of Aggregators or Distributed Network Operators and new imbalance price based on JEPX price will be in force in April 2022.
FIP scheme requires aggregators to support VREs to enter JEPX.
2020FY 2021FY 2022FY 2023FY 2024FY 2025FY~
CapacityMarket (C.M.)
BalancingMarket (B.M.)
FIP scheme
License of Aggregators,
DNOs
Main auction in C.M. for
2024
Additional auction in
C.M. for 2024
Delivering in C.M.
R.R.-FIT in B.M.
R.R. in B.M.F.F.R. and
F.C.R. in B.M.
TSO’s auctions for reserve power
In force
In force
18
(Ref.)Product specification in balancing market
Frequency Containme
ntReserves
(FCR)
Synchronized Frequency
ContainmentReserves (S-
FCR)
Frequency Restoration
Reserves(FRR)
Replacement Reserves
(RR)
Replacement Reserves for FIT (RR-FIT)
Ref.Auction :
Severe peak reserve
Ref.Capacity
Mechanism
Open of Markets
2024 2024 2024 2022 20212017-2023
2024
Responsetime
Within 10 Sec.
Within 5Min.
Within 5 Min.
15 Min. 45 Min. 3 hours 3 hours
Durationtime
5 Min.or more
30 Min. or more
30 Min. or more
3 hours 3 hours 3 hours 3 hours
Minimum Capacity
5MW(1 MW Of-line)
5MW 5MW 5MW 1MW 1MW 1MW
Market specification decides who can enter the balancing markets.
Major requirements in balancing market, as of now
19
(Rf.) Transaction schedule
Balancing Market
Capacity Market
AuctionAdditional auction
4 YR before 1 YR before 1 mo. before 1 wk. before A day ahead Intraday Days after intraday
RR-FIT
RR
FRR
S-FRR
FCR
Flexibility
Wholesale MarketDay-ahead market
Intraday market Bid closed at GC
Response:within 15minDuration :3hrs
Response :within 5minDuration :30min
・Ancillary services
Price
・Imbalance Price
Day-ahead spot market
Response:within 5minDuration :30min
Response:within 10secDuration :5min
kWh bid
kWh bid
ΔkW bidkWh bid
Bid is closed at 2pm previous day, and price must be agreed by 3pm.
Bid is closed at 2pm on Wednesday previous week, and price must be agreed by 3pm.
10am 12pm 2pm 5pm Gate Close(1 hr before delivery)
Day-ahead spot market
0am0am
Response:within 45minDuration :3hrs
ΔkW bidkWh bid
ΔkW bidkWh bid
ΔkW bidkWh bid
kWh price Changeable till GC
Natural disasters require more resilient energy system
Damaged floating solar power plant
Collapsed transmission tower
Destroyed utility poles and fallen trees
Typoon No.15 hit Tokyo area in Sep. 2019
20
DERs making energy system more resilient
• DERs (CHP, FCV/PHEV, Battery Storage), provided electricity to the locals in Chiba Prefecture, when power outage happened.
21
給電活動の様子
Power outage in MutsuzawaWellness Smart Town
(Distributed Energy System)
FCV/PHV supplies electricityto homes
Local micro-grid system
Local micro-grid system can contribute to reducing cost to runprivate power distribution lines and improving power sectorresilience to natural disasters.
2 local micro-grid projects has been developed in Odawara andMiyako in Okinawa. 25 feasibility studies was conducted as of now.
Flexibility power system
Storage Battery
Disconnected from power grid when power outage occurs, and the micro-grid system continue to supply power.
Biomass energy
Solar PV
CHP
Load in local area
1. Local micro-grid project in Miyako• Membership: NEXTEMS, Okinawa EPCO.,
Miyako-city • Location: Miyako island, Okinawa• Resources: Residential PV, Industry-
scale BS
2. Local micro-grid project in Odawara• Membership: Kyocera, TEPCO,
Odawara-city• Location: Odawara-city, Kanagawa• Resources: Solar PV, EVs, Large-scale
loads
Local micro-grid projectsLocal micro-grid system
22
23
Conclusions
DER market development;
Residential PV in Post-FIT accounts for 2GW in 2019, and will reach 7GW in 2023.
Lithium-Ion battery storage in BTM reached 3GWh at the end of 2020.
Demand-side Response (DR);
Reducing loads by DR for severe peak time accounts for 1.8 GW in 2021.
4GW DR won the auction in Capacity Market, which will deliver in 2024.
Reshaping load curves based on JEPX prices make use of electricity from renewables. Smart charging system of EV has possibilities to improve energy system.
DR has started to enter RR-FIT in April 2021.
Micgro-grid systems can use renewables as much as possible, reduce cost to construct and run private power distribution lines, and improve power sector resilience to natural disasters.