Japanese Energy Market - Optimum Use of
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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 Energy
Ministry of Economy, Trade and Industry, Japan
22 April 2021
Power generation and supply
80% Thermal power, 8% Hydro, 8% RE and 3% Nuc.
(TWh)
1,200
12000
新エネ等
1150
Renewables (excl. hydro)
Oil
石油等 1056
LNG
ＬＮＧ 8.1%
10000
1,000
940
Hydro
水力
8.7%
Coal
石炭
8000
800 Nuclear
原子力
738
39.8%
600
6000
485
4000
400 7.9%
294
2000
200 32.3%
100
0 3.1%
1952 55 60 65 70 1975 1980 1985 1990 1995 2000 2005 2010 2015 2017
(FY)
Source: Energy White Paper 2019 in Japan Based on “Outline of electric power development (METI)” and “Outline
of power supply plan (METI)” 2
Based on “Comprehensive energy statistics (METI)”
Power Grid
10 TSOs/DSOs manage grid stabilization.
Two frequency areas exist
Frequency: 50Hz
*The figures below indicates the maximum electricity
demand in 2016. Hokkaido
Frequency: 60Hz 5GW
0.6GW
0.6GW→0.9G
Hokuriku Tohoku W by2019
5.6GW 5GW 14GW
16.7GW
Chugoku Kansai 0.3GW 12.6GW
（Installed capacity）
10GW 25GW 5.6GW
5.6GW Chubu Tokyo （Total Capability）
2.4GW 1.4GW
24GW 50GW 5.7GW→10.28GW
Kyushu Shikoku by2027
Frequency
Okinawa 15GW 5GW Converter
2GW 1.2GW→2.1GW 1.2GW
by2020
2.1GW→3.0GW
by2027 3
Mission/ Background
Japan’s Responsibility for Energy Transition
Energy trilemma
Energy security
3”Es” + Safety
Environment (Sustainability)
Economic affordability (Cost)
Measures;
Energy Efficiency
Renewable energy
Nuclear energy
CCS + Fossil fuels
Hydrogen
4
More Renewable requires 3 key actions
1. Lower Cost, 2. Strengthen Grid, 3. Flexibility system
Capacity Renewable
(GW) generation ratio
120 18%
Solar PV
Wind 16.0%
Geothermal
14.6%
100 Biomass 14.3% 15%
Hydro
Renewable generation ratio (right axis)
12.5%
80 12%
10.9%
10.4%
10.0%
60 9%
40 6%
20 3%
0 0%
2011 2012 2013 2014 2015 2016 2017 (FY)
5
Energy system reform
Past Current and Future
Non-interactive supply system Interactive supply system based on
based on bulk electricity resources both BERs and DERs
(BER) and large-scale transmission ＜Electricity＞
＜Electricity＞ Interactive supply by DERs, using IoT
One-way supply by thermal power technology
generation, varied with demand ＜Heat＞
＜Heat＞ Flex. and sharing energy consumption
Not consumed enough ＜Players＞
＜Players＞ Liberalization encouraging various
Vertically integrated companies companies to enter the market
Generator Generator
Transmit/ Transmit/
Distribute Distribute
Retail Retail
Consumer Consumer
6
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.
Household Solar PV (Post FIT) LiB market (Behind the Meter BS)
Cumulative Capacity 1.7 Cumulative No.
8 GW 1.3 1.6 Million （MWh）
900 3,500
7 GW 1.4 Million
800 1st half(Left) 3,000
1.0
6 GW 1.2 Million 700 2nd half(Left)
Cumulative capacity(Right) 2,500
5 GW 1 Million 600
0.7
500 2,000
4 GW 0.5 0.8 Million
400 1,500
3 GW 0.6 Million
300
1,000
2 GW 0.4 Million 200
500
1 GW 0.2 Million 100
0 0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
7
EV × V2X
Combination of EV and V2X enhances their values. 1.Emergency
power sources, 2.Smart charging, 3.Solar prosumer, 4.Reducing
demand, 5.Grid stabilization. Key element is EV Aggregation business.
1. Emergency power 2. Smart charging with
sources for blackout price signal (Dynamic Prc.)
Local governments V2B
80 EVs/PHEVs
V2B
in Kansai
Offices／Bus Com.
／Transport Com.
5. Flexibility resources
for grid stabilization 3. Solar PV
Prosumers
TSO
Repurposing
Batteries. V2G Residents
V2H
4. Reducing
6 EVs/PHEVs in V2G site
peak demand
8
Recent transaction prices in Kyushu area
Renewables are installing rapidly in Kyushu, traded
by lowest prices. Need to use lower electricity.
System price and area price in Kyushu, as of 24 Feb. 2019
12.0
［円/kWh]
10.0
システムプライス
System price 九州エリアプライス
Kyushu area price
8.0
6.0
4.0
2.0 11:00～15:00
0.01JPY/kWh
0.0
0:00~0:30
1:00~1:30
2:00~2:30
3:00~3:30
4:00~4:30
5:00~5:30
6:00~6:30
7:00~7:30
8:00~8:30
9:00~9:30
23:00~23:30
10:00~10:30
11:00~11:30
12:00~12:30
13:00~13:30
14:00~14:30
15:00~15:30
16:00~16:30
17:00~17:30
18:00~18:30
19:00~19:30
20:00~20:30
21:00~21:30
22:00~22:30
Source: JEPX
9
DR providing reserve power in severe peak time
1.8 GW Demand-side Response (DR) was awarded in TSO’s
auction 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 peak
period in January 2021. Energy Market welcomes more active
participants of DR. Challenges are how to encourage large-scale
loads in industry sector to DR businesses.
4GW DR won auction in Capacity Market, which will deliver in 2024.
Total DR Capacity in TSO’s auction DR dispatched in Jan. 2021
200 （MW）
2,000 1,800
175.9
1,500
150 1,300
128.9
960
95.8 960
96.1 890
1,000
100 89.3
500
50
0
2017年度 2018年度 2019年度 2020年度 2021年度
Source: EGC Source: Energy Pool Japan 10Aggregation Communication Structure
- protocol and cyber security -
①Transmission System Operator (Demand Response Application Server) ②Retailer
R1
OpenADR
Aggregator
Aggregation
Coordinator
R2
R3
Resource
Aggregator
Output controlOutput control Proprietary standard
Output control R4
(one way) (two way)
R4 R4 R4
GW GW GW GW BEMS HEMS GW
controller
R5 controller
ECHONET Lite
BACnet,FL-net等
Proprietary standardR5 R5 R5 R5 R5 R5 R5
1112
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
Current Near
future
TSO TSO Elec. Retailers (FIP) Micro-grid
CHP Large Loads BS(FTM Fuel PV Wind Grid Scale CHP BS
EVs
in industries or BTM) Cells Batteries
12VPP national demonstration project (2016-20)
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)
Aggregation Coordinators
Resource Aggregators
13VPP 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.
Flattening duration curves
Reduction of peak generating Reduce investment in peak
time (kWh value) capacity (kW value)
電力供給設備量
（イメージ）
×
50GW 50GW
3.8GW
ｌｌ
Peak generation 7.5%
of
Peak
demand
Middle generation Middle generation
GW
GW
Base-load
Base-load generation
generation
0 Top 88 hours Hour 8,760h 0 Top 88 hours Hour 8,760h
||
1％ of
annual hours Source: METI 14VPP helping PV to generate power in
low-demand period
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
12 [GW]
10 Pumped storage Pumped storage
generation generation
Demand Pumping
8
Thermal
6
Solar PV output: 5.65 GW
(73% of demand)
4
2
Nuclear, Hydro
and Geothermal
0
00:00 06:00 12:00 18:00 24:00
15VPP provides new reserve power sources
Aggregators provide reserve power by controlling
multiple distributed energy resources.
VPP shifts electric power to necessary time for grid
stabilization.
Power Controlled by Aggregators Baseline
(kW)
Dispatch Command
Demand
Resources: Thermal power, Industrial Battery,
Household Battery, A/C
Source : KEPCO
16Market 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~
TSO’s auctions for reserve power
Main auction Additional
Capacity Delivering
in C.M. for auction in
Market (C.M.)
2024 C.M. for 2024 in C.M.
R.R.-FIT
Balancing in B.M.
Market (B.M.) R.R. in B.M.
F.F.R. and
F.C.R. in B.M.
FIP scheme In force
License of
Aggregators, In force
DNOs 17（Ref.）Product specification in balancing market
Market specification decides who can enter the balancing markets.
Major requirements in balancing market, as of now
Frequency Synchronized
Frequency Ref.
Containme Frequency Replacement Replacement Ref.
Restoration Auction :
nt Containment Reserves Reserves for Capacity
Reserves Severe peak
Reserves Reserves (S- (RR) FIT (RR-FIT) Mechanism
(FRR) reserve
(FCR) FCR)
Open of 2017-
2024 2024 2024 2022 2021 2024
Markets 2023
Response Within Within 5 Within 5
15 Min. 45 Min. 3 hours 3 hours
time 10 Sec. Min. Min.
Duration 5 Min. 30 Min. or 30 Min. or
3 hours 3 hours 3 hours 3 hours
time or more more more
5MW
Minimum
(1 MW 5MW 5MW 5MW 1MW 1MW 1MW
Capacity
Of-line)
18(Rf.) Transaction schedule
Days after
4 YR before 1 YR before 1 mo. before 1 wk. before A day ahead Intraday
intraday
0am 10am 12pm 2pm 5pm 0am Gate Close
Capacity Market (1 hr before delivery)
Additional
Auction
auction
Wholesale Market
Day-ahead
Day-ahead market spot market
Intraday market Day-ahead Bid closed at GC
spot market
Balancing Market
kWh price Changeable till GC
Flexibility kWh bid Bid is closed at 2pm previous day,
Response：within 45min and price must be agreed by 3pm.
RR-FIT
Duration ：3hrs kWh bid
Response：within 15min ΔkW bid ･Ancillary
RR services
Duration ：3hrs kWh bid
Price
Response ：within 5min ΔkW bid
FRR
Duration ：30min kWh bid Bid is closed at 2pm on Wednesday
previous week, and price must be ･Imbalance
Response：within 5min ΔkW bid
agreed by 3pm. Price
S-FRR
Duration ：30min kWh bid
Response：within 10sec ΔkW bid
FCR
Duration ：5min kWh bid
19Natural disasters require more resilient energy system
Typoon No.15 hit Tokyo area in Sep. 2019
Collapsed transmission tower
Destroyed utility poles and fallen trees Damaged floating solar power plant 20DERs making energy system more resilient
• DERs (CHP, FCV/PHEV, Battery Storage), provided electricity to the
locals in Chiba Prefecture, when power outage happened.
Power outage in Mutsuzawa FCV/PHV supplies electricity
Wellness Smart Town to homes
(Distributed Energy System)
給電活動の様子
21Local micro-grid system
Local micro-grid system can contribute to reducing cost to run
private power distribution lines and improving power sector
resilience to natural disasters.
2 local micro-grid projects has been developed in Odawara and
Miyako in Okinawa. 25 feasibility studies was conducted as of now.
Local micro-grid system Local micro-grid projects
Disconnected from power grid
when power outage occurs, and 1. Local micro-grid project in Miyako
the micro-grid system continue to • Membership: NEXTEMS, Okinawa EPCO.,
supply power. Miyako-city
Flexibility Solar PV • Location: Miyako island, Okinawa
Biomass power • Resources: Residential PV, Industry-
energy system
scale BS
2. Local micro-grid project in Odawara
Storage
Battery CHP • Membership: Kyocera, TEPCO,
Odawara-city
• Location: Odawara-city, Kanagawa
• Resources: Solar PV, EVs, Large-scale
loads
Load in local area
22Conclusions
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.
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