JAPAN’S ENERGY OUTLOOK AND NEW CHALLENGES IEA ESAP …
Transcript of JAPAN’S ENERGY OUTLOOK AND NEW CHALLENGES IEA ESAP …
JAPAN’S ENERGY OUTLOOK
AND NEW CHALLENGES (IEA ESAP SESSION 1)
June 2016
Takehiko Matsuo Secretary General,
Electricity and Gas Market Surveillance Commission, Japan
METI
Roadmap for Energy Market Reform
Electricity
Gas
2017 2016 2020 2018 2015 2022 2019 2021
Apr. Establishment
of OCCTO
OCCTO’s main functions (The Organization for Cross-regional Coordination of Transmission Operators) - prescribing utilities to increase power generation and interchange when needed. - reviewing utilities’ power supply and demand plans. - constructing transmission lines between regions in response to an increase in demand.
Sep. Establishment
of EGC
Apr. Full Liberalization of
Electricity Retail Market
Transitional Period of Regulated Retail Tariff
Apr. Legal
Unbundling
Apr. Legal
Unbundling
Apr. Full Liberalization of
Gas Retail Market 2
Electricity retail market has been fully liberalized from this April and legal unbundling is scheduled in 2020.
OCCTO and EGC was established to advance the energy system reform.
Transitional Period of Regulated Retail Tariff
About EGC
3
Role Mission
•The Commission is aimed to urge sound competition in the electricity and gas market.
•Besides strictly monitoring transactions in the market, EGC makes policy recommendations on necessary rule-makings to the Minister.
METI
Electricity /Gas Market
①Monitoring/Inspection Consumer protection ex. Demanding extremely high cancellation fee Exercising the market power ex. Setting extremely low retail price to block
new entrants Neutrality of transmission operators ex. Leaking the information of other
generators/retailers obtained through the transmission operation to the generation/retail sections in the company/group
②Policy Recommendation Rule-makings from the viewpoint of
competition as well as consumer protection
EGC
36.5%
4.8% 6.6%
42.3%
8.6% 1.2%
Source:ANRE
Total 1006.4TWh (248.87GW)
Hokkaido Company 37.3TWh (8.26GW)
Hokuriku 40.3GWh (9.18GW)
Kansai 163.3GWh (40.77GW)
Chugoku 68.7TWh
(15.72GW)
Shikoku 38.1TWh (8.45GW)
Kyusyu 96.6TWh
(23.24GW)
Okinawa 8.7TWh
(2.23GW)
25.0%
29.3%
7.5%
28.6%
8.5% 1.1%
31.4%
7.6% 43.6%
15.2%
2.1%
38.9%
20.2% 3.0%
22.9%
12.6%
2.3%
20.1%
20.7%
4.8%
43.2%
10.3%
0.8%
58.0% 17.6%
14.0%
3.3% 6.2%
0.9%
26.4%
18.9%
7.1%
38.7%
5.9% 3.0%
77.4%
21.0%
0.4%
1.2%
9.9%
44.8% 10.9%
28.2%
5.5%
0.6%
(Hydro) (RE)
25.7%
47.8%
3.7%
13.4%
8.7%
0.7%
38.6%
2.8%
37.8%
20.0%
0.8%
Generation by energy source by company(2010)
4 4
LNG Oil etc.
Nuclear
Hydro
Renewables
Coal
Tokyo 317.4GWh (78.10GW)
Tohoku 96.5TWh
(21.91GW)
Chubu 139.6GWh
(36GW)
31.0%
46.1%
10.6% 9.0%
3.2%
16.5%
66.3%
9.2%
5.8% 2.2%
24.7%
62.6%
1.6% 8.4%
2.7%
50.6%
0.6%
28.8%
14.8%
5.2%
64.8%
8.5%
24.5%
1.5%
24.9%
47.1%
15.2% 10.6%
2.1%
55.2% 22.9%
11.8%
6.7% 3.5%
31.8%
38.1%
15.7%
6.9%
7.5%
65.1%
18.6%
12.8%
3.5%
44.9% 31.3%
6.8% 12.9%
4.1%
Generation by energy source by company(2014)
LNG
Oil etc.
Nuclear Hydro
Renewables
Source:ANRE 5 5
Coal
Total 910.1TWh (252GW)
Kansai 143TWh (43.32GW)
Hokuriku 3.3TWh (9.24GW)
Hokkaido 3.3TWh (8.55GW)
Tohoku 92.7TWh (22.38GW)
Tokyo 277.1TWh (80,7GW)
Chubu 141.1TWh (37.8GW)
Shikoku 30.5TWh (8.57GW)
Okinawa 8.6TWh (2.56GW)
Kyusyu 85.3TWh (23.06GW)
Chugoku 65.9TWh (15.75GW)
56.7% 7.9%
18.7%
11.5%
4.9%
0
500
1000
1500
2000
2500
3000
3500
4000
4500
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
太陽光 風力
バイオマス 地熱
中小水力
Surplus power buyback program FIT RPS
(MW)
Annual average growth rate 5%
Annual average
growth rate 9%
Annual average
growth rate 33%
Geo thermal
Solar power
Wind power
Small and medium hydropower
Expansion of renewable energy facilities
Biomass
※1
note1. except large-scale hydro power Source: ANRE calculation based on several statistics such as JPEA ,NEDO etc. 6
1,065 TWh (Total generated energy)
2030
Electric power 980.8 TWh
2030 2013 (Actual result)
Economic growth
1.7%/year
Electric power 966.6 TWh
Renewable energy 22 to 24%
Nuclear power 20 to 22%
LNG 27%
Coal 26%
Petroleum 3%
Hydroelectric 8.8 to 9.2%
Solar power 7.0%
Wind power 1.7%
Biomass 3.7 to 4.6%
Geothermal 1.0 to 1.1%
Base load ratio: 56%
* Values are approximate.
2013
966.6 TWh
LNG 40%
Coal 31%
Petroleum 13%
Renewable energy 12%
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Electricity Supply and Demand Outlook for 2030 Generation by energy source Power demand
Thorough energy efficiency and conservation 196.1 billion kWh
(17% lower than before the implementation of the energy conservation measures)
Source: ANRE calculation based on several statistics such as JPEA ,NEDO etc.
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Three challenges to further introduction of REs
Challenge②: interregional
transmission lines
• How can new inter-regional lines, which is necessary for REs’ further instruction, be smoothly constructed? How can utilization of existing lines be expanded?
Challenge①: fixed cost of conventional power plants
• As more renewable electricity, whose variable cost is almost zero, come into the market, how can the fixed cost of conventional power plants, which are essential for ancillary service, be secured?
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Challenge③: transmission tariff system
• While electricity demand is not expected to grow, how should transmission tariff system be reformed, in order to make the grid-related investment, required by newly introduced renewables, efficient and appropriate?
Overview of transmission tariff system in Japan
• 物理的送電権はxxであるのに対し、金融的送電権はxx • Japan adopts the full pricing system. • Transmission tariffs consist of capacity charge(kW) and energy charge
(kWh), and are charged 100% to loads on the premise that electricity flows from upper to lower grid.
Calculation of full pricing/ First connection charge
Allocation of generation-tariff/
Load-tariff Allocation by
voltage Transmission tariff planning
by service categories
Current system In Japan
Overview
9
• Full pricing system • Shallow1)
• Transmission tariff is 100% charged to loads
• Based on the premise that electricity flows from upper to lower
• Combination of capacity and energy charges, but…
Transformation cost
Transmission cost
Distribution cost
General Administration
cost
NW Overall
cost
Load Tariff
Generation Tariff
Except the First
Connection charge
note1. Grid users pay for the infrastructure connecting its installation to the transmission grid (line/cable and other necessary equipment)
Composition rate of full cost
Fixed cost 80%
Energy charge (kWh) 73%
Variable cost 20%
Capacity charge (kW) 27%
…
LV ・Distribution cost for LV
HV and LV ・Transformation cost for distribution ・Distribution cost for HV
SHV(220-500kV), HV(154-220kV), and LV(6.6-154kV) ・Ancillary service cost ・Transmission cost etc.
53 % of the total cost is collected through energy charge, while being fixed cost
Composition rate of transmission
charge
Challenge①:Charge to generators
• 物理的送電権はxxであるのに対し、金融的送電権はxx • Charging 100% to load would diminish generators' incentive to construct and operate grid system more efficiently.
Efficient development and maintenance of grid Efficient use of grid • Depending on the locations of RE, the cost of grid might be extremely high.
• However, generators don’t need to consider the additional cost for the grid because load pays 100% of the cost.
• It is necessary to consider the maximum flow from the generation facilities when transmission facilities are developed.
• If the generation capacity is the same, the necessary cost is also the same regardless of the utilization rate of the facilities.
Ex): Utilization rate of the facilities Thermal power plant:80% Wind power plant: 20%
Additional cost
Hokkaido Tohoku Total
2.7GW (4.7TWh/ year)
3.2GW (5.6TWh/ year)
5.9TkW (10.3TWh/ year)
Internal grid cost
1.47 billion Euro
0.5 billion Euro
1.99 billion Euro
Interconnection between regions/ Internal main transmission lines etc.
5.01 billion Euro
1.61 billion Euro
6.63 billion Euro
Total construction cost
6.48 billion Euro(11.1 cent/kWh)
2.14 billion Euro(2.95 cent/kWh)
8.61 billion Euro (6.63 cent/kWh)
10 Source:ANRE
Hokkaido
Tohoku
【Areas in the left side chart】
Tokyo
Challenge②:Charge to consumers • The fairness of the burdens of fixed cost and the risk of being unable
to recover fixed cost could become more serious problems in the future depending on the extent of expansion of RE.
• Since fixed cost is recovered by energy charge, the users of off-grid power system don’t pay sufficient fixed cost in transmission tariff.
【Preliminary calculation roof-top PV】 <Premise> ・Contracted capacity :50A,6,000kWh/year ・Utilization of facility:14%, self consumption:30%
Increasing off-grid power system • Increase in the number of consumers with off-grid power system accelerates free-rider problem regarding the payment of fixed cost.
• In Japan, this problem gets more serious because roof-top PV and micro-cogeneration are often installed together.
• 9GW of roof-top PV for residence and 5.3 million micro-cogeneration(around 10% of all households) are expected to be installed in 2030.
Problem of the fairness of the burdens
Capacity Charge (kW)
Energy Charge (kWh)
w Roof top PV w/o Roof top PV
Around 243 (fixed cost: around 161)
Around 338 (fixed cost: around 235)
Around 18 Around 18
1/3 of fixed cost(74euro) which originally should be paid decreases. *Toward 2030, this difference will be expanded.
unit: euro/year
Source:ANRE
0
1
2
3
4
5
0.0
1.0
2.0
3.0
93 95 97 99 01 03 05 07 09 11system price per kW
introduction amount(roof top)
introduction amount(all PV)
(GW
)
(Mill
ion
Euro
)
0
50,000
100,000
150,000
200,000
09 10 11 12 13 14 15
micro co-generation
(am
ount
)
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Challenge③:Value of the grid
In the future Change of the electricity flow
High voltage (HV)
Low voltage(LV)
Special high Voltage(SVH)
• In the low voltage area, new services like VPPs including DR are emerging together with introduction of roof top PV and micro-cogeneration.
Source:ANRE
Possible flow in the future
Existing flow
Utilization of off-grid
power system
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Reverse flow from the lower
gird system
• Smart meters will be fully deployed by early 2020s. – For high voltage users (ex. factories), smart
meters will be installed by 2016. – For low voltage users (ex. residences etc.), smart
meters will be installed by 2020 in Tokyo area and by 2024 in all the areas in Japan.
User (Energy saving)
user
aggregator
Generators (RE)
Retailers/TSO
• 物理的送電権はxxであるのに対し、金融的送電権はxx • Given the increase in the number of off-grid generation users and the increase in reverse flow from lower to upper grid system in the future, how should we evaluate the value of the grid?
Measures to be considered
Challenges
• How should we evaluate the value of the grid in case reverse flow to the upper grid occurs due to the introduction of roof-top PV and micro co-generation?
• Generators might locate power plants without taking into account the transmission and distribution cost since the cost is 100% charged to loads.
• The utilization rate of network facilities might be low because they are constructed based on the maximum flow.
Measures to be considered
• Locational transmission tariff system (Demand side)
• New transmission tariff system considering the flow within the lower gird
Load
Generation
• Introduction of network charge to generators
• Locational transmission tariff system
Others
Further discussion is needed considering that electricity flow has been changing. Charges for ancillary service and transport service should be considered differently?
• Due to the imbalance between the ratio of fixed cost and ratio of capacity charge, heavy power users bear more burden.
• Acceleration of distributed power systems makes the problem more serious, further damaging the fairness of burdens.
Rebalance of fixed cost
・Transmission charge depending on the capacity (kW charging)
・Reviewing capacity charge
・Charging the fixed cost to the users of off-grid power system
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