For Japan, the famous 4Ds of the energy transition - creating a distributed, decarbonised, decentralised and digitised grid - will involve a huge scaling up of smart solutions on a market basis, various sources have told Energy-Storage.news.
A further ‘D’, deregulation, is being implemented in the electricity market, all the way down to the retail space, starting with electrical grids across both the main Japanese island of Honshu and those further afield. Even on Honshu there are two grids for East and West, operating on different frequencies, 60Hz and 50Hz.
“Japan is a country with high [energy] consumption, they have requirements for adding resilience. It’s interesting to me that it appears to have a very fragmented market structure. As much as there is a lot of talk around moving to renewable generation, I think they need and want to accelerate that but then they’ve also got to manage that along with the actual physical infrastructure of their electricity system,” Mark Bailey, chief commercial officer at Connected Energy, said.
The UK-headquartered provider of battery energy storage systems based on second life electric vehicle (EV) batteries was one of the winners of the 2019 edition of the Japan Energy Challenge, a contest sponsored by a mixture of big incumbent players in energy and noted startup companies in the East Asian country.
The sponsors of the Japan Energy Challenge include two of Japan’s 10 main electric power companies, which are also responsible for the transmission and distribution grids in their respective regions, several big players in Japan’s gas supply market and a couple of the many retail electricity market suppliers that will vie for market share as those 10 regional monopoly companies see their transmission, distribution, generation and retail operations unbundled in a process which began in earnest in 2016.
Grid batteries in Japan a realistic prospect for the mid-2020s
As yet, however, while literally dozens of megawatts of batteries are being sold to households to increase their self-consumption of solar as the feed-in tariff regime ends and even more households are turning to batteries to provide backup power in the case of outages, grid-scale batteries are yet to be deployed beyond the pilot scale. Similarly, the hundreds of megawatts and megawatt-hours of household batteries are yet to see any meaningful aggregation into virtual power plants (VPPs). Again, these are at the pilot stage.
“There’s developments in the ancillary services markets, and in capacity - and these are going to be introduced progressively over the next couple of years,” Mark Bailey of Connected Energy said.
“Our commercial [previous] experience of those products and services in western markets, is of clear interest and value to the energy companies that sponsored the Japan Energy Challenge.”
Nima Tabatabai, international market development manager at Kiwi Power, told Energy-Storage.news that he understands Japan’s government and collective business leaders are looking to begin procuring flexibility services including those enabled by grid batteries in the next few years.
“Retail electricity is liberalised in Japan. Now they’re going through the breakup of generation, transmission and distribution, but what’s happening, starting at the end of 2020 through to 2024 is that the flexibility markets are being opened up and that’s the main enabler for batteries and demand response and everything [else],” Tabatabai said.
“Right now, if you live in the Tokyo region, even if you have demand response, if there’s no market to bid into - [regional power company] Tepco is not trying to procure demand response from third party operators.
“They just do it with their own power stations, if they need more supply they ramp it up and down. It’s all internal to the company and the accounting is also internal. The cost of that is not clearly articulated and visible, and once they’re forced to open it up, suddenly there’s a price on it and they can compete in that market but they’ll have to compete with other technologies and things like that.”
Scale required means 'tens, or hundreds of thousands' of aggregated resources
For one company that is already active in Japan’s market, aggregation platform technology provider AutoGrid, Japan’s relatively conservative business culture means that while these changes are momentous, they are also gradual and unexpected twists are rare, which provides a “good signal to the market,” Rahul Kar, general manager for New Energy at AutoGrid, said.
AutoGrid is partnered with Japanese energy supply management company ENERES, which is seeking to integrate the US company’s distributed energy resources management (DERMs) and virtual power plant (VPP) aggregation platforms into new services it will roll out into Japan’s deregulated, post-feed in tariff market.
“ENERES are leveraging our platform, to be able to run DERMs and VPP applications, we are their technology provider in that sense. We are enabling ENERES to combine a variety of different assets at scale,” Rahul Kar said, with those dispatchable assets’ capabilities then to be bid into various energy trading opportunities, both extant and soon-to-be created.
The key to that, for AutoGrid and for Japan’s 4Ds in general, Kar said, will be enabling a scalable and reliable solution, whether that be in the residential or commercial market segments. It also perhaps explains why to some outsiders, the pace of this adaptation process may seem to be moving slower than the various technological advances that will enable them.
“You have to be able to scale, whether you’re working with residential or commercial units. We’re not talking about a thousand units which you can relatively easily optimise. This is where you have to design for tens of thousands or even hundreds of thousands of devices that are sending you signals in near real-time or waiting for you to give them plans to drive. That’s not an easy problem to solve.”
The latest edition of the quarterly journal PV Tech Power, featuring exclusive content from the Energy-Storage.news team, includes three in-depth articles on Japan's energy transition, solar and energy storage. It's available to download now, free from the PV Tech Store (premium subscription options also available).
Stay up to date with the latest news, analysis and opinions. Sign up here to the Energy-Storage.news Newsletter.