June 1, 2020
Aiming to further disseminate businesses in which distributed energy resources are aggregated and the aggregated resources are used as supply capacity or adjustment capacity, the Ministry of Economy, Trade and Industry (METI) revised the Guidelines for Energy Resource Aggregation Business.
Outline of the guidelines
The Guidelines for Energy Resource Aggregation Business feature negawatt trading, a system in which electricity utilities procure and pay for the amount of electricity saved by consumers under the demand response program (DR), and present basic policies for negawatt trading as a reference for energy resource aggregation business (ERAB) stakeholders (e.g., method of assessing the amount of controlled electricity). The guidelines were formulated in March 2015 and revised three times in September 2016, November 2017 and April 2019.
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. Since then, the working group has been discussing methods of assessing the amount of electricity generated through negawatt retailers’ remote control of distribued energy resources owned by consumers.
Based on expansion of negawatt trading, the progress in discussions on requirements involving markets, e.g., balancing markets and capacity markets, and other factors, METI revised the existing guidelines to clarify the position of the guidelines, further subdivide the categories of trade and stipulate other rules.
Key points of the revision
Clarifying the position of the guidelines
The revised guidelines are to rclarify the position of the guidelines into: guidelines working as basic principles to which aggregators and other businesses should refer in making contracts or stipulating rules between stakeholders other than market operators, which are necessary for such aggregators’ business operations. Following this, the related items stipulated in the guidelines are to be revised.
Further subdividing the categories of trade for the load-reduction DR and exemplifying use cases
Concerning the category covering businesses that grid operators procure negawatts (Category 2), the revised guidelines are to subdivide the category by procurement sources of negawatts and by the timing of receiving directions from the grid operators and also to exemplify use cases thereof (use case examples).
Streamlining approaches to compensation for negawatts in all negawatt trading
Concerning all negawatt trading falling under Category 1-(2) for DR that electricity retailers will use for achieving their goals set under the system for adjusting the eectricity amount between generation and consumption concerning planned amount or Category 2-(2) for DR that general electricity transmission/distribution businesses will use for supply-demand balancing, the revised guidelines are to clearly show methods of calculating compensation for negawatts for the case where aggregators should pay for kWh.
Ideal approaches to information sharing between electricity retailers and aggregators
The revised guidelines are to additionally stipulate details of information that electricity retailers and aggregators should share and the timing of the information sharing.
Revising time units subject to adjustment under the standard baselines on the date of trading
Concerning the time units subject to adjustment under the standard baselines on the date of trading, the revised guidelines are to unify such units to “six units by 30 minutes from 5 hours to 2 hours before starting DR” for all categories.
- The Council on Study of Energy Resource Aggregation Business (ERAB) is a working-level body of members in the industry, academia, and government sectors. It aims to organize and discuss challenges involving ERAB, e.g., methods of assessing the electricity amount controlled under the DR program and cybersecurity measures. These are part of the efforts for development of a business framework in which businesses make use of a virtual power plant (VPP) (*3) and the DR program, and provide a variety of services related to: electricity adjustment, avoidance of supply-demand imbalances, electricity-rate cuts, avoidance of output controls and other measures to their customers, including electricity transmission/distribution businesses, electricity retailers, consumers and renewable-energy utilities. The council was established in January 2016.
- Compensation for negawatts is the cost for adjusting the cost-benefit gap caused by DR between electricity retailers supplying electricity to consumers and negawatt retailers (aggregators).
- VPP is a system in which distributed energy resources are remotely controlled through IoT technology to provide a function of power generation and adjustment similar to that of a power plant.