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Keio University New energy groupKeio University New energy groupKanameKaname ShirataShirata HarukaHaruka TanigiwaTanigiwaAkio Akio TominagaTominaga SayakaSayaka NakanoNakano
For Workable For Workable RPS systemRPS system
New energy family
For workable RPS systemFor workable RPS system
• New energy….3E (especially in EP)
mitigation to climate change
How to promote new energy ?
Workable RPS systemWorkable RPS system
StructureStructure
• What is new energy?• The necessities of new energy• RPS system in Japan• Point at issue & proposal• Conclusion
What is new energy ?What is new energy ?
characteristics
1. technically available2. not marketable 3. the alternative energy resource to oil
・solar energy
・wind power
・solar thermal
・cryogenic power by snow ice
biomass energy
such as・・・
waste combustion
such as・・・
・generation
・thermal utilization
・fuel fabrication
・water power
・geo-thermal energy
・generation
・thermal utilization
・fuel fabrication
・clean energy automobile
・LNG co-generation
・fuel cell
・temperature difference
・ocean energy
・solar energy
・wind power
・solar thermal
・cryogenic power by snow ice
biomass energy
such as・・・
waste combustion
such as・・・
・generation
・thermal utilization
・fuel fabrication
・solar energy
・wind power
・solar thermal
・cryogenic power by snow ice
biomass energy
such as・・・
waste combustion
such as・・・
・generation
・thermal utilization
・fuel fabrication
・water power
・geo-thermal energy
・generation
・thermal utilization
・fuel fabrication
・clean energy automobile
・LNG co-generation
・fuel cell
・temperature difference
・ocean energy
new energy
the patterns of energy use
renewable energy
recycled energy
natural energy
new energy
the patterns of energy use
renewable energy
recycled energy
new energy
the patterns of energy use
renewable energy
recycled energy
natural energy
Kinds of new energy
Merits and Demerits
Merits
• domestically produced• not exhaustible resource• less CO2 emissions ★
Demerits
• Unstable electrical output • energy conversion
efficiency is low• cost is high ★
The necessities of new energythe image to accomplish 3 targets of energy policy
Economic growth
well balanced 3E
Energy security
Environmental protection
go
New energy matches 3E1. diversification of energy supply
2. clean energy
3. creates new industry & job
Economic growth
Environmental protection
Energy security
Comparison betweennuclear power and new energy
○×economic efficiency
×○safety
○○economic growth
○○environmental protection
○○energy securitynuclear powernew energy
If the cost of new energy goes down, it can contribute to the promotion of new energy !!
StructureStructure
• What is new energy?• The necessities of new energy• RPS system in Japan• Point at issue & proposal• Conclusion
Restructuring of electric Restructuring of electric power in Japanpower in Japan
Before restructuring (1995)• regional monopoly
(10 electric power companies)
Stable electric power supply BUT
There was no cost competition
For cost competition…Now Restructuring
enables new entries & competition
enables new entries of energy power generator (including new energy power generator)
How to promote new energy?? RPS system
Little cost competitiveness
Under the consideration of Restructuring & 3E
RPS RPS ((RenewablesRenewables Portfolio Portfolio Standard)Standard) in Japanin Japan
What is RPS system ?
Issued in June 2002Put into force in April 2003
The system to introduce new energy certainly and cost-effectively
The outline of the RPSThe outline of the RPS
• Eligible energy sourcesWind powerSolar energy generationGeo-thermalWater power (small and medium)BiomassWaste combustion (only the biomass incineration)
1. Set the amount of the obligation to
the liable entities (electric power supplier)
2. Accomplish the obligation (electric power supplier)
How? 1. Generate by themselves
2. Purchase power from other supplier
3. Purchase the “account” from the generator
Advise → order → penal charge
3. Monitoring (government)
If not accomplished …
The image of RPS systemThe image of RPS system
★
★
The evaluation of Japanese The evaluation of Japanese RPS systemRPS system
• Certainty of the countermeasure effect⇒ YES• Flexibility ⇒ YES
EFFECTIVE
Only when the market mechanism effectively functioned
•Cost reduction incentive •Effect on the competition
• Consistency with the restructuring of electric power
The evaluation of Japanese The evaluation of Japanese RPS systemRPS system
Restructuring of electric power Lowering of the electricity price
RPS system Certain and cost-effective introduction of new energy
Both can be accomplished by….
Enhancing the cost effectiveness under a more competitive market power environment
YES
If RPS were workable…
•Accomplishment of certain amount of the new energy
• Potentiality of the cost-effective accomplishment
The evaluation of JapaneseThe evaluation of JapaneseRPS systemRPS system
○consistency with the restructuring of electric power
△effect on the competition
△cost reduction incentive
○Degree of freedom when selecting the power supply
○certainty of the countermeasure effect
Japanese RPS system
Our point at issueOur point at issue
StructureStructure
• What is new energy?• The necessities of new energy• RPS system in Japan• Point at issue & proposal• Conclusion
Our Point at issueOur Point at issue
RPS system in Japan
cost-effective accomplishment
How to ?
RPS system in Japan
cost-effective accomplishment
encourage new entries in new energy power generator market
the appropriate pricing of account
STEP 1
STEP 2
To encourage new entries
1. grid network issue2. appropriate amount of the obligation3. information disclosure
grid network issue
image
grid network issueshare cost to maintain and expand grid
network with many new entries
new entry
how much does it cost to share grid network ??
grid network issue
restructuring of electric power
→whole electric power industry
RPS
→only new energy industry
decide restructuring ofelectric power as soon as possible!!
appropriate amount of the obligation
too low ・additional generation is unnecessary
→decrease new entries
too high ・possibility to give up achievement
→decrease new entries
appropriate amount of the obligation is necessary to encourage new entries
information disclosure
information disclosure
price signals
encourages new entries !!
RPS system in Japan
encourage new entries in new energy power generator market
the appropriate pricing of account
STEP 1
STEP 2
cost-effective accomplishment
New energy powergenerators
Electric powersuppliers
Target of publishing account Target of the obligation
Price reflects the cost reduction of new energy
power generation??
Cost reduction
The account price will be??
look into …
whether the account pricing will be appropriate
STEP 1
STEP 2
Will the account pricing be appropriate ?Will the account pricing be appropriate ?
probably NOT
Because of… ① seller’s market
② over the counter
①① sellerseller’’s markets market
Seller BuyerNew energy power
generatorsElectric power
suppliersTarget of publishing account Target of the obligation
demand for account will be inelastic
have stronger power for
deciding price
In seller’s market, the account pricecan be unfairly high
①① sellerseller’’s markets marketmeasuresmeasures bankingbanking
The possibility to save unused account for use in the following period
borrowingborrowingThe possibility to make up an existing shortfall in the future target period
→make demand of the period smaller
time
future periodthis periodprevious period
banking borrowing
RPS system in Japan
OTCexchange
Which type ?
depends on the number of the player
②② over the counter (bilateral market)over the counter (bilateral market)
RPS system in Japan
OTCexchange
②② over the counterover the counter
Exchange needs enough players to avoid cost control
depends on the number of the player
24 players
How many players are there in account market ?
②② over the counterover the counter
RPS system in Japan
OTCexchange
Will the pricing of account be appropriate ?
YES NO
②② over the counterover the counter
Will the account pricing be appropriate in OTC ?
probably NO
OTC is a closed market.Because…
a fear of the blinded price signalsno common information
a fear of non appropriate account pricing
Price signals are necessary for the appropriate account pricing
②② over the counterover the counter
RPS system in Japan
OTCexchange
appropriate pricing
How to provide information including price signals ?
non appropriate pricing
②② over the counterover the counter
How to provide information including price signals ?
measuresmeasures entries of brokersex) SO2 emissions trading in USA
information disclosure by the administrator of account ex) RPS system in Italy
The examples of the success in OTCThe examples of the success in OTCInformation disclosure Information disclosure by entries of brokers by entries of brokers
SO2 emissions trading in USA
→worked well → why?⇒broker’s ability to collect
information contributed to decide the price
Information disclosure Information disclosure by the administratorby the administrator
RPS system in Italy→works well → why?Administrator of account①control trade information②disclose average price
and lowest price
these measures will help the appropriate account pricing
②② over the counterover the counter
RPS system in Japan
OTCexchange
appropriate pricing NOT appropriate pricing
measuresmeasures
appropriate pricingappropriate pricing
RPS system in Japan
cost-effective accomplishment
encourage new entries in new energy power generator market
the appropriate pricing of account
STEP 1
STEP 2
conclusion
• RPS system accomplish① increasing of new energy② cost-effectiveness
• For workable RPS system ①encourage new entries in new energy
power generator market② the appropriate pricing of account
New energy
Power plantuserEnergy supplier
A
energy
The image of Japanese RPS systemThe image of Japanese RPS system
Energy supplier
B
Account
trade
Account
trade
energy
Trade
obligation
obligation
new energy ≠ renewable energy
• hydraulic power generation• geo-thermal generation
are renewable energy, but are not new energy.because they are not economically inefficient.
renewable energy= natural energy + recycled energynew energy= renewable energy - hydraulic power generation ーgeo-
thermal generation
preventing CO2 emission
Unless take additional measures・・・
run over about
20 million t-C
fuel conversion ▲500万tーC
New energy▲900万tーC
conserve energy ▲600万t-C
additional measures
return
Current situation of primary energy in Japan
• the share of imported energy in domestic consumption
80%• the share of dependence on oil
52%• the share of imported oil in domestic consumption
100%• the share of dependence on Middle East oil
85%
return
energy security problem!
cost comparison
0.049
0.06
0.117
0.133
0.2
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16
0.18
0.2
nuclear steam water geo thermal wind
return
(US$/kWh)
The amount of CO2 emissions of every resource
return
0.0180.0110.0220.0370.059
0
0.2
0.4
0.6
0.8
1
1.2
coal oi
lLN
G
solar
wind
geo-
ther
malnu
clear
wate
r
kg-C
O2/kW
h
emission fromcombustion
emission fromconstruction andgeneration
0.990
0.7330.653
return
KanameKaname ShirataShirata
return
SayakaSayaka NakanoNakano
return
HarukaHaruka TanigiwaTanigiwa
return
Akio Akio TominagaTominaga
Objective amount of the RPS Objective amount of the RPS
12.2 billion kWh
Consistency with the climate change
volumes of the new energy: 11.5billion kWh + water power 0.7 billion kWh
Trial calculation for supply potential
0
20
40
60
80
100
120
140
1 2 3 4 5 6 7 8
Year
Hundr
ed
millio
n k
Wh
obligation amount
objective amount
2003 2004 2005 2006 2007 2008 2009 2010
1. 1. Amount of the obligationAmount of the obligation
Leading Runner
From the Agency of natural resources and energy
transitional measure
To accomplish such a high goal, To accomplish such a high goal, introducing new energy certainly and introducing new energy certainly and cost effectively is important.cost effectively is important.
★RPS system
100100
Energy supplier
B
Energy supplier
A
Generate Generate Purchase Purchase
120120
Generate
AccountAccount
3030
Smaller Energy supplier
AccountAccount
For example…AccountAccount
Image breakdown of the accountImage breakdown of the account
cost
generate purchase Account A Account B Account C
Cost reduction
Equalize the generation cost Minimize the social cost
accomplish cost-effectively
★