Demand Response-Big In Japan

Japan’s utilities have turned their attention to demand response programs as they struggle with generation limits post Fukushima.
Published: Wed 29 Jan 2014

Japan is in the middle of a major power crisis ever since the government was forced to shut down its nuclear power plants as a result of the nuclear disaster.

To compensate for this major loss in generation, the country is importing large quantities of natural gas, pushing for new wind and solar power generation, as well as energy storage solutions and building load controls. Microgrids and “smart city” technologies are being developed and demand response is being recognised as a key problem-solver for the current capacity shortages in both the medium and long terms. The rollout for smart meters will be accelerated to cover 80% of demand by FY2016.

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Pilots and investment on the increase

Big names, such as Schneider, EnerNOC and Comverge, have already flocked to Japan to take advantage of this opportunity. The OpenADR Alliance is also making inroads. Last year, the partnerships laid the groundwork but pilots will begin in the first quarter of 2014. Many of the pilots are being funded by Japan’s New Energy Promotion Council. If the pilots are successful in 2014, they will be scaled up at a rapid rate. Large utilities, such as Tokyo Electric Power Company, will start with large commercial and industrial customers and opportunities will follow in the small commercial and residential sectors.

Japan’s Ministry of Economy, Trade and Industry (METI) has also launched an incentive-based demand response demonstration project to measure its potential in managing demand and providing balancing services. The utilities will conclude contracts with businesses and other demand response aggregators, who will receive compensation for demand-based events.

Kamil Bojanczyk, lead author of the GTM Research report [The Smart Grid in Asia, 2012-2016: Markets, Technologies and Strategies], points out that from a cultural point of view, the Japanese have always been energy conservationists. Based on this, it will probably be easy to convince them to participate in load reduction programs.

Demand Response Experiments in Smart Grid Projects

One of the main focuses of current smart grid projects in Japan is to investigate the potential for demand response of residential customers through dynamic pricing. This is according to Toru Hattori , Senior Research Economist, Central Research Institute of the Electric Power Industry, Japan, in his presentation, Demand Response Experiments in Smart Grid Projects in Japan, at European Utility Week 2013. He explains that the visualisation of data consumption and offering time of use or a dynamic pricing menu to enable demand response, is one of the keys to the business case of smart metering.

Two million smart meters have already been installed by two major utilities in Japan. Four major smart community projects are being sponsored by the government today: Kyoto, Yokohama, Toyota and Kitakyushu.

The impact of dynamic pricing (critical peak pricing) is tested throughout these grids. In some projects , the monitors are given tablet terminals to receive notification of critical peak . This gives them the opportunity to see their “point balance” or type of “virtual money.” Monitors are given 7,000 points and are then consumed according to their peak hour demand. Monitors are then paid based on the point balance (remaining balance) at one point after the experiment period. Keihanna Eco-City Project is involved in this system. Keihanna’s project suggests that 3.6% of peak load reduction is due to the visualisation of consumption data.

Mr Hattori points out that there are still demand response challenges which must be overcome:

  • Overcoming psychological barriers of customers-critical peak notifications can be stressful for customers. Customers may respond better to a rebate system instead of a pricing system. Also, a game-like programme may attract more positive attention.

  • Technological breakthrough-cost reduction is necessary for the energy management system,and automated demand response technology must be developed to reduce the customer’s burden for demand response.

  • Strategies must be developed to create funding for demand response projects-the collaboration with other businesses may be necessary.

Japan’s demand response program is still in its foundation phase. Since the country already has one of the most advanced electrical grids in the world, it will probably take the same approach towards demand response solutions and technology. The industry can expect a great deal of automation and advanced technologies in order to make demand response a resounding success.