Energy Policy toward a Sustainable Society

Oct. 2017

Sayaka ShishidoANRE, METI

Contents

１．Trends in Japan

①．Paris Agreement

②．Energy Market Reform

③．Deployment of RE and Amendment of FIT

④．Nega-watt Trading and VPP

２．Further Steps

①．Enhancement of Energy Efficiency

②．Acceleration of RE

③．Distributed Energy System

④．Hydrogen Society

⑤．Fukushima Revitalization

2

１． Trends in Japan

Japan committed to a 26% reduction of CO2 in 2013. To achieve the Paris agreement, it is important that the energy mixture consists

of energy saving and widespread use of renewable energy.

3

１． Trends in Japan ① Paris Agreement

2030

(After energy

conservation measures)

2013

(Actual result)

Energy demand

Final energy consumption

Heat,

gasoline,

town gas, etc.

75%

Electric

power 25%

361 million kl

Electric

power

28%

Heat,

gasoline,

town gas, etc.

72%

Economic growth

1.7%/year

326 million kl

Thorough energy efficiency

50.3 million kL(13% lower)

(Power transmission

/distribution loss, etc.)

２０３０(approximately)

Base load ratio：56％

Hydro 8.8～9.2％

Wind 1.7％

geothermal1.0～1.1％

Solar7.0％

Biomass3.７～4.６％

Total: １,０６５TWh（power demand＋Transmission loss etc…）

２０１０

Thermal ：65％

LNG 29％petroleum 10％

coal 26％

Nuclear ２５％

RE １０％

２０１３

Thermal :87％

LNG 40％petroleum 16％

coal 31％

RE １２％

Nuclear １％

Nuclear 22～20％

Thermal:56％

LNG 27％petroleum 3％

Coal 26％

RE２２～２４％

Power source composition

１． Trends in Japan ② Energy Market Reform

4

April 2016 - market liberalization for electricity retailApril 2017 - market liberalization for gas retail

Next step should be unbundling between generators and DSO/TSOs. Policies will be discussed, such as activation of the wholesale electricity business

market, capacity market, zero-emission value market and so on.

Schedule for market liberalization

Phase1:Organization for Cross-regional Coordination of Transmission Operators

Electricity

Gas

Market monitoring Committee

April2015

Phase2:Market

liberalization for electricity retail

Phase3:Unbundling for

DSO/TSO

Unbundling pipe line business

Market liberalization for gas retail

Establishment of Committee for

electricity market monitoring

Start of monitoring for

gas market

（Sep.2015)

Soft landing termAfter April 2020, we can lift the

restriction of fees for each company depending on business situation

After April 2017, we can lift the restriction of fees for each company depending on business

situation

April2016

April2017

April2020

April2022

5

Amendment of Feed in Tarif(FIT)

Rapid spread of RE under FIT scheme raises some challenges such as cost effectiveness. Amendment of FIT in place from April 2017 will balance between spread of RE and cost allocation.

1.Trends in Japan ③ Deployment of RE and Amendment of FIT

FIT (only for Surplus

residential PV)FIT

ＲＰＳ

GＷ

Annual average ratio

+5%

Annual average ratio

+9%

Capacity of Renewable Energy

Annual average

ratio+２９％

※ without large hydro pump

July, 2012 FIT starts（RE capacity increased to 2.5 times in 3.5 years）

Spreading RE and cost allocation should be balancedEnergy mixture target：RE 22-24% on 2030

Partial to PV PV occupied 90% of RE capacity 310 thousand PV cases are

authorized, but not operated

Cost Effectiveness Total tariff of 2300 Bill. yen

in 2016. In 2030, tariff should be

3700-4000 Bill. yen

1)Additional Conditions Focused on O&M

3) Wind Farm, Geothermal Power etc…

The price along several years provided previously.

4)Measures for Industrial sector

5) TSO/DSO Purchase Flexible wide area power pool

increase RE.

2) Cost Effectiveness Mega-solar auction Mid-term target of purchase price

New FIT scheme starts in Apr. 2017

Market mechanism

Mechanism changing such as liberalization and unbundling

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Challenges

Activities for Nega-watt trading

June,2015 Nega-watt trading positioned clearly in Electricity Business Act

Sep., 2016 “the Guide Line for Nega-watt Trading” revised

Oct., 2016 As providing power for general TSO/DSO, open call starts

Apr., 2017 Trading starts.

１．Trends in Japan④ Nega-watt Trading and VPP

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Regulations for Nega-watt trading are now ready, starts Apr. 2017.

7 VPP demonstration projects (Virtual Power Plant) will start including technologies integrating supplying, storing and efficient use of energy resources.

Example of Project

Capacity for control on 2016Fy:9,800kW（8 large battery system and 500 home-use

batteries）

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２． Further Steps

8

Japan has achieved world top-class energy efficiency.

In each sector such as industrial, commercial, residential and transportation, Japan is pushing forward for greater energy efficiency. The political target is set to decrease to 50.3 million kL crude oil equivalent (=35% energy efficiency ratio by 2013) by 2030.

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２．Further Steps① Enhancement of Energy Efficiency

Industrial Sector <approx. -10.42 million kL>

Commercial Sector <approx. -12.26 million kL>

Residential Sector <approx. -11.60 million kL>

Transportation Sector <approx. -16.07 million kL>

Energy efficiency target is set in each industry. SABC

evaluation scheme is running

Multiple players cooperate in energy efficiency action

such as common use of facilities.

Promotion of next-generation cars

Traffic flow control, modal shift

Target for each division

⇒ by 2018, 70% of commercial sector will covered.

Energy efficiency by top-runner scheme

⇒ 31 items such as lighting, air conditioners, cars etc.,

are now in scope

Energy efficiency of houses and buildings

⇒zero-emission house/ building, renovation for EE,

Mandating EE standards for newly constructed

houses

Energy efficiency by top-runner scheme

Energy efficiency by each country (2013)

Reference：IEA/Energy Balances of OECD Countries 2014 Edition, Energy Balances of Non-OECD Countries 2014 Edition, IEEJ/energy economics statistics（※）Primary energy supply (Toe)/real GDP, and calculated as Japan＝1

※

UK

Japan

Germ

any

Fra

nce

EU

28

OECD

Austra

lia

USA

Canada

Kore

a

Mid

dle

East

Indonesia

Non-O

ECD

Thaila

nd

India

Chin

a

Russia

World

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２． Further Steps ② Acceleration of Renewable Energy

Tasks Status Next challenge (as example)

CostCost goes down globally, but in Japan, cost remains high.

・New FIT scheme will reduce cost・Effective use of low-cost resources－Battery storage and self-use－Utilization for post-FIT power

resources (roof top PV etc.)

Grid limitationMany cases in which cannot connect to grid smoothly.

・Overcome grid limitation－Regulation for grid connection－Retro-fit for exiting grid－Cost allocation

Regulation and location limitation

Regulation and location limitations delay the introduction of power plants. A long lead time is needed.

・Additional promotion for RE－Regulation and coordination for

public acceptance, environmentalassessment

①Shimabara city in Nagasaki pref. ②Hita city in Oita pref.

PJ components

①cost and potential

estimation of leftover

wood

②feasibility study for

chipping remaining wood

③considering whether to

introduce boiler

④total evaluation of PJ

Forestry

machinery

Private road for

forestry

company

Fast growing

trees

Leftover

wood

Feasibility study

Biomass

generator

Biomass

boiler

Tip combustion test

(shape, % of water, cost test

calculation)

Cost estimation

and road

maintenance

planning

Chipping

rotary press

vehicle Feasibility

Study for

instant chipping

Waste heat from an liquor factory is used in the hot water supply system of a spa town.

Feasibility study for wood biomass fuel from leftover forest wood

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２． Further Steps ③ Distributed Energy System

Using local energy resources such as Demand Response, waste heat and so on.

Promote regional activation by combining energy services and local services such as mobility services and medical care.

Cost estimation

Private Public

Providing heat

Liquorfactory

Shimabara city

Hot water supplier

O&M

Providing hot water

feeHotelsandusers

liquorfactory

Hot water supplier

Cooperation

• Target of 1.4mil. by 2020 and 5.3mil. by 2030

• Target price of 800,000 yen/ unit by 2020

⇒ no subsidy after 2020

FC co-generation system

Fuel Cell Vehicle（ＦＣＶ）

• 18 items for regulation review

Short range activities：expansion of hydrogenMid-term activities：supply chain, hydrogen

gas turbine/ hydrogen from RE

Total 92（opened 80）※by Dec 2016

Kyushu：15

Tokyo：41

Nagoya：22

Kansai：15

４big cities

Hydrogen station

Production/procurement

Storage/ transport

use

R&D for H2 gas turbine

manufacturing simulation

Liquid H2／Organic hydride

lignitebyproductgas

Hydrogen resources

• Utilizing unused overseas energy such as lignite

• Establishment commercial supply chain by 2030,

Variable Renewable Energy (VRE)

Global supply chain of Hydrogen,Hydrogen gas turbines

Power-to-gas

hydrolysis

Power grid

FCV, gas turbine etc…

VRE

Base-load

• H2 made by VRE will be stored, transported and used.

２．Next Challenge④ Hydrogen Society

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Hydrogen is eco-friendly because it doesn’t produce CO2 while running. Hydrogen can strengthen energy security because it can be made from several energy resources including un-utilized energy overseas.

For this target, METI established a roadmap in June 2014 and was revised in March 2016.

2020 2025 2030

No. of FCV 40,000 200,000 800,000

No. of stations

160 320 -

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■Battery storage reduces grid instability caused by RE.

Battery storage demonstration for substations

■The world’s first commercial scale floating wind farm is under construction.

東京電力福島第一原子力発電所

２０Ｋｍ

Floating wind farmR&D center for RE

■FREA/AIST is the first R&D center focused on RE in Japan.

■Energy supply and demand in the local area are balanced by using battery storage and hydrogen.

■Enhancement and revision for substations are needed for introducing RE.

Enhancement and revision for substations

Smart community

To accelerate the energy-related policy measures of the Innovation Coast Initiative and to create a future model for a “New Energy Society”, the Fukushima Plan for a New Energy Society is developed.

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２． Next Challenge ⑤ Fukushima Revitalization

■Hydrogen produced by VRE will be used in Olympic/ Paralympic Games in Tokyo 2020.

Hydrogen producedby RE

■Large wind farm including transmission lines in mountain and coastal areas

Wind farm