Japan's Electricity Market Reform and Beyong · While Japan’s electricity market has been...
Transcript of Japan's Electricity Market Reform and Beyong · While Japan’s electricity market has been...
Japan’s Electricity Market Reform and Beyond
July 7, 2015
Takuya Yamazaki Director, Electricity Market Division
Director for Electricity Market Reform Agency for Natural Resources and Energy (ANRE)
OVERVIEW OF JAPAN’S ELECTRICITY MARKET
<1>
1
Electricity Market Overview
Okinawa
Hokkaido [2012]
5.52 GW
Tohoku [2012]
13.72 GW
Kansai [2012]
26.82 GW
Hokuriku [2012]
5.26 GW
Kyushu [2012]
15.21 GW
Chugoku [2012]
10.85 GW
Shikoku [2012]
5.26 GW
5.57 GW 16.66 GW
5.57 GW 2.4
GW
0.3GW
0.6GW
12.62GW
1.2GW
DC Tie line
BTB
Chubu [2012]
24.78 GW
Tokyo [2012]
50.78 GW 1.4GW
Frequency in West: 60Hz
FC
• DC – Direct Current, • FC – Frequency Conversion
Frequency in East: 50Hz
5.57 GW
DC Tie line
10 Vertically Integrated Electricity Power Companies (EPCOs) 2 types of frequency, 50Hz and 60Hz
2
Partially Liberalized But Still Very Low Competition
3
While Japan’s electricity market has been partially liberalized since 2000, still big 10 EPCOs dominates the market. 10 big EPCOs: 848.5TWh / 209GW = JPY 18.2 trillion ($ 151.7bn, € 134.8bn) (2013)
Share of non- big EPCOs for over 50kW retail market = 4.2%
Only 1.3% is transacted at Japan Electric Power Exchange (JEPX)
Total market volume: 982.4TWh/289GW
Problems Revealed by 3.11
The Great East Japan Earthquake on March 11 2011 revealed negative aspects of regional monopoly system with 10 big and vertically integrated EPCOs. 1. Lack of system which transmits electricity beyond regions
2. Little competition and strong price control
3. Little flexibility in changing the existing energy mix; hard to
increase the ratio of renewable energy
4
Electricity Price Goes Up After 3.11
5
20.37 21.26
22.33
24.33 25.51
13.65
14.59
15.73
17.53
18.86
12
14
16
18
20
22
24
26
7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
電灯 電力
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Fiscal year
Increased 25.2%
Increased 38.2%
(Yen/kWh)
[Source] Created based on the “Electricity Demand Report” (Federation of Electric Power Companies in Japan) and the materials concerning the power companies’ final settlement reports, etc.
For Households
For Industry
CO2 Emissions Also Goes Up After 3.11
6
Non-CO2 emissions from energy production CO2 emissions from energy production
CO2 emissions by general electricity utilities
1,270 1,397
1,304 1,354 1,390 1,408
0
200
400
600
800
1000
1200
1400
(Million ton-CO2)
FY1990 FY2005 FY2010 FY2011 FY2012 FY2013
+65 +112 +110
ELECTRICITY MARKET REFORM ROADMAP
<2>
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1st step: Establish the OCCTO Established the Organization for Cross-regional Coordination of Transmission
Operators (OCCTO) in Apr. 2015 OCCTO’s main functions include:
1. Review the EPCOs’ supply-demand and grid plans for changes in the plans (e.g. tie line construction) if needed.
2. Order EPCOs to increase power generation and interchange if supply gets tight.
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5.57GW 16.66GW
5.57GW 2.4GW
5.57GW 0.3GW
0.6GW
12.62GW
1.2GW
DC Tie line
BTB
DC Tie line 1.4GW
FC
* DC – direct current, FC – frequency conversion, TDSO – Transmission and Distribution System Operator
JEPX OCCTO
TDSO
Generation
Retail
TDSO
Generation
Retail
TDSO
Generation
Retail
TDSO
Generation
Retail
TDSO
Generation
Retail
TDSO
Generation
Retail
TDSO
Generation
Retail
TDSO
Generation
Retail
TDSO
Generation
Retail
Kyushu
Chugoku
Shikoku
Hokuriku
Chubu
Tokyo (TEPCO)
Tohoku
Hokkaido
Kansai
(Power Exchange) (Coordination of TDSOs )
60Hz 50Hz
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2nd step: Full Retail Competition • Expand retail competition to the residential sector in 2016 • Maintain regulation on retail tariff for under 50kW users to incumbent 10 big EPCOs at
least until 2020
Will be liberalized
3rd step: Unbundle Transmission/Distribution Sector
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• Unbundle the big EPCOs’ transmission/distribution (T/D) sector by “legal unbundling” in 2020 to enhance neutrality and transparency of T/D sector.
• EPCO can choose either a holding company or an affiliated company format
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Holding company format Affiliated company format
Generation company
Retail company
Transmission/Distribution company
(System operation)
(Transmission/distribution facilities)
Holding company
Competitive Competitive Regulated
Transmission/Distribution company
Competitive Competitive
Regulated
Generation company Retail company
(System operation)
(Transmission/distribution facilities)
• Regional monopoly • Regulation on network tariff • Responsibility for maintaining frequency & providing
LR service • Code of conduct for securing neutrality
(※Within 2015:Transition to new regulatory authority)
1st reform
Legal unbundling of T/D sector
【1st Step】 Apr. 2015
【2nd Step】 Apr. 2016
【3rd Step】 Apr. 2020
2nd reform
3
rd reform
Establishment of OCCTO (The Organization for
Cross-regional Coordination of
Transmission Operators)
Full retail competition
Period of transitional arrangement for retail tariff
(The government reviews competitive situations)
Abolishment of retail tariff
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Japan’s Electricity Market Reform: Roadmap
New regulatory authority
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Positive Signs of More Competition
Non-EPCO companies s announce to enter the power retail market after 2016 • Gas company : electricity + gas, • Telecom company : telecom + electricity, etc.
Big EPCOs announce to start preparing for offering power retail business in other
EPCOs’ regions.
Non-EPCO Companies start making new investments in power generation • KOBELCO: 1.4GW (2019-2020), Saibu Gas: 1.6GW (2020), Ohgishima Power:
0.4GW (2016), etc. EPCOs promote partnership
• Tokyo EPCO and Chubu EPCO contracted to form comprehensive partnership to jointly procure fuel, operate related businesses (upstream investment, transportation and trading), construct and replace thermal power plants, etc.
ROAD AHEAD <3>
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Challenge
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How can we secure stable supply and achieve desirable low-carbon energy mix
while facilitating competition?
Japan’s Generation Mix Target (Preliminary)
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Coal
Nuclear 28.6% Nuclear
20-22%
Coal 25%
Coal 31.0%
Coal 26%
LNG 29.3%
LNG 46.1%
LNG 27%
Oil 7.5% Oil 10.6%
Oil 3%
Renewables 9.6%
Renewables 12.2% Renewables
22-24%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010FY 2014FY 2030FY
停止中の原子力発電所 運転中の原子力発電所
建設中の原子力発電所
1 2 3 4 5 6 7 1 2 3
1 3 2
3 5
1 2 3 4
1 2 3 4 5 6
1 2 3 1
1 2 3 4
1 2 3
1 2
1 2
1 3
1 2 3
1 2 3 4
4
2
1
1
:Under review by NRA :Decommissioning by operator
4 1 2
Tokyo Electric Power Co.- Kashiwazaki Kariwa
Hokuriku Electric Power Co.- Shika
The Japan Atomic Power Co.-Tsuruga
The Kansai Electric Power Co.-Mihama
The Kansai Electric Power Co.-Ohi
The Kansai Electric Power Co.-Takahama
The Chugoku Electric Power Co.- Shimane
Fukui
Kyushu Electric Power Co.-Genkai
Kyushu Electric Power Co.-Sendai
Shikoku Electric Power Co.-Ikata
Output scale <500MW <1000MW ≧1000MW
Chubu Electric Power Co.-Hamaoka
The Japan Atomic Co.-Tokai Daini
Tokyo Electric Power Co.-Fukushima Daini
Tokyo Electric Power Co.-Fukushima Daiichi
Tohoku Electric Power Co.-Onagawa
Tokyo Electric Power Co.-Higashidori
Tohoku Electric Power Co.-Higashidori
Electric Power Development Co.-Ohma
Hokkaido Electric Power Co.-Tomari
In operation
Under suspension
Under construction
Nuclear Electric Power Plants in Japan (As of June 23rd, 2015) • 25 units in 15 NRPs are under NRA’S assessment and inspections for resuming operation: NRA has decided to decommission 5
units in 3NRPs. • These 25 units account for 25GW out of total nuclear capacity of 46GW.
RES integration
FIT(only for surplus residential PV) FIT
RPS
GW
0
5
10
15
20
25
30
35
40
45
2003FY 2004FY 2005FY 2006FY 2007FY 2008FY 2009FY 2010FY 2011FY 2012FY 2013FY 2014FY
Biomass Geothemal Hydraulic Wind PV
Average annual growth rate 5%
9%
32%
33%
About 39GW
Authorized (up to the
end of 2014FY)
Already installed before 2014FY
PV (residential)
3.79GW 3.1GW
PV (non-residential)
78.84GW 15.01GW
Wind 2.29GW 0.33GW
Hydraulic 0.66GW 0.09GW
Geothermal 0.07GW 0.01GW
Biomass 2.03GW 0.22GW
Total 87.68GW 18.76GW
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Generated Renewable Energy
Policy Under Consideration
How can we secure stable supply and achieve desirable low-carbon generation mix while facilitating competition?
Challenges
Maintain nuclear power generation in competitive environments. Promote cross-regional electricity supply. Set up a scheme to recover investments in grid reinforcement for RES integration.
Policy Plan
Strengthen OCCTO’s influence over 9 TSOs to promote risk/cost sharing and coordination for more cross-regional transmission and grid reinforcement.
Prepare the scheme for neutralizing risks of nuclear investments Review FIT system. Introduce “Capacity Mechanism”
Thank you!
APPENDIX
Transition of Japan’s Generation Mix
21 Coal
27% 28% 29% 32% 32% 34% 35% 36% 37% 34% 34% 35% 31%
26% 29% 31% 30%
26% 26% 29% 29%
11%
2% 1% 0%
10% 10% 11% 12% 13%
14% 14% 15% 15% 17% 18% 21% 22%
24% 25%
26% 25%
25% 25% 25% 25%
25%
28% 30% 31%
22% 23% 23%
22% 22% 22% 23%
24% 25% 26% 26%
27% 27%
28% 26%
24% 26% 27% 28%
29% 29%
39%
42% 43% 46%
29% 26% 26% 21%
24% 19% 18% 14% 12% 12% 11% 8% 10% 11% 10% 11% 9% 13% 12%
7% 7%
14% 18% 15% 11%
12% 13% 11% 13% 9% 10% 10% 11% 11% 10% 10% 10% 10% 11% 11% 9% 10% 9% 9% 9% 10% 10% 10% 11% 12%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Renewables
Oil
LNG
Coal
Nuclear
History of Electricity Market Reforms in Japan
No. Year enforced Overview
1 1995 • Opened the IPP (Independent Power Producer) market • Allowed specified-scaled and vertically integrated power generators
2 2000 • Introduced partial retail competition (over 2,000kW in 2000 [26%], over 500kW in 2004 [40%]) • Introduced regulation of third party access to grid lines
3 2005 • Expanded retail competition (over 50kW [62%]) • Established the wholesale power exchange (JEPX) and its supporting
body for transmission in wider areas • Improved regulation of third party access to grid lines, and
introduced accounting separation of transmission/distribution sector
4 2008 • Modified the rule of wheeling rates
No competition in the electricity market before 1995: 10 vertically integrated EPCOs dominated and controlled the market.
METI embarked on a series of reforms...
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Thermal plant Nuclear power plant Wind farm,etc. Hydroelectric plant
Primary substation
Substation for distribution
Large factory Large building
Building Medium factory Small factory Household Shop
Meter Meter Meter Meter Meter
220-500kV
220-500kV
220-500kV
154-220kV 154-220kV
Consumers
Retailers
Generation companies
Contract with retailer to sell
electricity
Retail contract with consumers
Not necessary to have assets
66-154kV
6.6kV
100/200V
6.6kV
66kV Transmission
Distribution
Wheeling contract
Regional monopoly, tariff regulation
Transmission/ Distribution companies
Receive electricity from various power companies Super high voltage
substation
Future Design of Japan’s Electricity Market
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JEPX
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54% people want to switch their electricity retailer if retail power sales is fully deregulated.
And even among those who do not think about switching, only 1% say they like the current retailer.
Strongly positive 22.7%
Positive 31.7%
Neutral 27.1%
Negative 6.1%
Strongly negative
2.6%
N/A 9.8%
Do you want to switch your retailer?
Ask to people (36%) who answered as follows • Neutral • Negative • Strongly negative
Reasons why you are negative or neutral to switch you retailer?
No particular reason
45%
10% Don’t think the price goes down
9% Satisfied with the current retailer.
1%
3%
14%
18%
18%
34%
37%
22% Do not know which company is good.
23% Cannot think of switching the retailer.
18% Procedures may be troublesome.
I like the current retailer
3% The most powerful reason Less power reasons
54.4%
Source: Opinion research , Apr. 2014 , METI
People Want Reform
Other reasons
Improve liquidity in the wholesale market • Current rule (from March 2013):
• Self commitment by 10 big EPCOs to provide all capacity except for adequate reserve margin into JEPX
• Market monitoring by the regulator
• Further discussion including introduction of VPP scheme etc. will be needed depending on the result of market monitoring
Share of trading in JEPX to retail market sales (FY2014)
(13.51TWh)
(837.67TWh)
Trading in JEPX
Others
(1.10TWh)
(12.41TWh)
Breakdown of 8.1%
(0.19TWh)
(0.04TWh)
(0.86TWh)
Breakdown of trading in JEPX (FY2014)
Day-Ahead spot trading
Others
4 hour-Ahead spot trading
New Forward trading
Forward trading 1.6%
98.4% 91.9%
8.1%
78.8%
17.3%
4.0% Breakdown of 1.6%
Source: JEPX 25
0.5% 0.9%
1.3%
FY2011 FY2012 FY2013
Trend of share of trading in JEPX to retail market sales
4.74TWh
7.67TWh
11.17TWh
(+2.93TWh)
(+3.50TWh)
1.6%
13.51TWh
(+2.34TWh)
FY2014
Cross-regional competition • Avoid market separation and congestion of tie lines through OCCTO’s function for
reinforcing their capacities. Eg. Frequency conversion b/w Tokyo and Chubu : 1.2GW 2.1GW 3.0GW DC tie line b/w Hokkaido and Tohoku: 0.6GW 0.9GW ? ?
• Maintain the “postage stamp” cost allocation scheme for network fee, even after
introducing full retail competition.
Hokkaido [2012] 5.52 GW
Tohoku [2012] 13.72 GW
Kansai [2012] 26.82 GW
Hokuriku [2012] 5.26 GW
Kyushu [2012] 15.21 GW
Chugoku [2012] 10.85 GW
Shikoku [2012] 5.26 GW
5.57GW 16.66GW
5.57GW 2.4GW
5.57GW 0.3GW
0.6GW
12.62GW
1.2GW
DC Tie line
BTB
DC Tie line Chubu
[2012] 24.78 GW Tokyo
[2012] 50.78 GW 1.4GW
Frequency in West: 60Hz
FC
* DC – direct current, FC – frequency conversion
Frequency in East: 50Hz
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Switching support system
• Establish an one-stop system for switching support until 2016. • New retailer X can obtain necessary customers’ information for the switching, which are
standardized, from TDSOs through the system. • New retailer X can complete a switching process including changing a wheeling contract b/w
retailer X and TDSOs through the system. • Time line: “automatically and instantly”
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consumers
Retailer A
Switching Support System
TDSO A
TDSO C
TDSO B
start to supply
apply to switching
OCCTO
・ ・ ・
continuously linked
request for changing
wheeling contract
Retailer B
Retailer C
Retailer D
finalize to change
wheeling contract
request for consumer
information
provide for consumer
information
make up an estimate
・ ・
※ Information interchanged through this system will be standardized and provided for retailer instantly.
Ensuring electricity security in Japan’s EMR project
1. Regulation for T/D companies to secure frequencies and to maintain
investment on the grid
2. Obligation for all retailers to secure adequate capacity <2016> - Ensure procurement of enough quantity in the electricity market
3. Auction for the long-run generation capacity by OCCTO <2016>
- Prepare for the possible shortage of long-run capacity as a safety net for the electricity market
4. Further discussion on capacity mechanism (capacity market etc.) - Enhance the incentive to establish and maintain generation plant
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Obligation for all retailers to secure adequate capacity <2016>
Actual supply
Actual demand
Retailer A Retailer B Retailer X
The gap (shortage)
Actual supply
Actual demand
The gap (surplus)
・・・
・・・
Actual supply
Actual demand
The gap (shortage)
TDSO
Compensate the shortage Buy the
surplus
Compensate the shortage
Retailer A
Purchase plan for supply
The demand Increases to ‘110’, when accident happens.
Actual demand
Reserve margin which retailer A should have secured for upward demand (additional supply necessary for fulfilling the obligation)
Forecast the demand
Actual supply
Some years or months ahead
At the actual supply and
demand
Forecast the demand as ‘100’
Purchase the supply same as forecasted demand (=‘100’)
• All retailers are legally obliged to ensure adequate capacity (incl. reserve margin) to match their demand.
• Government checks all retailers’ plans at both points of registering to enter the market and of submitting 10-year supply and demand plan each year
• TDSO will balance the gap b/w actual supply and actual demand in the imbalance mechanism.
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Auction for the long-run capacity by OCCTO <2016>
• OCCTO will call for bids when supply power shortage is likely to occur because of insufficient investment.
• OCTTO will pay for their capacity (MW), through recovering from network fee. • The detailed design is under discussion.
OCCTO
Generation company A
Generation company B
Generation company C
Bid Bid Bid
Decide the constructor by bids
Compensate part of the cost
All Consumers
Pay the cost as network fee
Construct the power plant and sell the electricity
Selling electricity
Call for bids for constructor of power plants
Revenue Retailers / Power exchange
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1) Remote metering and opening/closing for efficient tasks
2) Utilizing data for declining energy and CO2 by customers
3) Controlling appliances in demand side for stabilizing girds
Total image and the effects of Smart Meter and the related system
Smart Meter and the effects
EPCO (transmission/distribution)
Smart Meter
需要家
A B
C
Stop/Stop-release Change contract
Retailer Private company (third party)
HES MDMS
<Peak cut / Peak shift of demand>
<Visualization of power usage / Control of home electrical appliances>
EV PV
Storage Home electrical appliances
Customers
Power usage (30min.), etc. Request information
Power usage (30min.), etc.
EMS
(Note) EMS: Energy Management System MDMS: Meter Data Management System
HES: Head End System HEMS: Home Energy Management System
Reducing measurement cost and the future capital investment by launching Demand Response menus, visualization of the electricity use, control of appliances and so on
Creating future various services and businesses by utilizing ‘Big Data’ such as energy usage
Smart meter
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The demand of each “Small and Medium-sized Enterprise” and “Low Voltage Consumer” is small. However, the number is large.
Based on the perspective of efficiency of Smart Meters as a supply and demand measure, a transition to Smart Meters for commercial-scale utility customers will be initiated first.
Smart Meters in high voltage sector (factories, etc.) are planed to complete installing in Japan until FY2016.
Smart Meters in low voltage sector (household, etc.) are planed to complete installing in Tokyo until the end of FY2020 and in Japan until the end of FY2024.
All EPCOs announced to exchange the current meters to smart meters promptly for consumers who want to install according to the introduction of HEMS, etc. or switch their retailers.
Hokkaido Tohoku Tokyo Chubu Kansai Hokuriku Chugoku Shikoku Kyushu Okinawa
High voltage Installation will be completed in 2016 Completed Completed 2016 2016 Completed 2016 2016 Completed 2016
Low voltage
Installation will be started in 2015 Started Started 2015 Started 2015 2016 Started 2016 2016
Installation will be completed in 2023 2023 2020 2022 2022 2023 2023 2023 2023 2024
Introduction schedule of Smart Meters
Introduction schedule
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FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 Total
Hokkaido 380 530 480 490 510 510 520 560 570 4,550
Tohoku 120 650 840 820 810 800 780 730 730 720 7,000
Tokyo 1,900 3,200 5,700 5,700 5,700 3,300 3,300 28,800
Chubu 10 1,020 1,460 1,440 1,420 1,390 1,390 1,420 1,390 10,940
Hokuriku 150 250 250 230 230 220 190 190 160 1,870
Kansai 1,600 1,700 1,700 1,700 1,500(Note) 1,300(Note) 1,300(Note) 1,200(Note) 1,100(Note) 15,600
Chugoku 240 560 610 610 610 610 610 610 610 5,070
Shikoku 30 150 310 310 310 310 310 310 310 300 2,650
Kyusyu 800 850 850 1,090 1,010(Note) 1,000(Note) 890(Note) 790(Note) 7,280
Okinawa 10 100 100 100 100 100 100 90 90 90 850
Total 3,660 7,500 12,250 12,260 12,020 9,640 9,530 6,080 5,870 3,240 90 84,610 (Note) Except the number in the table, some smart meters will be exchanged new smart meters because of reaching maturity of the verification
The estimated number of smart meters introduced as of the end of each fiscal year (Thousand)
33
EPCOs Plan to Introduce Smart Meters