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Agency for Natural Resources and EnergyMETI has Compiled Guidelines for Trading Negawatts– An effort towards improving the environment for smarter energy saving –

The Ministry of Economy, Trade and Industry (METI) compiled Guidelines for Trading Negawatts, which stipulate specific guidelines for addressing certain issues expected in trading Negawatts.

The guidelines are expected to contribute to increasing the popularity of Negawatt trading, which has been conducted by a limited number of businesses, and to establish efficient electricity systems.

Note: The term “trading Negawatts” refers to a service in which utilities will purchase the amount of electricity that enterprises and entities have saved in response to the request.

1. Background to preparing the guidelines

In October 2013, the Working Group on System Design under the Electricity System Reform Subcommittee held their third meeting. The participants of the meeting held discussions on the topic of “an approach to trading Negawatts” and discussed the challenges in their trade and future approaches to handling them. In addition, they also decided to formulate guidelines for these transactions under the Strategic Energy Plan (Cabinet Decision in April 2014) and the revised the Japan Revitalization Strategy (Cabinet Decision in June 2014).

Based on this decision, METI established a Study Group for Preparing Guidelines for Trading Negawatts, consisting of experts in the field. The study group mainly discussed three points regarding the issues: setting baselines, approaches to measuring the amount of electricity saved, and the ideal form of contracts, and then compiled the results of the discussions into the Guidelines for Trading Negawatts. METI will conduct the necessary review of the guidelines as necessary, along with the full-fledged introduction of the trading initiative.

2. Key points of the guidelines

The guidelines stipulate specific instructions for businesses to address certain issues expected in trading Negawatts.

1) Overview

The guidelines state the significance of Negawatt trading and the necessity of the guidelines, and stipulate categories of such trading and the scope of application of the guidelines by category. In addition, METI formulated the guidelines expecting that they will offer criteria for businesses to monitor and determine the fairness of trades in Negawatts.

2) Baselines

Concerning the estimated baselines of the consumed amount of electricity when no demand response (DR) is requested, the generally-accepted method for estimating such baselines varies depending on the length of response time and duration period under the program. Therefore, METI stipulated standard baseline calculation methods, which are the criteria for baselines adopted in principle, which, in terms of DR for longer durations, were based on the data from historical electricity demand data, while those calculated for short periods of DR were estimated based on the amount of electricity demand recorded in the period immediately previous to the implementation of DR. Based on these approaches, the guidelines stipulate specific calculation methods of such baselines.

3) Method of measuring the amount of electricity saved

Concerning the method for measuring the amount of electricity saved, the guidelines stipulate the requirements that businesses should meet, namely, the period during which they are assessed for the amount of saved electricity, units for and methods of assessing the amount of saved electricity, and a method for measuring the amount of saved electricity.

4) Other guidelines

Concerning the necessary matters yet to be stipulated in Negawatt trading contracts, the guidelines also stipulate compensation paid to consumers and aggregators, penalties imposed on them, and compensation paid to electricity retail operators, and describe basic approaches to the stipulations.

Release date

March 30, 2015

Division in charge

Smart Community Policy Office, Agency for Natural Resources and Energy

Ministry of Economy, Trade and Industry
1-3-1 Kasumigaseki, Chiyoda-ku, Tokyo 100-8901, Japan Tel: +81-(0)3-3501-1511
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