Japan’s recently deregulated gas and power market is creating waves of opportunity for innovative companies, with distributed energy at its core. Power market deregulation, global energy innovation trends and a changing Japanese consumer make it ripe for innovation.
As covered in Decentralized Energy website recently the full deregulation of the energy market has prompted forward-thinking
Japanese utilities to assess how they might innovate and keep or even acquire customers.
The race is on – but how are companies looking at it? And what do we see as the
hot topics for Japan, given its relatively unique position in the distributed
At Delta-ee, our-on-the ground research and Japanese network has found:
Monetising the opportunity “after FIT” – a phrase you hear in many Japanese companies: the withdrawal of incentive support for solar PV installations will be complete in 2019 for residential customer. There is much debate on how utilities and other companies can bring to market attractive propositions for existing and potential PV owners, that also generate revenue and customer loyalty – and help customers with a replacement revenue stream. Looking to Europe, models such as SonnenFlat, or EDP Re:dy, where PV, battery, energy supply and controls are bundled together are on particular interest. With the openness to technology, perhaps the 250,000 Japanese consumers already with PV will adopt these models quickly, as battery prices come down, even if you consider Japan’s interest in fuel cell technology and flat gas prices.
One step on from this, the debate moves to Virtual Power Plants (VPP), where the legacy of distributed energy resources and increasing numbers of PV, cogeneration and battery installations, offers the potential for decentralised demand to be aggregated, traded and managed flexibly. Japan’s markets for electricity flexibility will open fully in 2020. The potential is significant, not least as an island nation, relying on LNG, more effective and flexible use of energy has political and practical drivers.
A related, nearer
term innovation, the concept of ‘Negawatts’,
where consumers are paid to use less energy, has held traction in Japan for
some time. Both negawatt trading and aggregation has been in place for since
the early 2010s and could be combined with existing, or new, distributed
renewable energy and storage assets to provide another value stream for
customers. Given the acceptance of this concept in Japan, it could present companies
with a great opportunity to differentiate.
We already see innovations coming to market with https://looop.co.jp/ a new supplier trialling
time of use energy tariffs with a bundled PV installation, offering further the
opportunity to sell power virtually from
parent to child. This very specific motivation for peer-to-peer trading is a
great example of how new energy business can tap into local consumer preferences.
Given the natural alignment of peer to peer trading with peer- to peer-
technology, TepCo, Tokyo’s main incumbent supplier recently invested in UK blockchain
start up, Electron, to understand the implications on their model.
These key hot topics are not going away in Japan and as the impact of deregulation rolls out, the global explosion of decentralised, ‘new energy’ business models continues, plus the sheer power of Japanese incumbents, Delta-ee sees Japan as a market to watch with interest.