Osaka - Sunday, May 22, 2011
In a popular morning TV programme this morning, there was an interesting short discussion on energy policy of Japan, which started with the excerpt of the recent comment of Prime Minister Naoto Kan about “separation of power generation and power transmission”.
The basic idea agreed by the panelists was that Japan is at the verge of change in its energy policy, which requires paradigm shift in the way of thinking, and that vision based on solid philosophy delivered effectively and clearly by the Prime Minister.
1. How has electricity power business in Japan been until today?
Currently, electricity power companies such as Tokyo/Tohoku Electric Power Co., Inc. (TEPCO) have been responsible for both generation and transmission of electricity/power, based on the concept of “stable electricity supply”. In short, it has been of centralization of power supply
Under this situation, electricity power companies allocated by regions of responsibility such as Tokyo/Kanto, Tohoku (north eastern Japan), Chubu (midlands including Aichi where Toyota is located), and Kansai (Osaka, Kyoto, Kobe etc.) have been monopolizing electricity power businesses in their region.
2. What is “separation of power generation and power transmission” and what could it mean?
It is to separate power transmission from power generation.
This means dispersion and diversification of power transmission from centralization. It is quite similar to the ongoing transformation of information by the emergence of the Internet and social media.
It can be also quite similar to what happened in capital by the financial policy change before 2000 that triggered “Financial Big Bang” and reorganization of financial industry/sector in Japan. This was due to implementation of principle of competition and market mechanism in the financial sector.
Separation of power generation and power transmission is expected to implement the same principle in the energy supply sector as well, allowing power supply companies enter the market. It could also mean individuals who generated electricity by such system as solar to provide electricity to the public.
As a result, it is quite possible that citizens would benefit from reduction in their monthly electricity fee payment.
3. Is there any country that implemented this policy with success?
Yes, there is. It is Germany.
As a result of separating power transmission from power generation, the supply of natural energy increased from 6% to 16%. And the country aims to further increase to 30% by 2015 or so.
4. What are other requirements to increase natural energy?
1) Financial support from the government
In the initial stage, support from the government, financial in particular, is required because cost of anything new to the market is extremely high. A good, easy-to-understand example is of AV product of new technology and/or format and the author would like to add the explanation of this mechanism.
For example, when first launched in the market, LCD and plasma flat panel TVs were so expensive that the general public could not afford. But with further technological innovation and others, the cost went down so it became more affordable for more people. The more people buy and use the product, the great the reduction of the price per unit due to reduction in production cost per unit.
And when it reaches a “critical mass”, the product becomes popular all of a sudden, which is usually said that when 16% of the people in the market use the product.
Financial support from the government at the initial stage could speed up the whole process in popularization of natural energy.
2) Vision, roadmap, regulations and systems set by the government
Easy-going approach would only lead to failure of natural energy popularization. Solid energy supply vision, roadmap, regulations and systems to achieve the vision. Not only Germany but all other countries that the government initiated popularization of natural energy developed and implemented them.
3) Environment to drive popularization
There may be many factors for an environment to drive popularization of natural energy. One is the recent popularization of smart grid.
5. What should happen to the nuclear power?
This is a question that provokes a hot discussion. There were interesting comments by a panelist of the TV programme, whom he said is that he is more of a person who has been initiating nuclear power.
That is that Japan is the only country that has been leveraging nuclear power for electricity use only and not for producing atomic bombs (although it is the only victim country from atomic bomb in World War II).
Japan is also a country that has engineers in this realm, and since there are many neighbouring countries that initiate nuclear power generation, Japan is expected to protect the engineers and allow/encourage them so that they can utilize their skills and know how to such countries.
6. What are the author’s final thoughts?
The author is not a specialist in this realm but from general understanding she fully understands what the panelists said and agrees, especially the comment about the nuclear power made at last as conclusion.
It might be ideal to abolish nuclear power immediately; however, it is simply not feasible to do so completely and immediately under current circumstances of power generation; i.e. balance of demand and supply of electricity. Should nuclear power be immediately abolished, serious electricity shortage would spread worldwide and not only in Japan which has been suffering from electricity shortage since March because operation of Fukushima and recently other nuclear power plants are halted.
The electricity shortage is expected to be a serious problem in summer when electricity use is at one of the peak in the year therefore the country has been making upmost efforts to overcome it by all possible means as mentioned in the previous article 15% Energy Cut without Production Cut – The Japan Disaster as well as planned blackouts in Kanto (e.g. Tokyo, Yokoyama, Chiba) in March but worldwide.
With such a reality, while Japan is expected to terminate the Fukushima nuclear power issue with help and support from around the globe while it is also expected to protect and support its nuclear power engineers and encourage them to leverage their skills and know how for “safe and appropriate use of nuclear power” globally. This is based on mutual help philosophy.
And of course, all countries and parties are expected to get together to make innovation for discovery and/or proliferation of alternative energy while saving energy for sustainability and prosperity of our planet.
2011年5月22日日曜日
2011年5月15日日曜日
15% Energy Cut without Production Cut – The Japan Disaster
Osaka - Sunday, May 15, 2011
Nikkei, Japan’s leading newspaper specialized in business and economy, reported on May 14 that parties throughout the industries are to take actions to meet the request of cutting energy use by 15% from the Japanese government and Tokyo/Tohoku Electric Power Co., Inc. The request has been discussed to reach a consensus and was officially announced on May 13.
Actions range from shift in operation days/hours and location to production transfer to implementation of energy saving equipments and systems, with the objective of fulfilling both business continuity and energy saving.
1. What request is made to companies?
With Fukushima nuclear plant issue triggered by the earthquake and tsunami that occurred on March 11, Fukushima nuclear plant has stopped its operation. This made Tokyo Electric Power Co., Inc. unable to sufficiently supply electricity to its responsibility area including key cities of economy such as Tokyo.
1) Request made to companies operating in the area responsible by Tokyo and Tohoku Electric Power
All companies operating in the area that use electricity supplied by Tokyo and Tohoku Electric Power, i.e. eastern Japan, are requested to cut electricity use by 15%.
Plants that produce electronic components used in wide a range of fields including automotive and electronics are concentrated in the area so the request has much meaning.
2) Exceptions
The Japanese government has been studying fields that are to be exceptions because electricity cut is extremely difficult in some cases, such as medical devices. There are some industries that request to be handled as exceptions and the government is currently studying what can be exceptions with extreme care and is to make final decision and announcement by the end of this month.
Examples of the cases/fields that are studied whether to be included as exceptions or not at present are as follows, all of which are those that could severely impact lives of citizens and economic activities. Related ministries and industries are requesting exceptions such as easing the target.
- hospitals
- railway during commuting hours (mornings, evenings)
- sewerage facilities
- refrigerator warehouses
- data centres
2. What actions are planned or studied by companies?
There are mainly 3 kinds of actions and initiatives planned and studied by companies.
1) Shift/change of operating days and hours, and location
(1) Shift some operating days from summer to spring and autumn and winter by Toshiba, Hitachi and Mitsubishi Heavy Industries.
(2) Change plant shut down days by nationwide automobile plants based on the policy by JAMA (Japan Automobile Manufacturers Association, Inc.) to change plant shut down days from weekends to Thursday and Friday.
(3) Operate during the Golden Week Holidays (April 29 – May 8) and instead increase number of days that plants are shut down in summer by Nikon.
(4) Implement summer time by Sony, Sumitomo Metal Industries and Aeon.
(5) Implement work from home system to cut electricity use in offices by NTT Data and Teijin.
2) Transfer of production, equipments and facilities
(1) Transfer production from eastern Japan to western Japan or overseas by Honda, Toray and JFE Steel.
(2) Transfer 30% of servers for development from eastern Japan (around Tokyo) to multiple locations in western and other parts of Japan.
3) Implement energy saving equipments and systems
(1) Replace lights to energy saving ones such as LED by JX Nippon Oil & Energy Corporation, Marubeni and Seven Eleven.
(2) Rotate showing hours of movies at cinema by Shochiku.
(3) Terminate refrigerating hours of vending machines for 5 or 6 hours a day in turn by Coca Cola and other beverage companies.
3. What action is to be taken by Panasonic that enables achieving 15% electricity cut target without changing operation days/hours or transferring production?
1) Solution: installment of sensors to monitor and control electricity use
Panasonic is to install sensors in plants in the area to monitor and control electricity use to obtain data which will be used to streamline electricity use, with the objective of maintaining productivity while achieving the electricity cut target.
2) Benefit from the solution
The solution enable the company to avoid decrease in operating days and hours and transfer of plants so the company can avoid stagnation in its economic activities. This is amazing and can be a best practice when it is estimated that with 15% electricity cut initiative 50,000 jobs will be lost and wage of employees will be cut by 0.2%, leading to reduction of GDP growth by 0.3% in 2011.
It would require total of over 100 million yen investment for this initiative but the company estimates that it can earn back the investment in 3 years. The initiative for the upcoming summer focuses on those of immediate results and improvements will be added continuously next year onwards.
3) Upcoming actions
The sensors will be installed in all 30 plants in the area that produce products such as LCD panels and LCD flat panel TVs. 20 staff members are to start installation one after the other from the week starting May 16. The company is to add analysis and simulation with their unique software to establish a system in which they can continue lean, streamlined production by plants by the end of June.
When the sensors are installed, the company will be able to monitor use of electricity, gas and water, and temperature and humidity by production lines and equipments. The company is to initiate reviewing humidity control in clean rooms, reduction in compressors and short time operation halts in addition to reduction in lights and frequent termination in power.
As a result, the company is confident that it can achieve 15% reduction in electricity use at the peak this summer from last summer and has made agreement with Tokyo and Tohoku Electric Power to be provided with total of 160,000 kW. The company has tried using the sensor in multiple plants in other parts of Japan such as Wakayama.
Resources:-
To fulfill the request from the Japanese government of cutting electricity use by 15%, companies are taking measures to achieve the target such as shift/change of working days/hours and locations, production transfer and implementation of energy saving equipments and systems. An interesting solution by Panasonic is installing sensors in plants to monitor and control electricity use that enable achieving target while avoiding economic activity stagnation by change/shift of working days/hours and production transfer.
Nikkei, Japan’s leading newspaper specialized in business and economy, reported on May 14 that parties throughout the industries are to take actions to meet the request of cutting energy use by 15% from the Japanese government and Tokyo/Tohoku Electric Power Co., Inc. The request has been discussed to reach a consensus and was officially announced on May 13.
Actions range from shift in operation days/hours and location to production transfer to implementation of energy saving equipments and systems, with the objective of fulfilling both business continuity and energy saving.
1. What request is made to companies?
With Fukushima nuclear plant issue triggered by the earthquake and tsunami that occurred on March 11, Fukushima nuclear plant has stopped its operation. This made Tokyo Electric Power Co., Inc. unable to sufficiently supply electricity to its responsibility area including key cities of economy such as Tokyo.
1) Request made to companies operating in the area responsible by Tokyo and Tohoku Electric Power
All companies operating in the area that use electricity supplied by Tokyo and Tohoku Electric Power, i.e. eastern Japan, are requested to cut electricity use by 15%.
Plants that produce electronic components used in wide a range of fields including automotive and electronics are concentrated in the area so the request has much meaning.
2) Exceptions
The Japanese government has been studying fields that are to be exceptions because electricity cut is extremely difficult in some cases, such as medical devices. There are some industries that request to be handled as exceptions and the government is currently studying what can be exceptions with extreme care and is to make final decision and announcement by the end of this month.
Examples of the cases/fields that are studied whether to be included as exceptions or not at present are as follows, all of which are those that could severely impact lives of citizens and economic activities. Related ministries and industries are requesting exceptions such as easing the target.
- hospitals
- railway during commuting hours (mornings, evenings)
- sewerage facilities
- refrigerator warehouses
- data centres
2. What actions are planned or studied by companies?
There are mainly 3 kinds of actions and initiatives planned and studied by companies.
1) Shift/change of operating days and hours, and location
(1) Shift some operating days from summer to spring and autumn and winter by Toshiba, Hitachi and Mitsubishi Heavy Industries.
(2) Change plant shut down days by nationwide automobile plants based on the policy by JAMA (Japan Automobile Manufacturers Association, Inc.) to change plant shut down days from weekends to Thursday and Friday.
(3) Operate during the Golden Week Holidays (April 29 – May 8) and instead increase number of days that plants are shut down in summer by Nikon.
(4) Implement summer time by Sony, Sumitomo Metal Industries and Aeon.
(5) Implement work from home system to cut electricity use in offices by NTT Data and Teijin.
2) Transfer of production, equipments and facilities
(1) Transfer production from eastern Japan to western Japan or overseas by Honda, Toray and JFE Steel.
(2) Transfer 30% of servers for development from eastern Japan (around Tokyo) to multiple locations in western and other parts of Japan.
3) Implement energy saving equipments and systems
(1) Replace lights to energy saving ones such as LED by JX Nippon Oil & Energy Corporation, Marubeni and Seven Eleven.
(2) Rotate showing hours of movies at cinema by Shochiku.
(3) Terminate refrigerating hours of vending machines for 5 or 6 hours a day in turn by Coca Cola and other beverage companies.
3. What action is to be taken by Panasonic that enables achieving 15% electricity cut target without changing operation days/hours or transferring production?
1) Solution: installment of sensors to monitor and control electricity use
Panasonic is to install sensors in plants in the area to monitor and control electricity use to obtain data which will be used to streamline electricity use, with the objective of maintaining productivity while achieving the electricity cut target.
2) Benefit from the solution
The solution enable the company to avoid decrease in operating days and hours and transfer of plants so the company can avoid stagnation in its economic activities. This is amazing and can be a best practice when it is estimated that with 15% electricity cut initiative 50,000 jobs will be lost and wage of employees will be cut by 0.2%, leading to reduction of GDP growth by 0.3% in 2011.
It would require total of over 100 million yen investment for this initiative but the company estimates that it can earn back the investment in 3 years. The initiative for the upcoming summer focuses on those of immediate results and improvements will be added continuously next year onwards.
3) Upcoming actions
The sensors will be installed in all 30 plants in the area that produce products such as LCD panels and LCD flat panel TVs. 20 staff members are to start installation one after the other from the week starting May 16. The company is to add analysis and simulation with their unique software to establish a system in which they can continue lean, streamlined production by plants by the end of June.
When the sensors are installed, the company will be able to monitor use of electricity, gas and water, and temperature and humidity by production lines and equipments. The company is to initiate reviewing humidity control in clean rooms, reduction in compressors and short time operation halts in addition to reduction in lights and frequent termination in power.
As a result, the company is confident that it can achieve 15% reduction in electricity use at the peak this summer from last summer and has made agreement with Tokyo and Tohoku Electric Power to be provided with total of 160,000 kW. The company has tried using the sensor in multiple plants in other parts of Japan such as Wakayama.
Resources:-
To fulfill the request from the Japanese government of cutting electricity use by 15%, companies are taking measures to achieve the target such as shift/change of working days/hours and locations, production transfer and implementation of energy saving equipments and systems. An interesting solution by Panasonic is installing sensors in plants to monitor and control electricity use that enable achieving target while avoiding economic activity stagnation by change/shift of working days/hours and production transfer.
2011年5月14日土曜日
LNG as an Alternative Energy Replacing Nuclear Power – The Japan Disaster
Osaka - Saturday, May 14, 2011
Nikkei, Japan’s leading newspaper specialized in business and economy, reported on May 12 that electricity and trading companies have managed to obtain additional LNG (Liquefied Natural Gas) of 5 million ton to overcome the anticipated electricity shortage in summer when the electricity use is at the peak because of termination of nuclear plant operation (Fukushima and Hamaoka) since the Japan disaster.
It is estimated that total of additional 10 million ton of LNG would be necessary and therefore the companies are making upmost efforts to do so.
This means increase in thermal power plant in mid and long term; therefore, companies of heavy industries are planning to increase their production capacities of large gas turbines.
1. What is the background of electricity and trading companies obtaining additional LNG as an alternative energy of nuclear power?
With Fukushima nuclear plant issue triggered by the earthquake and tsunami that occurred on March 11, Fukushima nuclear plant has stopped operating. This made Tokyo Electric Power Co., Inc unable to sufficiently supply electricity to its responsibility area including key cities of economy such as Tokyo.
Taking this incident into account, the Japanese government recently decided to terminate operation of Hamaoka nuclear plant as well that supplies electricity to Chubu including key area of Aichi where Toyota is located. This is because experts estimate that earthquake of magnitude 8 or larger is to occur in Tokai area where Hamaoka nuclear plant is located within 30 years with possibility of 87%.
Under such a situation, it is almost impossible to open new nuclear plants or re-start nuclear plant operation and therefore replacement to alternative energy is urgent.
Currently LNG is the optimum alternative energy because the cost is stable due to technology innovation meaning stable supply of energy, and also CO2 emission is lower than other energy such as coal and oil.
2. How have the constituents of energy supply been and how are they to change?
Thermal power including LNG has been the primary source of energy supply constituting 64%, followed by nuclear power constituting 29%. Other forms of energy supply includes hydraulic power that constitutes 6% and others including new energy that constitutes 1% or less.
Nuclear power supply is to decrease from current 288.2 billion kW to 200 billion kW if operation of total of 6 nuclear plants including Fukushima Daiichi and Hamaoka are to remain terminated. It could even decrease to as low as 100 billion kW if operation of other nuclear plants that are currently under regular inspection cannot re-started.
This means the nuclear power supply would drop from 29% to 10 - 20%, and the decrease in nuclear power supply is planned to be replaced by LNG that currently constitutes 30%.
3. How much additional LNG needs to be obtained?
To replace the energy which had been generated by Fukushima and other north eastern nuclear plant, Tokyo Electric Power Co., Inc and Tohoku Electric Power Co., Inc need to additionally obtain LNG of 6.2 – 8.6 million ton.
To replace the energy which had been generated by Hamaoka nuclear plant, Chubu Electric Power Co., Inc need to additionally obtain LNG of 3.2 million ton.
This means that when Japan has been the largest LNG importer in the world importing LNG of 70 million ton a year, the country needs to additionally import 10 million ton, i.e. 14% of its current import.
The Japanese government has requested companies in Tokyo Electric Power area to cut electricity use by 15% in upcoming summer when it is at the peak. Even if the 15% reduction target is achieved, it is estimated that 55 million kW will be short.
4. What actions have been taken by companies to make up for the estimated electricity shortage?
1) Obtain additional LNG
According to related parties, Tokyo Electric Power is said to have obtained additional LNG of 2 – 3 million ton required to supply 55 million kW.
Tohoku Electric Power, which managed to gain word of “provide maximum support to supply LNG” from Katar, is said to have obtained additional LNG of 1 million ton.
Other electricity companies are said to have obtained 5 million in total.
However, additional 5 million ton would be necessary as risk management; i.e. in case electricity shortage should occur despite such efforts of electricity companies and of electricity use cut of 15%, and to be prepared to the next peak of electricity use in winter.
For this reason, trading companies such as Mitsubishi Corporation and Mitsui ＆Co., Ltd are planning to additionally obtain from such countries as Malaysia, Indonesia, Russia and Katar (and even Nigeria and UAE if necessary) by one-time trading. They plan to do so by leveraging the project they belong through investment.
2) Establish and increase operation rate of thermal electric power plant by gas
Additional electricity supply by LNG requires additional establishment and increase in operation rate of thermal electric power plant by gas.
This kind of investment is rationale even if fuel cost (total cost of oil and LNG) would increase by 1.15 trillion yen at maximum if all energy supply is to be replaced by thermal power by gas because unit cost of power generation by LNG thermal power is lower that that of oil thus stable energy supply can be expected.
3) Increase production capacity of gas turbines
Mitsubishi Heavy Industries is to increase production capacity of gas turbine plant in Takasago, Hyogo from 20/year to 36/year within 2011. The additional gas turbines produced are mainly to be supplied to electricity companies mainly in Japan such as Tokyo Electric Power and Tohoku Electric Power. Their new plant in the U.S. is to start operating in 2012. As a result, more than 50/year in total can be produced and supplied from plants in Japan and the U.S.
IHI is to increase the production capacity in Hiroshima from 10/year to 20/year. The company is also to shorten the lead time that is currently approximately 1 year by reviewing processes.
Such investments are rationale because cost and time required to produce new gas turbines are far lower and shorter than producing new nuclear plant equipments. It requires as much as 400 billion yen and 7 years to produce one new nuclear plant equipment when it requires less than 100 billion yen and 1 year to produce one new gas turbine equipment.
Nikkei, Japan’s leading newspaper specialized in business and economy, reported on May 12 that electricity and trading companies have managed to obtain additional LNG (Liquefied Natural Gas) of 5 million ton to overcome the anticipated electricity shortage in summer when the electricity use is at the peak because of termination of nuclear plant operation (Fukushima and Hamaoka) since the Japan disaster.
It is estimated that total of additional 10 million ton of LNG would be necessary and therefore the companies are making upmost efforts to do so.
This means increase in thermal power plant in mid and long term; therefore, companies of heavy industries are planning to increase their production capacities of large gas turbines.
1. What is the background of electricity and trading companies obtaining additional LNG as an alternative energy of nuclear power?
With Fukushima nuclear plant issue triggered by the earthquake and tsunami that occurred on March 11, Fukushima nuclear plant has stopped operating. This made Tokyo Electric Power Co., Inc unable to sufficiently supply electricity to its responsibility area including key cities of economy such as Tokyo.
Taking this incident into account, the Japanese government recently decided to terminate operation of Hamaoka nuclear plant as well that supplies electricity to Chubu including key area of Aichi where Toyota is located. This is because experts estimate that earthquake of magnitude 8 or larger is to occur in Tokai area where Hamaoka nuclear plant is located within 30 years with possibility of 87%.
Under such a situation, it is almost impossible to open new nuclear plants or re-start nuclear plant operation and therefore replacement to alternative energy is urgent.
Currently LNG is the optimum alternative energy because the cost is stable due to technology innovation meaning stable supply of energy, and also CO2 emission is lower than other energy such as coal and oil.
2. How have the constituents of energy supply been and how are they to change?
Thermal power including LNG has been the primary source of energy supply constituting 64%, followed by nuclear power constituting 29%. Other forms of energy supply includes hydraulic power that constitutes 6% and others including new energy that constitutes 1% or less.
Nuclear power supply is to decrease from current 288.2 billion kW to 200 billion kW if operation of total of 6 nuclear plants including Fukushima Daiichi and Hamaoka are to remain terminated. It could even decrease to as low as 100 billion kW if operation of other nuclear plants that are currently under regular inspection cannot re-started.
This means the nuclear power supply would drop from 29% to 10 - 20%, and the decrease in nuclear power supply is planned to be replaced by LNG that currently constitutes 30%.
3. How much additional LNG needs to be obtained?
To replace the energy which had been generated by Fukushima and other north eastern nuclear plant, Tokyo Electric Power Co., Inc and Tohoku Electric Power Co., Inc need to additionally obtain LNG of 6.2 – 8.6 million ton.
To replace the energy which had been generated by Hamaoka nuclear plant, Chubu Electric Power Co., Inc need to additionally obtain LNG of 3.2 million ton.
This means that when Japan has been the largest LNG importer in the world importing LNG of 70 million ton a year, the country needs to additionally import 10 million ton, i.e. 14% of its current import.
The Japanese government has requested companies in Tokyo Electric Power area to cut electricity use by 15% in upcoming summer when it is at the peak. Even if the 15% reduction target is achieved, it is estimated that 55 million kW will be short.
4. What actions have been taken by companies to make up for the estimated electricity shortage?
1) Obtain additional LNG
According to related parties, Tokyo Electric Power is said to have obtained additional LNG of 2 – 3 million ton required to supply 55 million kW.
Tohoku Electric Power, which managed to gain word of “provide maximum support to supply LNG” from Katar, is said to have obtained additional LNG of 1 million ton.
Other electricity companies are said to have obtained 5 million in total.
However, additional 5 million ton would be necessary as risk management; i.e. in case electricity shortage should occur despite such efforts of electricity companies and of electricity use cut of 15%, and to be prepared to the next peak of electricity use in winter.
For this reason, trading companies such as Mitsubishi Corporation and Mitsui ＆Co., Ltd are planning to additionally obtain from such countries as Malaysia, Indonesia, Russia and Katar (and even Nigeria and UAE if necessary) by one-time trading. They plan to do so by leveraging the project they belong through investment.
2) Establish and increase operation rate of thermal electric power plant by gas
Additional electricity supply by LNG requires additional establishment and increase in operation rate of thermal electric power plant by gas.
This kind of investment is rationale even if fuel cost (total cost of oil and LNG) would increase by 1.15 trillion yen at maximum if all energy supply is to be replaced by thermal power by gas because unit cost of power generation by LNG thermal power is lower that that of oil thus stable energy supply can be expected.
3) Increase production capacity of gas turbines
Mitsubishi Heavy Industries is to increase production capacity of gas turbine plant in Takasago, Hyogo from 20/year to 36/year within 2011. The additional gas turbines produced are mainly to be supplied to electricity companies mainly in Japan such as Tokyo Electric Power and Tohoku Electric Power. Their new plant in the U.S. is to start operating in 2012. As a result, more than 50/year in total can be produced and supplied from plants in Japan and the U.S.
IHI is to increase the production capacity in Hiroshima from 10/year to 20/year. The company is also to shorten the lead time that is currently approximately 1 year by reviewing processes.
Such investments are rationale because cost and time required to produce new gas turbines are far lower and shorter than producing new nuclear plant equipments. It requires as much as 400 billion yen and 7 years to produce one new nuclear plant equipment when it requires less than 100 billion yen and 1 year to produce one new gas turbine equipment.
2011年5月8日日曜日
New Market Demand and Business from the Japan Disaster
Osaka - Sunday, May 8, 2011
Nikkei, Japan’s leading newspaper specialized in business and economy, reported on May 7 that with the Japanese government’s policy of reducing energy in the peak of summer to minimize planned blackout, there are some unexpected possibilities of new demand to be created.
In this article, the author would like to explain the background of the policy and introduce the outline of the article with some possible insights at the end.
1. What is the background of the Japanese government’s policy?
The Japan disaster of earthquake and tsunami that broke out on March 11 triggered the Fukushima nuclear plant issue, leading to electricity supply shortage. For this reason, there have been some planned blackouts as mentioned in the previous article The Reality of Japan Disaster – Affecting Nationwide. It has been effective to some extent so far but has been negatively affecting some businesses as reported in recent TV programmes/news.
However, the real challenge comes in daytime of summer, the peak of electricity used because offices and factories are operating and everyone use air conditioner.
For this reason, the Japanese government had set a target of reducing maximum electricity use at the peak by 15% and requested industry parties to take measures to achieve the target. Some companies have been working on it such as shifting summer holiday and operating at night time; however, some experts estimate that the energy saving policy could mean reduction in productivity.
On the other hand, there have been some signs that the policy may trigger creation of new market demand and business.
2. What kind of new marketing demand and business is likely to be created, according to Nikkei?
1) Services targeting “overtime work refugees”
Many companies are to set room temperature at 28℃ or above at summer and turn off the air conditioner after official working hours. This means many business persons working in offices in cities to become “overtime work refugees”, getting out of their offices as soon as the official working hour ends because it is too hot and humid to work in the office after the air conditioner is turned off in Japan in summer.
Taking this opportunity, comic cafes that usually target young generation and other businesses started to exploit market targeting such business persons. For example, business owner that provides study room charging by hour has been providing seminars on accounting mostly at weekends but he is to change operating hours to evenings during week days to attract “overtime work refugees”.
2) Accommodation at summer resorts with discount rate
A business owner of a pension in Nagano, a popular summer resort in Japan, created a new discount plan to attract customers. The customer can benefit from 20% discount if he/she stays more than 5 nights.
The department in Mitsui Fudosan that runs hotels is to discount hotel rates for customers staying 2 or more nights in their hotels in Sapporo in Hokkaido (northern Japan, famous for cool summer) and other hotels located in summer resort area in Japan.
Some companies that use electricity supplied by TEPCO is planning to make their summer holiday longer than previous years as a counter measure of energy saving when many Japanese companies set their summer holiday only 1 week or less, making many Japanese people to enjoy their vacation “near their house, spending less, in short time”.
If more people get longer holidays, it is likely that they enjoy vacation leveraging discount rate of accommodations at summer resorts mentioned above, which could help tourism that is suffering from less revenue/business fewer tourists from outside Japan.
3) Energy saving LED bulbs
Power consumption of LED bulbs is half of LCD so although its price is 2,000 – 4,000 JPY which is higher than LCD bulbs and many people are now buying LED bulbs to benefit from energy saving. This is why recently there has been a crowd of people in LED bulb display corners of a leading mass merchandiser of consumer electronics in Tokyo.
METI (Ministry of Economy, Trade and Industry) has drawn up a blue print of replacing all bulbs in Japan to LED and other energy saving ones by 2030. The electricity supply shortage attributing to the Japan disaster is expected to accelerate popularization of LED.
4) “Energy saving biz” products (vs. “Cool biz” that has already become popular)
“Cool Biz” (the name of an energy-saving campaign the government started in 2005) products such as business casual clothes without neck ties for men has taken root and is a pillar of summer business for department stores, and this year it has started to spread to “electricity saving biz” products. This is because some companies are to approve their employees to come to their offices in polo shirts. Taking this opportunity, a few department stores imported fashionable polo shirts and plan to expand polo shirts corner by 40%.
In addition, some business men who go to work without jackets started to buy sun screen creams as a counter measures to protect themselves from ultra-violet lights, which is an unexpected demand. Taking this opportunity, Shiseido, a leading maker in the industry, is operating at its maximum to meet such market demand to produce sun screen creams.
3. The author’s final thoughts
As Nikkei reports, industrial output index for March dropped by 15.3% from February, which the largest drop in the history attributing mostly to broken link of global supply chain due to the Japan disaster. Many experts say that the recovery of the index is to be in autumn or later. Thus, Japanese companies, especially manufacturers, are facing challenges that they had never faced.
However, “hot summer without sufficient electricity and air conditioning” can mean creation of new market demand meaning new businesses and this would stimulate consumer spending when “jishuku”, restraining from spending money, have been proliferating after the disaster, as mentioned in the previous article Impact of “Jishuku” (Self-Restraint) in the Japan Disaster Aftermath. Stimulation of consumer spending is a requirement for Japanese economy to recover.
The companies operating in Japan, both Japanese and non-Japanese (foreign affiliates), are expected to convert the challenges they are currently facing into opportunities for the growth of themselves and the economy.
As often said, necessity is the mother of invention. The author believes that under the current tough situation, companies will come up with breakthroughs by creativity and innovation to create and develop new products, services and businesses from which consumers and the companies benefit.
Resources:-
The Japan disaster triggering electricity supply shortage has been negatively impacting Japanese economy and businesses but there have been signs of new market demand creation and new businesses. Companies operating in Japan are expected to leverage this opportunity to grow their businesses and the economy with creativity and innovation, to stimulate consumer spending, a requirement for Japanese economy to recover.
Nikkei, Japan’s leading newspaper specialized in business and economy, reported on May 7 that with the Japanese government’s policy of reducing energy in the peak of summer to minimize planned blackout, there are some unexpected possibilities of new demand to be created.
In this article, the author would like to explain the background of the policy and introduce the outline of the article with some possible insights at the end.
1. What is the background of the Japanese government’s policy?
The Japan disaster of earthquake and tsunami that broke out on March 11 triggered the Fukushima nuclear plant issue, leading to electricity supply shortage. For this reason, there have been some planned blackouts as mentioned in the previous article The Reality of Japan Disaster – Affecting Nationwide. It has been effective to some extent so far but has been negatively affecting some businesses as reported in recent TV programmes/news.
However, the real challenge comes in daytime of summer, the peak of electricity used because offices and factories are operating and everyone use air conditioner.
For this reason, the Japanese government had set a target of reducing maximum electricity use at the peak by 15% and requested industry parties to take measures to achieve the target. Some companies have been working on it such as shifting summer holiday and operating at night time; however, some experts estimate that the energy saving policy could mean reduction in productivity.
On the other hand, there have been some signs that the policy may trigger creation of new market demand and business.
2. What kind of new marketing demand and business is likely to be created, according to Nikkei?
1) Services targeting “overtime work refugees”
Many companies are to set room temperature at 28℃ or above at summer and turn off the air conditioner after official working hours. This means many business persons working in offices in cities to become “overtime work refugees”, getting out of their offices as soon as the official working hour ends because it is too hot and humid to work in the office after the air conditioner is turned off in Japan in summer.
Taking this opportunity, comic cafes that usually target young generation and other businesses started to exploit market targeting such business persons. For example, business owner that provides study room charging by hour has been providing seminars on accounting mostly at weekends but he is to change operating hours to evenings during week days to attract “overtime work refugees”.
2) Accommodation at summer resorts with discount rate
A business owner of a pension in Nagano, a popular summer resort in Japan, created a new discount plan to attract customers. The customer can benefit from 20% discount if he/she stays more than 5 nights.
The department in Mitsui Fudosan that runs hotels is to discount hotel rates for customers staying 2 or more nights in their hotels in Sapporo in Hokkaido (northern Japan, famous for cool summer) and other hotels located in summer resort area in Japan.
Some companies that use electricity supplied by TEPCO is planning to make their summer holiday longer than previous years as a counter measure of energy saving when many Japanese companies set their summer holiday only 1 week or less, making many Japanese people to enjoy their vacation “near their house, spending less, in short time”.
If more people get longer holidays, it is likely that they enjoy vacation leveraging discount rate of accommodations at summer resorts mentioned above, which could help tourism that is suffering from less revenue/business fewer tourists from outside Japan.
3) Energy saving LED bulbs
Power consumption of LED bulbs is half of LCD so although its price is 2,000 – 4,000 JPY which is higher than LCD bulbs and many people are now buying LED bulbs to benefit from energy saving. This is why recently there has been a crowd of people in LED bulb display corners of a leading mass merchandiser of consumer electronics in Tokyo.
METI (Ministry of Economy, Trade and Industry) has drawn up a blue print of replacing all bulbs in Japan to LED and other energy saving ones by 2030. The electricity supply shortage attributing to the Japan disaster is expected to accelerate popularization of LED.
4) “Energy saving biz” products (vs. “Cool biz” that has already become popular)
“Cool Biz” (the name of an energy-saving campaign the government started in 2005) products such as business casual clothes without neck ties for men has taken root and is a pillar of summer business for department stores, and this year it has started to spread to “electricity saving biz” products. This is because some companies are to approve their employees to come to their offices in polo shirts. Taking this opportunity, a few department stores imported fashionable polo shirts and plan to expand polo shirts corner by 40%.
In addition, some business men who go to work without jackets started to buy sun screen creams as a counter measures to protect themselves from ultra-violet lights, which is an unexpected demand. Taking this opportunity, Shiseido, a leading maker in the industry, is operating at its maximum to meet such market demand to produce sun screen creams.
3. The author’s final thoughts
As Nikkei reports, industrial output index for March dropped by 15.3% from February, which the largest drop in the history attributing mostly to broken link of global supply chain due to the Japan disaster. Many experts say that the recovery of the index is to be in autumn or later. Thus, Japanese companies, especially manufacturers, are facing challenges that they had never faced.
However, “hot summer without sufficient electricity and air conditioning” can mean creation of new market demand meaning new businesses and this would stimulate consumer spending when “jishuku”, restraining from spending money, have been proliferating after the disaster, as mentioned in the previous article Impact of “Jishuku” (Self-Restraint) in the Japan Disaster Aftermath. Stimulation of consumer spending is a requirement for Japanese economy to recover.
The companies operating in Japan, both Japanese and non-Japanese (foreign affiliates), are expected to convert the challenges they are currently facing into opportunities for the growth of themselves and the economy.
As often said, necessity is the mother of invention. The author believes that under the current tough situation, companies will come up with breakthroughs by creativity and innovation to create and develop new products, services and businesses from which consumers and the companies benefit.
Resources:-
The Japan disaster triggering electricity supply shortage has been negatively impacting Japanese economy and businesses but there have been signs of new market demand creation and new businesses. Companies operating in Japan are expected to leverage this opportunity to grow their businesses and the economy with creativity and innovation, to stimulate consumer spending, a requirement for Japanese economy to recover.
登録:
投稿 (Atom)