Navigant Research Blog

Japan’s METI Supporting Smart City Projects

— July 2, 2015

According to Navigant Research, a smart city is characterized by the integration of technology into a strategic approach to sustainability, citizen well-being, and economic development. While there may be various definitions of a smart city, in many cases, smart cities are desired in order to cope with the growing urban population, achieve sustainability goals, and maintain economic competitiveness through innovation and technology development. In addition, city resilience—the ability to recover from catastrophic events—has become increasingly important in the context of climate change.

In Japan, smart city projects are being led by the central government and local governments, as well as by the private sector. However, due to the centralized political model and events requiring national response, such as the Great East Japan Earthquake in 2011, large-scale smart city projects are usually initiated by the central government through the Ministry of Economy, Trade and Industry (METI). After the 2011 earthquake and Fukushima Daiichi nuclear accident, Japan had a distinct motive to promote smart cities as means to reconstruct affected urban areas.

Subsidized Projects

There have been two waves of smart city projects subsidized by the METI under its Science, Technology and Innovation budget. The first wave of projects is the Test Projects for Next-Generation Energy and Social System. In 2010, METI solicited local governments for smart city project applications. In April 2010, four cities were selected—Yokohama, Toyota City, Keihanna, and Kitakyushu—to receive METI subsidies that amount to ¥126.5 million. Initially, the pilot cities focused on improving the quality of life and showcasing innovative technologies. However, after the 2011 earthquake, there was a paradigm shift to work toward reducing energy consumption and improving energy efficiency.

These four cities have become the first successful operational pilots in Japan. Some areas of success include demand response programs, which reduced consumption during peak period by 20% in Kitakyushu; home energy management (HEM) programs in which 1,500 homes in Yokohama had HEM systems installed in 2013; vehicle-to-grid (V2G) technology; and smart metering. Details on these projects and updates can be found on the Japan Smart City Portal.

In 2012, METI pursued a second wave of subsidized smart city projects to reconstruct cities affected by the earthquake to become more resilient. In 2012, 10 cities were selected for the Projects for Promoting Introduction of Smart Communities program with a budget of ¥8.06 billion. Also, because of the widespread shutdown of the nation’s nuclear power plants post-Fukushima, Japan has been decidedly promoting renewable energy resources to meet its demand. In 2012, the country introduced a feed-in tariff system, as well. While the second wave of smart city projects is still in the planning stage, thanks to the earlier success in the four pilot cities, Japan is getting closer to realizing its aspiration to create the Japanese model of smart cities to export.

 

In Energy Crisis, Japan Turns to Demand Response

— 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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