The full liberalization of electricity retail market in Japan started.

p until now, the low voltage (consumers below 50 kW of maximum demand) electricity retail market in Japan has been a local monopoly market, with 10 vertically integrated electricity companies (the electricity market for factories and office buildings has been deregulated in 2000, for consumers above 500 kW in 2004, and for consumers above 50 kW in 2005). This has been changed with the Japanese Electricity System Reform, which will be done in three stages: in the first stage, which was completed in April 2015, an organization to handle cross-regional energy flows Organization for Cross-regional Coordination of Transmission Operators (OCCTO) was created. In the second stage, in April 2016, the retail market was opened for full competition.

In the third and final stage, the vertically integrated utilities will be legally unbundled into three companies: generation, transmission/distribution, and retail on 2020, at which point the electricity rates will be fully deregulated as well. The law aims to guarantee the independence of the T&D companies by forbidding personnel exchange between the T&D companies and the generation/retail companies.

As of June 3^rd 2016, there are 307 registered retail electricity suppliers. Gas companies account for the most, followed by renewable energy companies and regional new power companies. The new activities are emerging in response to the liberalization of gas retail market in 2017, such as package sales of electricity and gas. According to OCCTO, the number of applicants for switching the electricity contractors are 1.03 million, which account for only 1.7% of the whole number of 62 million contracts. However, considering that the number was 510,000 as of March, right before the liberalization, the number has increased by 820,000 as of April, it is showing a steady growth.

“Innovative Energy Strategy” was complied.

1. Reforming the transmission standards
   The transmission standards will be modified in 2016 in order to regulate energy resources on demand side remotely

2. Developing the rules in response to opening megawatt transaction market
   Towards opening of megawatt market in 2017, transaction rules will be developed in 2016. More precisely, after amendment of “Guidelines for megawatt transaction” which is regarding the baseline used for calculation of the energy saving amount, the overall objective of transaction including information service to megawatt traders and streamlining of workflow will be decided by June 2016.

3. Modifying the measurement regarding reversed power flow
   In order to pursue the effective utilization of energy resources on demand side, the measurement of reversed power flow to grid is to be modified by the spring of 2016, the rules for actual operations and others will be considered.

4. Demonstrating the control technologies relating to “Virtual power plant (VPP)”
   In parallel with this system reform, by taking a budgetary step, a new technological challenge called “Virtual power plant (VPP)” will be implemented. The objective of this project is to manage and control energy resources on demand side in an integrated approach using IoT to functioning as a power plant.

    

   Aiming for the establishment of this system expecting approximately 50 MW -scale in 2020, a technological demonstration on controlling groups in an actual field will be implemented to support the achievement of practical use.

Thus, by utilizing IoT technologies, aggregators are to integrate and control energy resources (such as PV, storage batteries, EV and negawatts etc.) scattered on electrical grids on demand side.

These technological efforts just started, aiming for supply demand adjustments among retailers or distributers.