Navigant Research Blog

In Energy Crisis, Japan Turns to Demand Response

Lauren Callaway — January 3, 2014

Besides gaining recognition over the years for some rather odd technological innovations, Japan has come into focus as an innovator in advanced smart grid capabilities.  Most recently, announcements of demand response (DR) projects in Japan have permeated the energy news reports.  Accenture, Schneider Electric, Comverge, and EnerNOC have all begun major projects in research and development (R&D) and DR pilots in the country over the past 6 months.  In early December EnerNOC said it will partner with Japanese general trading firm Marubeni to deploy DR for peaking capacity and load balancing for commercial and industrial (C&I) customers.  Comverge is engaged in R&D for DR in Japan, working under the sponsorship of Japan’s Ministry of Economy, Trade and Industry, while Schneider will partner with Tokyo Electric Power Company (TEPCO) to deploy 50 MW of industrial DR.

Amid Japan’s unfolding energy crisis, some have wondered why the DR market has remained in an exploratory state – and arguably still remains in one.  Since the Fukushima Daiichi disaster in 2011, the country has scrambled to replace over 30% of the country’s energy resources with increased imports of oil and natural gas.  The U.S. Energy Information Administration estimated that 2012 Japanese liquefied natural gas (LNG) imports accounted for 37% of all global shipments.

Stretching Scarce Resources

Prior to Fukushima, Japanese policymakers imagined the smart grid as a means of incorporating increased renewable sources such as wind and solar, as well as low density energy sources such as geothermal, battery systems, and hydraulic power.  While these resources are still being developed and promoted (especially wind), there is a clear need to employ smart grid capabilities for energy efficiency and curtailment in order to conserve energy and keep costs at a manageable level for utilities and customers.

So what would DR look like if employed throughout Japan?  Accenture’s DR billing system will support building energy management systems and electric vehicle ancillary services, while companies like Toshiba and Panasonic are working to integrate other smart city technologies into Japan’s energy infrastructure.  With automated DR technologies rapidly evolving, the nation’s potential to leverage this burgeoning infrastructure to respond to its energy shortage is promising.

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