Japan's Power Market News 2023/W25

Japan Starts Discussions on Electricity Tariff-Based Demand Response?

The potential of #electric tariff-based demand response (DR) was discussed at the METI and ANRE’s experts' meeting of the "Study Group on Next-Generation Distributed Power Systems" on 14th June. DR tariffs involve increasing #electricity prices during peak hours and had thus far been promoted through negawatt trading in Japan. The meeting group plans to investigate the effectiveness of market-linked pricing menus and time-of-use tariffs (creating high-priced electricity menus during peak periods) in managing fluctuations in #energy demand.

The discussion comes after the promotion of DR was included in the "Action Plan for the Expansion of Renewable Energy Introduction", compiled in April. The goal was set to increase the scale of DR from the current approximately 2.3 million kilowatts?by an additional?500,000 kilowatts annually.

The meeting also discussed utilizing low-voltage resources such as #battery storage systems and EVs, calculating imbalances, and counting the numerous resources as a single resource through "group management”, to increase the number of participating resources in the DR market. One focus area going forward will be the use of next-generation smart meters as they can separate measurements of electricity consumption for each EV charger and power conditioning system (PCS). The availability of real-time data in to this level of granularity will in turn facilitate the creation of additional propositions, such as retail #tariff menus specifically for EV charging.?

Overall, this is an interesting but important discussion for METI to pursue, and one that mirrors schemes observed in other countries, such as the United Kingdom's "Time-of-Use" (ToU) tariffs. These incentivize consumers to use energy during off-peak hours and in return, they receive discounts to their bills, enabled by pre-installed smart meters.

It will also be interesting to see how discussions on these tariffs develop, especially in the context of next-generation smart meter deployment more broadly, as the full effectiveness of ToU tariffs can only be realized with large-scale uptake of this technology.?

Source: METI

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