METI Embraces the VPP as a Vital Tool in the Energy Transition

December 14, 2022|Electricity Market

As Japan seeks to accelerate the rollout of green energy, METI has concluded that one bottleneck that clearly must be dealt with is how to better balance power demand and supply. And the solution that has the bureaucrats most excited of late is the use of optimization tools like Virtual Power Plants (VPPs).

Weather-dependent sources like solar and wind make up the bulk of Japan’s renewables output, which exceeded 20% of the nation’s total electricity volume for the first time last year. A greater penetration of variable power sources has, however, strained the ability of grid operators to balance the electrons in the system with actual demand. As a result, more and more areas around the country are asking solar farms to curtail output at certain times for the sake of grid stability.

In the past, Japan’s energy planners looked to other generation sources to provide the balance, but METI officials have noticeably shifted their attention to digital and system optimization options. These include treating a fleet of electric vehicles (EVs) as a local grid balancing tool. Another is harnessing VPPs to aggregate a large number of power units and then functioning as an intermediary between them and the wholesale electricity market.

Ultimately, according to a TEPCO Power Grid proposal to METI, the installment of VPPs can stimulate the creation of local, sustainable energy marketplaces that offer new revenue options for developers while helping regions meet their carbon neutrality goals.

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