for workable rps system - keio...

Keio University New energy groupKeio University New energy groupKanameKaname ShirataShirata HarukaHaruka TanigiwaTanigiwaAkio Akio TominagaTominaga SayakaSayaka NakanoNakano

For Workable For Workable RPS systemRPS system

New energy family

For workable RPS systemFor workable RPS system

• New energy….3E (especially in EP)

mitigation to climate change

How to promote new energy ?

Workable RPS systemWorkable RPS system

StructureStructure

• What is new energy?• The necessities of new energy• RPS system in Japan• Point at issue & proposal• Conclusion

What is new energy ?What is new energy ?

characteristics

1. technically available2. not marketable 3. the alternative energy resource to oil

・solar energy

・wind power

・solar thermal

・cryogenic power by snow ice

biomass energy

such as・・・

waste combustion

such as・・・

・generation

・thermal utilization

・fuel fabrication

・water power

・geo-thermal energy

・generation


・fuel fabrication

・clean energy automobile

・LNG co-generation

・fuel cell

・temperature difference

・ocean energy

・solar energy

・wind power

・solar thermal


biomass energy

such as・・・

waste combustion

such as・・・

・generation


・fuel fabrication

・solar energy

・wind power

・solar thermal


biomass energy

such as・・・

waste combustion

such as・・・

・generation


・fuel fabrication

・water power

・geo-thermal energy

・generation


・fuel fabrication

・clean energy automobile

・LNG co-generation

・fuel cell

・temperature difference

・ocean energy

new energy

the patterns of energy use

renewable energy

recycled energy

natural energy

new energy


renewable energy

recycled energy

new energy


renewable energy

recycled energy

natural energy

Kinds of new energy

Merits and Demerits

Merits

• domestically produced• not exhaustible resource• less CO2 emissions ★

Demerits

• Unstable electrical output • energy conversion

efficiency is low• cost is high ★

The necessities of new energythe image to accomplish 3 targets of energy policy

Economic growth

well balanced 3E

Energy security

Environmental protection

go

New energy matches 3E1. diversification of energy supply

2. clean energy

3. creates new industry & job

Economic growth

Environmental protection

Energy security

Comparison betweennuclear power and new energy

○×economic efficiency

×○safety

○○economic growth

○○environmental protection

○○energy securitynuclear powernew energy

If the cost of new energy goes down, it can contribute to the promotion of new energy !!

StructureStructure


Restructuring of electric Restructuring of electric power in Japanpower in Japan

Before restructuring (1995)• regional monopoly

(10 electric power companies)

Stable electric power supply BUT

There was no cost competition

For cost competition…Now Restructuring

enables new entries & competition

enables new entries of energy power generator (including new energy power generator)

How to promote new energy?? RPS system

Little cost competitiveness

Under the consideration of Restructuring & 3E

RPS RPS ((RenewablesRenewables Portfolio Portfolio Standard)Standard) in Japanin Japan

What is RPS system ?

Issued in June 2002Put into force in April 2003

The system to introduce new energy certainly and cost-effectively

The outline of the RPSThe outline of the RPS

• Eligible energy sourcesWind powerSolar energy generationGeo-thermalWater power (small and medium)BiomassWaste combustion (only the biomass incineration)

1. Set the amount of the obligation to

the liable entities (electric power supplier)

2. Accomplish the obligation (electric power supplier)

How? 1. Generate by themselves

2. Purchase power from other supplier

3. Purchase the “account” from the generator

Advise → order → penal charge

3. Monitoring (government)

If not accomplished …

The image of RPS systemThe image of RPS system

★

★

The evaluation of Japanese The evaluation of Japanese RPS systemRPS system

• Certainty of the countermeasure effect⇒　YES• Flexibility ⇒ YES

EFFECTIVE

Only when the market mechanism effectively functioned

•Cost reduction incentive •Effect on the competition

• Consistency with the restructuring of electric power

The evaluation of Japanese The evaluation of Japanese RPS systemRPS system

Restructuring of electric power Lowering of the electricity price

RPS system Certain and cost-effective introduction of new energy

Both can be accomplished by….

Enhancing the cost effectiveness under a more competitive market power environment

YES

If RPS were workable…

•Accomplishment of certain amount of the new energy

• Potentiality of the cost-effective accomplishment

The evaluation of JapaneseThe evaluation of JapaneseRPS systemRPS system

○consistency with the restructuring of electric power

△effect on the competition

△cost reduction incentive

○Degree of freedom when selecting the power supply

○certainty of the countermeasure effect

Japanese RPS system

Our point at issueOur point at issue

StructureStructure


Our Point at issueOur Point at issue

RPS system in Japan

cost-effective accomplishment

How to ?

RPS system in Japan


encourage new entries in new energy power generator market

the appropriate pricing of account

STEP 1

STEP 2

To encourage new entries

1. grid network issue2. appropriate amount of the obligation3. information disclosure

grid network issue

image

grid network issueshare cost to maintain and expand grid

network with many new entries

new entry

how much does it cost to share grid network ??

grid network issue

restructuring of electric power

→whole electric power industry

RPS

→only new energy industry

decide restructuring ofelectric power as soon as possible!!

appropriate amount of the obligation

too low ・additional generation is unnecessary

　　 →decrease new entries

too high ・possibility to give up achievement

　 →decrease new entries

appropriate amount of the obligation is necessary to encourage new entries

information disclosure

information disclosure

price signals

encourages new entries !!

RPS system in Japan



STEP 1

STEP 2


New energy powergenerators

Electric powersuppliers

Target of publishing account Target of the obligation

Price reflects the cost reduction of new energy

power generation??

Cost reduction

The account price will be??

look into …

whether the account pricing will be appropriate

STEP 1

STEP 2

Will the account pricing be appropriate ?Will the account pricing be appropriate ?

probably NOT

Because of… ① seller’s market

② over the counter

①① sellerseller’’s markets market

Seller BuyerNew energy power

generatorsElectric power

suppliersTarget of publishing account Target of the obligation

demand for account will be inelastic

have stronger power for

deciding price

In seller’s market, the account pricecan be unfairly high

①① sellerseller’’s markets marketmeasuresmeasures bankingbanking

The possibility to save unused account for use in the following period

borrowingborrowingThe possibility to make up an existing shortfall in the future target period

→make demand of the period smaller

time

future periodthis periodprevious period

banking borrowing

RPS system in Japan

OTCexchange

　Which type ?

depends on the number of the player

②② over the counter (bilateral market)over the counter (bilateral market)

RPS system in Japan

OTCexchange

②② over the counterover the counter

Exchange needs enough players to avoid cost control

depends on the number of the player

24 players

How many players are there in account market ?


RPS system in Japan

OTCexchange

Will the pricing of account be appropriate ?

YES NO


Will the account pricing be appropriate in OTC ?

probably NO

OTC is a closed market.Because…

a fear of the blinded price signalsno common information

a fear of non appropriate account pricing

Price signals are necessary for the appropriate account pricing


RPS system in Japan

OTCexchange

appropriate pricing

How to provide information including price signals ?

non appropriate pricing


How to provide information including price signals ?

measuresmeasures entries of brokersex) SO2 emissions trading in USA

information disclosure by the administrator of account ex) RPS system in Italy

The examples of the success in OTCThe examples of the success in OTCInformation disclosure Information disclosure by entries of brokers by entries of brokers

SO2 emissions trading in USA

→worked well → why?⇒broker’s ability to collect

information contributed to decide the price

Information disclosure Information disclosure by the administratorby the administrator

RPS system in Italy→works well → why?Administrator of account①control trade information②disclose average price

and lowest price

these measures will help the appropriate account pricing


RPS system in Japan

OTCexchange

appropriate pricing NOT appropriate pricing

measuresmeasures

appropriate pricingappropriate pricing

RPS system in Japan




STEP 1

STEP 2

conclusion

• RPS system accomplish① increasing of new energy② cost-effectiveness

• For workable RPS system ①encourage new entries in new energy

power generator market② the appropriate pricing of account

New energy

Power plantuserEnergy supplier

A

energy

The image of Japanese RPS systemThe image of Japanese RPS system

Energy supplier

B

Account

trade

Account

trade

energy

Trade

obligation

obligation

new energy ≠ renewable energy

• hydraulic power generation• geo-thermal generation

　are renewable energy, but are not new energy.because they are not economically inefficient.

renewable energy＝ natural energy + recycled energynew energy＝ renewable energy － hydraulic power generation ーgeo-

thermal generation

preventing ＣＯ２ emission

Unless take additional measures・・・

run over about

20 million ｔ－Ｃ

fuel conversion ▲５００万ｔーＣ

New energy▲９００万ｔーＣ

conserve energy ▲６００万ｔ－Ｃ

additional measures

return

Current situation of primary energy in Japan

• the share of imported energy in domestic consumption

80%• the share of dependence on oil

52%• the share of imported oil in domestic consumption

100%• the share of dependence on Middle East oil

85%

return

energy security problem!

cost comparison

0.049

0.06

0.117

0.133

0.2

0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

0.16

0.18

0.2

nuclear steam water geo thermal wind

return

（US$/kWh）

The amount of CO2 emissions of every resource

return

0.0180.0110.0220.0370.059

0

0.2

0.4

0.6

0.8

1

1.2

coal oi

lＬＮ

Ｇ

solar

wind

geo-

ther

malnu

clear

wate

r

kg-C

O2/kW

h

emission fromcombustion

emission fromconstruction andgeneration

0.990

0.7330.653

return

KanameKaname ShirataShirata

return

SayakaSayaka NakanoNakano

return

HarukaHaruka TanigiwaTanigiwa

return

Akio Akio TominagaTominaga

Objective amount of the RPS Objective amount of the RPS

12.2 billion kWh

Consistency with the climate change

volumes of the new energy: 11.5billion kWh + water power 0.7 billion kWh

Trial calculation for supply potential

0

20

40

60

80

100

120

140

1 2 3 4 5 6 7 8

Year

Hundr

ed

millio

n k

Wh

obligation amount

objective amount

2003 2004 2005 2006 2007 2008 2009 2010

1. 1. Amount of the obligationAmount of the obligation

Leading Runner

From the Agency of natural resources and energy

transitional measure

To accomplish such a high goal, To accomplish such a high goal, introducing new energy certainly and introducing new energy certainly and cost effectively is important.cost effectively is important.

★RPS system

１００１００

Energy supplier

B

Energy supplier

A

Generate Generate Purchase Purchase

１２０１２０

Generate

AccountAccount

３０３０

Smaller　Energy supplier

AccountAccount

For example…AccountAccount

Image breakdown of the accountImage breakdown of the account

cost

generate purchase Account A Account B Account C

Cost reduction

Equalize the generation cost Minimize the social cost　

　accomplish cost-effectively

★

for workable rps system - keio...

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