IRENA International Energy Storage Policy and Regulation Workshop

Policies and Regulations for Electricity Storage in

27 March 2014 Düsseldorf, Germany

Tetsuji Tomita New and Renewable Energy and International Cooperation Unit The Institute of Energy Economics, Japan (IEEJ) Contents

1. Introduction 2. Energy Policy in Japan 3. Policies and Measures for Storage Battery in Japan 4. Regulations for Storage Battery in Japan 5. Demonstration Projects in Japan 6. Summary

2 1. Introduction Electricity Storage in Japan

 Electricity storage is important for Generation Capacity(GW) by Energy Source load leveling and reliability/quality improvement  Pumped hydro stations are practically used for grid level storage in Japan. (26 GW)

 Construction of new pumped hydro stations was estimated to become difficult due to shortage of appropriate site and environmental concerns.  By contrast, battery could be installed at any place.

(Source) IEEJ (end of 2011)

Focusing on battery R&D

3 2. Energy Policy in Japan Basic Energy Plan

 The previous Basic Energy Plan compiled in 2010 called for a boost in nuclear power to about half of Japan’s electricity needs by 2030 from about one-third.  After change of administration from LDP (Liberal Democratic Party) to DPJ (Democratic Party of Japan) and Great East Japan Earthquake on March 2011, energy policy in Japan have been moving to “zero-nuclear”..  After change of administration from DPJ to LDP again, based on the discussion in the committee, the Japanese government made a draft of the new Basic Energy Plan on 25th February 2014.

• A mix of nuclear, renewables and fossil fuel be the most reliable and stable source of electricity to meet Japan’s energy needs. • Not specified the exact mix, citing uncertain factors such as the number of reactor restarts and the pace of renewable energy development.

 Nuclear energy dependency will be reduced as much as possible, but that reactors meeting new safety standards set after the 2011 nuclear crisis should be restarted. (Source) Ministry of Economy, Trade and Industry 4 2. Energy Policy in Japan Priority Issues of New Energy Policy

Sector Contents

Deregulation Maximize introduction of renewable energy Promote wind and geothermal power, Diversify through enhancing grid, etc. electricity source Restart nuclear power plants once safety is assured Production Introduce high-efficiency thermal power plants (coal and LNG) while considering the environmental impact Diversify Procure low-cost LNG fuel Promoting development of domestic energy sources including methane source hydrate ①Full liberalization of generation and retail. Electricity market reform ②Unbundling Distribution ③Nation wide transmission operation Strict assessment of power rate (Cut down fuel cost) Enhance competitiveness and promote energy efficiency by installing cutting edge and efficient facilities in industries Consumption Enhanced energy conservation by adding house/buildings Promote efficient energy management systems such as demand response

(Source) Ministry of Economy, Trade and Industry (METI), modified by IEEJ 5 3. Policies and Measures for Storage Battery in Japan Storage Battery Strategy (2012)

Storage Battery Strategy Project Team in the Ministry of Economy, Trade and Industry (METI)

Commerce and Information Agency for Natural Manufacturing Policy Bureau Resources and Energy Industries Bureau responsible for supervising industrial policies overseeing battery industry and (application of storage batteries, energy policies information policies next-generation vehicles

 The goal of the team is to formulate and implement integrated strategic policies for storage batteries, including creation of future storage battery markets, industrial competitiveness enhancement, and international standardization of relevant technologies.  The government will also create a certification system  transmission lines to facilitate linkage between them and storage batteries  formulating specifications and promoting international standardization for large lithium-ion batteries and other devices to ensure their safety

(Source) Storage Battery Strategy 6 3. Policies and Measures for Storage Battery in Japan Target for Installing Storage Battery

 METI announced its strategy on storage batteries in July 2012.  The strategy aims that Japanese companies acquire about half of the world’s storage battery market share by 2020.  Within this share, a little more than one third is envisaged for large scale storage batteries.

World Market Size: 20 trillion JPY Large scale Japanese 35% battery for Market Share Companies: Storage Size 50% (trillion JPY) 10 trillion JPY Residential or World Market Size: 5.2 trillion JPY 25% Industrial Use (Japanese Companies: 0.93 trillion JPY) 40% Vehicle Use

2011 2020

(Source) National Policy Unit, (modified by IEEJ) 7 3. Policies and Measures for Storage Battery in Japan Technology Roadmap for Stationary Battery  NEDO revised RM2010 in July 2013.

Application Present (end of FY2012) around 2020 around 2030 Life span 10-15 years Life span 20 years Life span 20 years Long-time \50,000-100,000/kWh \23,000/kWh expecting lowered

Grid fluctuating control Demonstration Installation Start Commercially Installation Life span 10-15 years Life span 20 years Life span 20 years Short-time \200,000/kWh \85,000/kWh expecting lowered fluctuating control Demonstration Start Commercially Installation Middle-scale grid, Life span 10-15 years Life span 15 years Life span 20 years factory, building, \500,000-600,000//kWh expecting lowered

apartment Demonstration Spread Start Spread Period Demand Side Demand Emergency, Disaster Spread Start Integration) Life span 5-10 years Life span 15 years Life span 20 years Home \100,000-250,000//kWh expecting lowered Spread Start Spread Period Emergency, Disaster Spread Start Integration) Wireless base Life span 10 years Life span 15 years Life span 20 years station, data \200,000-400,000//kWh expecting lowered center backup Spread Start Spread Period (Source) NEDO, “Battery RM2013”, modified by IEEJ 8 3. Policies and Measures for Storage Battery in Japan R&D Challenges for Batteries

Current Battery Challenges Major Manufacturer Features GS Yuasa, , Hitachi 200 Wh/L cost reduction, enhanced safety, Maxell, Heavy Li-ion 80 Wh/kg temperature character, .overcharge, 100 W/kg recycle technology Industry, NEC, (Sanyo), etc.

40 Wh/L discharge/charge efficiency, cycle GS Yuasa, Shin-kobe Lead Acid 10 Wh/kg degradation, corrosion, 300 W/kg maintenance Electric Machinery etc. 84 Wh/L cost reduction, discharge/charge Kawasaki Heavy Industry NiMH 20 Wh/kg efficiency, energy efficiency, FDK() 100 W/kg temperature character, rare earth Panasonic (Sanyo) etc. enhanced safety, cost reduction, NAS 160 Wh/L energy efficiency, recycle NGK Insulators technology environmental acceptability, cost Redox Flow 8.5 Wh/L reduction, durability, energy density, Sumitomo Electric resource restriction

Common cost reduction of power conditioner (inverter), long time backup (more than 24hours). Challenges V2H/V2G, secondary use, recycle, residual performance, standardization, etc.

(Source) NEDO, “Battery RM2013”, modified by IEEJ 9 3. Policies and Measures for Storage Battery in Japan Major Subsidy Programs in 2012-2013

Governing Maximum Program Name Note Agency Subsidy Stationary Li-ion battery 1/3 Total 21bn JPY Large-scale battery plan - Stand alone renewable energy less than 30m 1/2 generation (with batteries) JPY METI 1/3 Smart Energy System (SMEs:1/2) Earthquake Smart Community 2/3 affected area Renewable energy generation (with 1/3 batteries) Storage battery for renewable 1/2 >1MW MOE energy generation Renewable energy in local area 1/2 Total 1bn JPY

• METI: Ministry of Economy, Trade and Industry • MOE: Ministry of Environment (Source) Several materials, (modified by IEEJ) 10 4. Regulations for Storage Battery in Japan Regulations for Electricity Storage  In case of installation, applications and permissions are required.  Some procedures have been simplified or removed for promoting batteries. (Deregulation)

Governing Type Regulations Organization Technical requirements guideline of grid interconnection to Ministry of Economy, Guideline secure electricity quality Trade and Industry (Technical (2004, revised in 2013) (METI) Requirement) Grid Interconnection Code (JEAC 9701-2006) Japan Electric (superseded by JEAC 9701-2012.) Association (JEA) Electricity Business Required approval for large electricity Ministry of Economy, storage system more than Trade and Industry Act 80,000kWh (METI) Dangerous material for more than Fire and Disaster Fire Service Act 1,000ℓ organic electrolyte solution Management Agency, Low Ministry of Internal Fire Prevention Required approval for large battery Affairs and Ordinance (4,800Ah/cell) Communications Ministry of Land, Building Standards Construction application for building Infrastructure, regarding to fire prevention property Act Transport and Tourism 11 5. Demonstration Projects in Japan Wakkanai Mega Solar Project

5MW Solar with 1.5MW NAS Battery

(Source) NGK Insulators, Ltd. 12 5. Demonstration Projects in Japan Miyakojima Remote Island Microgrids

(Source) NGK Insulators, Ltd. 13 5. Demonstration Projects in Japan Large-scale Battery Energy Storage System

Tohoku Electric Power Co.,Inc.

Wind Power Wind Power Generation Battery Wind Power Fluctuation Power Control System and Generation Transformer center containers

Solar Power Supervising the influence Fluctuation Transformer of the fluctuation Supervisory Substation Mega Solar of renewable energy control center Power Plant

Control center Gathering information Solar Power Order and adjusting for residential use frequency Ordering output adjustment instructions Thermal Power which combined Generation the battery system and Stabilized by Transformers the fuel generator frequency adjustment and Switches Tohoku area Frequency Tokyo area Conceptual drawing Overview of battery system (Toshiba) Subsidized Company Battery System Location type Capacity Tohoku Electric Power Co., Lithium ion 20 MWh Substation in Tohoku Inc. Battery

(Source) NEDO. 14 5. Demonstration Projects in Japan Multi-purpose Grid Storage Project

Hokkaido Electric Power Co.,Inc. 中央給電指令所 （蓄電池制御システムControl Systemを設置） Wind Power 風力発電出力Generation

Solar Power 太陽光発電出力Generation

Cell stack 制御指令Control Order

※蓄電池の充放電により 周波数の変動を抑制 放電Discharge Frequency周波数

Electrolyte Tank Large大型 scale蓄電池 battery Charge充電 (レドックスフロー電池(Redox flow battery)) Overview of battery system Conceptual drawing (Sumitomo Electric Industries) Subsidized Company Battery type System Location Capacity Hokkaido Electric Power Co., Inc. Redox Flow 60 MWh Substation in Sumitomo Electric Industries Ltd battery Hokkaido

(Source) NEDO. 15 6. Closing Summary

 Government of Japan is now redesigning Energy Policy after the Great East Japan Earthquake.  Storage Battery is a core technology under the current tight electricity supply and demand situation.  promoting electric-load leveling for both the supply and demand sides  promoting distributed power sources system like smart-grid society  Storage battery industry is expected to be a growth sector with a potential for market expansion.  To develop this potential growth sector into a strategic industry, the government will accelerate sophistication, cost reduction and widespread use of storage batteries.  Subsidies for installations and demonstration projects (large-scale)  Grants for R&D  Regulations are also being relaxed for expanding markets for batteries.

16 Reference

17 Reference Trend of Power Generation In Japan

(TWh) 1,200 1,030 1,006 936 971 989 996 992 957 955 941

1,000

Thermal Thermal Thermal 800

600

400

200

0 (FY) Nuclear Coal Oil Hydro Renewables

(Source) Federation of Electric Power Companies of Japan 18 Reference Current Status of Renewable Energy in Japan

 Renewable energy accounted for approximately 10% of power generation in Japan before the March 11, 2011, Great East Japan Earthquake.  More specifically, hydroelectric power generated by large-scale dams, etc., accounted for 9.0%, with solar PV, wind, geothermal and biomass power accounting for over 1%.

Composition of power generation by energy source in Japan (FY 2012) Renewable energy Hydropower 1.6％ (excluding hydropower) 8.4％ 1.7％

Oil 18.3％ LNG 42.5％

Coal 27.6％

(Source) Federation of Electric Power Companies of Japan 19 Reference Proportion of Renewable Energy in Japan

(billion kWh) Proportion of Renewable Energy (Proportion of electric power supply) 18,000,000,00018 2.0%

16,000,000,00016

14 1.6% 14,000,000,000 0.4% 1.5% 1.4% 0.2% 12,000,000,00012 0.1%

0.1% 1.2% 0.3% 太陽光Solar PV 10,000,000,00010 1.1% 0.3% 0.1% 0.1% 地熱Geothermal 0.3% 1.0% 0.1% 1.0% 風力 0.9% 0.3% Wind 8,000,000,0008 0.0% 0.9% バイオマスBiomass 0.8% 0.3% 0.3% 0.0% 0.5% 再生可能エネルギー合計（水力除く） 0.7% 0.5% Total Renewable Energy 0.0% 0.3% 6,000,000,0006 0.3% 0.4% (excluding hydro power) 0.6%0.3% 0.4% 0.3% 0.3% 0.3% 0.5% 4,000,000,0004 0.2% 0.2% 0.2% 0.1% 0.5% 2,000,000,0002 0.4% 0.5% 0.3% 0.3% 0.3% 0.3% 0.2% 0.2% 0.3% 0 0.0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 (fiscal year)

Surplus purchase system Feed-in tariff Renewable Portfolio Standard (RPS) (Source) Ministry of Economy, Trade and Industry 20