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Five years on, the Fukushima Daiichi nuclear power disaster is driving a restructuring of Japan’s $150 billion electricity sector. Proponents hope that an open power market will lower prices and drive improvements to system reliability and stability.
Commenting on this, Charles Fahy states: “There are a couple of big risks to the success of these market reforms and retail competition. One is the lack of wholesale market liquidity and the other is the problem of transmission interconnections. The Ministry’s policy goals following Fukushima were to secure stable supply, reduce electricity rates and enable choice for consumers and businesses, including encouragement of renewables.”
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Charles added: “There was a huge uptake in PV, particularly ground-mounted installations over 10 kilowatts and residential. But the uptake was unbalanced. There wasn’t enough new wind, geothermal and biomass. Too much renewable power will cause system imbalances and issues with frequency control.”
When asked about the Organization for Cross-Regional Coordination of Transmission Operators, Charles commented: “At the moment, the OCCTO is not operating as an independent system operator. System operations and dispatch responsibility falls to the legacy utilities who continue to control operation of their electric networks. It’s more of a governance and coordination body. There’s a bit of concern that it does not have enough authority to ensure that the interconnections that are needed are built.”
Commenting on Japan's legacy utilities, Charles said: “In fact, there are few carrots to lure Japan’s legacy utilities to support efficiency or demand-side management measures that might erode revenues. The industry has explored decoupling, which is “going on around the fringes. There is government funding for grid edge technologies and virtual power plants, but it’s at an early stage.”
Charles concluded: “In the long run, if interconnection issues aren’t eased, and access to wholesale markets isn’t enabled, it isn’t going to be successful in the eyes of consumers.”