Power firms racing to go digital

February 21, 2018

Tokyo- Japanese power firms are racing to introduce innovative digital technologies, including the Internet of Things and artificial intelligence, to cope with the changing business environment.

They are pressured to create new services amid intensifying competition following the April 2016 full liberalization of Japan's retail electricity market and the spreading use of renewable energy sources, including solar power.

Last summer, Tokyo Electric Power Company Holdings Inc. started a project to set up a peer-to-peer electricity trading platform together with German power firm Innogy.

The platform allows participating individuals to directly sell their surplus electricity created with solar power to local supermarkets and companies, via transactions using smartphones.

The service is slated to begin in Germany as early as this month. The project aims to attract 10,000 individual and corporate subscribers by 2020.

The platform uses blockchain, the core technology in cryptocurrencies that enables high security for transaction data at low costs.

The two power firms will charge commissions for transactions in their platform. TEPCO hopes to start a similar service in Japan in the 2020s.

"We'll prepare for risks involved with a rapid change in our businesses and also aim for growth at the same time," said TEPCO Managing Executive Officer Shinichiro Kengaku.

The concept of virtual power plants is another opportunity that power firms are looking into. VPPs connect solar panels and storage batteries at households and electric vehicles using the IoT technology to integrate them as a unified power supply system.

Such a system is expected to provide a drastic shift in operations for the industry, which has long relied on the business model of supplying large amounts of power generated at large-scale thermal and nuclear plants.

VPPs have been put into practical use in the United States, Britain and Germany. Earlier this month, the South Australian government and U.S. electric vehicle maker Tesla Inc. unveiled the world's largest VPP project, involving 50,000 households.

In Japan, TEPCO and Kansai Electric Power Co. are working together with Nissan Motor Co. to test VPPs. There is a similar alliance involving Chubu Electric Power Co. and Toyota Motor Corp.

Power utilities are also collaborating with home appliance and housing makers to explore new business opportunities utilizing the IoT and AI.

Going digital will allow power firms to "meet various customer needs," at a time when electricity demand is expected to fall due to Japan's population decline, said Satoru Katsuno, chairman of the Federation of Electric Power Companies of Japan. Jiji Press