April 1, 2019
Aiming to disseminate and expand energy resource aggregation business (ERAB), including negawatt trade, the Ministry of Economy, Trade and Industry (METI) revised the Guidelines for Energy Resource Aggregation Business.
1. Outline of the guidelines
The Guidelines for Energy Resource Aggregation Business feature negawatt trade, a system in which electricity utilities procure and pay for the amount of electricity saved by consumers under the demand response program (DR), (1*) and present basic policies for the trading as a reference for ERAB stakeholders (e.g., method of assessing the amount of electricity). The guidelines were formulated in March 2015 and revised twice in September 2016 and November 2017.
1. Demand response is to change demand patterns of electricity by controlling demand-side resources, such as electric generating equipment, electricity storage equipment and other electrical equipment.
2. Background to and details of the revision
In June 2017, METI established a Working Group for Assessment of Demand Control under the ERAB Study Group. (*2) Since then, the working group has been discussing methods of assessing the amount of electricity generated under the DR program and other issues.
Based on the achievements of the negawatt trade and other facts, METI revised the existing guidelines to change approaches to compensation for negawatts (*3) and other rules.
<Key points of the revision>
The revised guidelines are to stipulate a calculation method for compensation for negawatts in the case where general electricity transmission/distribution businesses intend to procure the amount of electricity generated under the DR program.
The revised guidelines are to additionally stipulate information that negawatt retailers should share with electricity retailers, such as the amount of electricity to be controlled and the start and end times for the control, in the case where the amount of electricity on the consumer side is controlled under the DR program.
*2. The ERAB Study Group is a working-level body of members in the industry, academia and government sectors and it aims to organize challenges and discuss measures involving ERAB (e.g., methods of assessing the amount of electricity generated under the DR program and cybersecurity measures), as part of the efforts for developing a business framework in which businesses make use of virtual power plants (VPP) (*4) and the DR program, and provide a variety of services related to: electricity adjustments, avoidance of supply-demand imbalances, electricity-rate cuts, avoidance of output controls and other measures affecting their customers. The businesses within the framework include electricity transmission/distribution businesses, electricity retailers/consumers and renewable-energy utilities. The working group was established in January 2016.
*3. Compensation for negawatts is a cost that negawatts retailers pay to electricity retailers to adjust the cost-benefit gap in negawatt trade. This approach aims to avoid a situation where demand control measures cause electricity retailers trading negawatts to be unable to recover related costs due to a decrease in the amount of electricity to be sold.
*4. Virtual power plants (VPP) are a system in which a distribution-type energy resource is remotely controlled through IoT technology to generate and adjust power like normal power plants.
Division in Charge
Advanced Energy Systems and Structure Division, Energy Efficiency and Renewable Energy Department, Agency for Natural Resources and Energy