Central Research Institute of Electric Power Industry
Demand Response Experiments in Smart Grid Projects in Japan
Toru Hattori Socio-economic Research Center
European Utility Week October 17, 2013
Power Supply on a Tightrope
2013 2
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
Monday, Aug 19
Tuesday, Aug 20
Wednesday, Aug 21
Thursday, Aug 22
Reserve Margin
MW
Peak Demand Capability Reserve Margin
Kyushu Electric Power Co. Area Kansai Electric Power Co. Area
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
0
5000
10000
15000
20000
25000
30000
35000
Monday, Aug 19
Tuesday, Aug 20
Wednesday, Aug 21
Thursday, Aug 22
Reserve Margin
MW
Peak Demand Capability Reserve Margin
Source: Kansai Electric Power Co. and Kyushu Electric Power Co.
Expectations for Residential DR u After the earthquake, enabling more demand response has been
recognized as a key to solve the problem of capacity shortages in the medium and the long terms, and the roll-out of smart meters is to be accelerated to cover 80% of demand by FY2016
u Visualizing consumption information and/or offering time-of-use/dynamic pricing menu to enable demand response is one of the keys to the business case of smart metering
u One of the major focuses of the current SG projects in Japan is to investigate the potential for demand response of residential customers through dynamic pricing
2013 3
Status of Smart Meter Roll-out
2013 4
1,660370
13,000
8,100
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Kansai (as of Nov. 2012) Kyushu (as of Mar. 2013)
(thousands)
Installed number of smart meters Total number of customers
The Current Status of Roll-out by Two EPCOs Source: Expert Panel to Review Electricity Rate System and Its Operation (left) and Study Group on Smart Meter Scheme (right)
Demand coveredby FY2016
Roll-outcomplete by
Hokkaido 63% 2024Tohoku 71% 2024Tokyo 72% 2023Chubu 73% 2025Hokuriku 71% 2024Kansai 81% 2023Chugoku 62% 2026Shikoku 66% 2024Kyushu 66% 2025Okinawa 54% 2032
The Roll-out Plan of Ten EPCOs
The Electric Power Companies plan to roll out by annually replacing about 10% of the existing meters with the smart meters
Residential DR Pilot Programs Program Area Year Scale
Types of Pricing/Tech.
Smart Meter Pilot Project Tokyo and Osaka areas 2010-2011 900 TOU, CPP, DLC
Keihannna Eco-City Next generation Energy and Social Systems* Kyoto 2012-2013 680 TOU, V-CPP
Kita-Kyushu Smart Community Project* Fukuoka 2012- 230 V-CPP
Kyushu Electric Power Co Kyushu 2012- 1,050 TOU, CPP
Toyota City Low-carbon Society Verification Project* Toyota 2013- 160 CPP
Yokohama Smart City Project* Yokohama 2013- 3,000 TOU, CPP
2013 5
Source: Ministry of Economy, Trade, and Industry, and Kyushu Electric Power Co.
TOU: Time-of-Use Pricing, CPP: Critical Peak Pricing, V-CPP: Variable CPP, DLC: Direct Load Control *Government-sponsored Smart Community Project
Smart Community Projects
2013 6
Yokohama*
Keihanna (Kyoto)*
Kitakyushu
Toyota*
-Large-scale deployment of PV (27MW) -Smart house/building (4,000 locations) -Next generation transport system
-Efficient energy use in households (70 households) -Efficient energy use in communities -Low carbon transport system
-Large-scale deployment of PV (1,000 households) -Nano-grids in homes/buildings -Local energy production for local consumption
-Real time energy management by smart meters -New energy (10% of energy consumption) -System to transfer the outcomes to Asia
* Local electric power company is involved
For more detail, visit the Japan Smart City Portal
http://jscp.nepc.or.jp/en/index.shtml
Source: Ministry of Economy, Trade and Industry
Demand Response Experiments
2013
10
20
30
40
50
60
70
0 0 3 6 9 12 15 18 21 24
hour
yen/kWh
Standard Fixed Rate
Time-of-Use Rate [TOU]
(Already offered in Japan)
Critical Peak Pricing [CPP]
*Extremely high price for limited number of hours conditional on critical peak event
Off-peak Off-peak Shoulder Shoulder Peak
Illustrative example of dynamic pricing
7
In some projects, the monitors are given tablet terminal to receive notification of critical peak and see their “point balance”
Source: Japan Smart City Portal
e.g. Keihannna Eco-City Project u The monitors are given 7,000 points and
consumed according to their demand during the peak hours: Ø The points are consumed at 40, 60, 80 points/
kWh during the critical peak hours for CPP monitors and at 20 points/kWh during the peak hours (1pm – 4pm) for TOU monitors
Ø Critical peak days are declared total 15 times
u The monitors will be paid based on the point balance (remaining points) at 1 point = \1 after the experiment period
2013 8
Example of tablet terminal screen showing point balance
Example of the DR request screen displayed on the tablet terminal
Source: Japan Smart City Portal
Economics Works
2013 9
Source: Compiled from reports/presentations from each project, with provisional translation by the author
y = -‐0.071ln(x) -‐ 0.0283-‐18.0%
-‐16.0%
-‐14.0%
-‐12.0%
-‐10.0%
-‐8.0%
-‐6.0%
-‐4.0%
-‐2.0%
0.0%1.0 2.0 3.0 4.0 5.0 6.0 7.0
Price Ratio (Treatment/Control)
Keihanna
Kyushu
Kita-‐Kyushu
SM_Pilot
Elasticity of Substitution
2013 10
Year Area Estimated elasticity of
substitution
2010 Kanto (Tokyo area) -0.063 ~ -0.081
Kansai (Osaka area) -0.066 ~ -0.081
2011 Kanto (Tokyo area) -0.057 ~ -0.065
Kansai (Osaka area) -0.076 ~ -0.083
2003-2004 California Statewide Pricing Pilot -0.086 ~ -0.090
2006-2007 PSE&G Mypower Pricing -0.063 ~ -0.137
2008 BGE Smart Energy Pricing Pilot -0.096 ~ -0.180
Source: Study Group on the Smart Meter Scheme
Elasticity of Substitution between Peak Consumption and Off-peak Consumption
Need Information Feedback? u The results from Keihannna project suggests that 3.6% of peak load
reduction is due to visualization of consumption information u The results from Kyushu Electric Power Co indicates that
information feedback may not be necessary to induce peak load reduction
2013 11
-‐25.0%
-‐20.0%
-‐15.0%
-‐10.0%
-‐5.0%
0.0%
Notificationonly TOU CPP_40P CPP_60P CPP_80P
Notification only TOU CPP-‐18.0%-‐16.0%-‐14.0%-‐12.0%-‐10.0%-‐8.0%-‐6.0%-‐4.0%-‐2.0%0.0%
B1 B2 B3 K1 K2 K3
Uniform Price Monitor TOU Monitor
TOU CPP
No feedback of information on consumption
Keihanna Project Kyushu Electric Power Co. Project Source: Keihannna Eco-City Project and Kyushu Electric Power Company
What about Winter? u Peak load reduction induced by economic incentive may be limited
in winter time
2013 12
-‐25.0%
-‐20.0%
-‐15.0%
-‐10.0%
-‐5.0%
0.0%
Notification only TOU CPP_40P CPP_60P CPP_80P
Notification only TOU CPP
-‐25.0%
-‐20.0%
-‐15.0%
-‐10.0%
-‐5.0%
0.0%
Notification only TOU CPP_40P CPP_60P CPP_80P
Notification only TOU CPP
Keihanna Eco-City Project Summer 2012 Winter 2013
Source: Keihannna Eco-City Project
The Way Forward
2013 13
Cost reduction is necessary for energy management system
Critical peak notification is stressful for customers
Government funding will not be available after experiments
Peak time “rebate”, rather than “pricing” may be an alternative, though it has its own problem e.g. Competitive offer by some retail electricity providers in Texas and regulated standard rate by Baltimore Gas & Electric in Maryland
Automated demand response (Auto-DR) technology needs to be developed to reduce the customers’ burden for DR
The benefit of DR may not be realized in the short-run
The daily benefit of DR for customers is very small
Collaboration with other business may be necessary
Game-like program needs to be implemented
Psychology Overcoming psychological barriers of customers
Technology Achieving technological breakthrough
Strategy Creating strategic solution for funding DR project
A Collaborative Approach
2013 14
Source: Based on Nikkei Business Daily article
ON OFF
Normal Day Critical Peak Day
Information on Sales plus Coupon /Discount Ticket
Local Supermarket /Movie Theater, etc.
SALES
Sponsor of the Program?