Turning Point of Japan’s Energy Policy

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.