Takuya Yamazaki Director for Electricity Market Reform (Legislation) Electricity Market Reform Office

Transcription

1 Ministry of Economy, Trade and Industry Agency for Natural Resources and Energy August, 2014 Takuya Yamazaki Director for Electricity Market Reform (Legislation) Electricity Market Reform Office Agency for Natural Resources and Energy Ministry of Economy, Trade and Industry (METI), Japan

2 Ministry of Economy, Trade and Industry Agency for Natural Resources and Energy Table of Contents 1. Overview 2. Current Situations and Strategic Energy Plan 3. Market Reform 1

3 Ministry of Economy, Trade and Industry Agency for Natural Resources and Energy 1. Overview 2

4 Japan s Electricity Market Outline 10 Vertically Integrated Power Companies (EPCOs) and New Entrance (PPSs) Market volume: 1094TWh / 287 GW (2012) Retail competition for over 50kW customers (62% of the market in 2013) - Share of non-epcos: 4.2% (2013) - 1.3% of the total retail market sales is transacted at JEPX (2013) Average household electricity price was yen/kwh before 3.11 (2011); yen/kwh (2013) (24.81 yen/kwh in 1994) Frequency West Japan: 60Hz East Japan: 50Hz *EPCO: Electricity Power Company *PPS: Power Producers and Suppliers *JEPX: Japan Electric Power Exchange Hokkaido (peak demand: about 5.7 GW) is connected by DC line. Okinawa Chugoku [2012] GW 5.57 GW 2.4 GW Kyushu [2012] GW Frequency in West: 60Hz DC Direct Current, FC Frequency Conversion GW Kansai [2012] GW Shikoku [2012] 5.26 GW 5.57 GW DC Tie line 1.4GW Hokuriku [2012] 5.26 GW 5.57 GW BTB 0.3GW Chubu [2012] GW Frequency in East: 50Hz Hokkaido [2012] 5.52 GW Tohoku [2012] GW Tokyo [2012] GW FC 1.2GW DC Tie line 0.6GW 12.62GW 3

5 History of Electricity Market Reforms in Japan No competition in the electricity market before 1995: 10 vertically integrated EPCOs dominated and controlled the market. METI embarked on a series of reforms... No. Year enforced Overview Opened the IPP (Independent Power Producer) market Allowed specified-scaled and vertically integrated power generators Introduced partial retail competition (over 2,000kW in 2000 [26%], over 500kW in 2004 [40%]) Introduced regulation of third party access to grid lines Expanded retail competition (over 50kW [62%]) Established the wholesale power exchange (JEPX) and its supporting body for transmission in wider areas Improved regulation of third party access to grid lines, and introduced accounting separation of transmission/distribution sector Modified the rule of wheeling rates 4

6 Japan s Gas Market Outline Many gas suppliers, unlike electricity market 3 business types of gas supplier Type of Business General Gas Utility Business Community Gas Utility Business Number of Companies Ratio of Sales % 1, % LPG Business 21, % Market volume (sales volume) (2013) - Gas market : ca billion m 3 - LNG market : ca. 1.6 billion m 3 Numbers of Users ca.29million (53%) ca. 1.4million (3%) ca.24million (44%) General Gas Utilities : ca billion m 3 (92.3%) New Entrants : ca. 2.8 billion m 3 (7.7%) Gas pipelines are diversified, and not connected nationally Self-regulation for LNG terminals Pipelines and LNG terminals in Japan Retail competition for over 100,000 m 3 customers (65% of the market) - Share of New Entrance: 15% (2012) 5

7 History of Gas Market Reform in Japan No competition in the gas market before 1995: METI embarked on a series of reforms... Deregulation of the gas retail market began in 1995, 5 years earlier than for electricity. No. Year enforced Overview Introduced partial retail competition (over 2 million m 3 [47%]) Expanded retail competition (over 1million m 3 [52%]) Introduced regulation of third party access of pipelines for 4 big gas companies Expanded retail competition (over 500,000 m 3 in 2004 [56%]) Improved regulation of third party access to pipelines, and introduced accounting separation of transportation sectors for all of General Gas Utility Business Expanded retail competition(over 100,000 m 3 in 2007 [63%] ) 6

8 Current Organizational Structure for Electricity and Gas Regulation Ministry of Economy, Trade and Industry (METI) Commerce and Information Policy Bureau Agency for Natural Resources and Energy (ANRE) <Ref> Nuclear Safety Commerce, Distribution and Industrial Safety Policy Group Ministry of Environment Electric Power Safety Division Safety Regulation on electricity facilities, especially technical aspects High Pressure Gas Safety Office Gas Safety Office Nuclear Regulation Authority Secretariat of the Nuclear Regulation Authority Commissioner's Secretariat Energy mix, international affairs etc. Electricity and Gas Industry Department Electricity Market Division Tariff regulation, monitoring the electricity market etc. Electricity Infrastructure Division Supply and demand plans, rule-making related to the grids, promoting development of power plants etc. Nuclear Policy Division Gas Market Division Energy Efficiency & Renewables Department Natural Resources and Fuel Department <Ref> There are some Ministerial Meetings related to energy issues, such as tightening electricity supply and demand etc.. 7

9 Ministry of Economy, Trade and Industry Agency for Natural Resources and Energy 2. Current situations and Strategic Energy Plan 8

10 Current Energy Mix in Japan Increase in LNG compensates for the decline in nuclear power. Renewables etc. Oil 48% LNG 25% Coal Nuclear Coal 9

11 Increase in Electricity Retail Price Following the Great East Japan Earthquake (3.11), the electricity price has risen steadily due to rate revisions from the increase in the cost of fossil fuels as a result of the suspended Nuclear Power Plants, and the rising renewable power energy promotion surcharge (FIT). (\/kwh) Trend of Electricity Retail Price by 10 EPCOs Household Average Industry 12 FY1995 FY1996 FY1997 FY1998 FY1999 FY2000 FY2001 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY

12 Fuel Import Costs Heavily Impact Japanese Economy In 2011, due to the increase in fuel import costs, Japan recorded a trade deficit for the first time in 31 years. The trade deficit for 2013 is 11.5 trillion yen. Lowering fuel import costs is an urgent task for the Japanese government. (trillion yen) Changes in trade balance and current account balance Trade balance Current account balance Trade deficit (2013) 11.5 Trillion yen Trade Balance (trillion yen) Difference Net Import Costs LNG Crude Oil Petroleum Products Coal

13 日本 (1973 年度 ) 日本 (2010 年度 ) 日本 (2012 年度 ) (%) FY1973 FY2010 FY2012 欧州 英国 フランス アメリカ 5% Coal 3% 1% 5% ドイツ % 28% 25% 30% % 43% 2% 7% 1% Fossil Fuel etc. Energy Security? Dependency on fossil fuel in the power supply is higher than that of the 1 st oil shock. Almost all fossil fuel in Japan is imported from abroad. Improving the self-sufficiency ratio in the energy supply is necessary to ensure energy security. Electricity Generation by Fuel Oil % LNG 22% 17% 9.8 1% % 29% Nuclear 40% 79% Japan Japan 0% China 20% Korea 40% USA UK 60% France Germany 80% Spain 100% India (2010) (2012) 14% % 25% 62% 43% 18% % 29% 19% 19% 3% 80% 15% 4% 8.4 Nuclear International comparison of energy self-sufficiency ratio (2012) Hydro 17% 2% 2% 9% 19% 9% 8% 88% 11% % % 0.03% 2% 4% 5% Renewables etc. 1% Source: Agency for Natural Resources Agency Sources: IEA Energy Balance of OECD, Non-OECD Countries 2012,

14 Strategic Energy Plan of Japan (April 11, 2014) Basic Viewpoint of Energy Policies (3E + S) Stable Supply (Energy Security) Cost Reduction (Economic Efficiency) Environment Safety + Global Viewpoint Developing energy policies with international movement appropriately Internationalizing energy industries by facilitating business overseas. Economic Growth Contribution to reinforce Japan s locational competitiveness. Activating Japan s energy market through energy system reform. Building multilayered, flexible and efficient energy supply/demand structure Establishing resilient, realistic and multi-layered energy supply structure, where each energy source can exert its advantage and complement others drawbacks. Creating a flexible and efficient supply/demand structure, where various players can participate and various alternatives are prepared through market reforms. 13

15 Nuclear All units (in red) are in a state of temporary shutdown as of February 24, units (in blue squares) are under review for restart by the Nuclear Regulation Authority in accordance with its new safety regulation. Re-establishment of Nuclear Policy Efforts toward reconstruction of Fukushima Pursuing the world s highest level of safety and stable environment for nuclear operations NPP in operation NPP in shutdown Under review by Nuclear Regulation Authority(NRA) 14

16 Renewables Although RES is increasing after introducing Feed-in Tariff scheme in 2012, the share of RES excluding hydro is under 2%. There are some already existing challenges on grids especially for tie lines. Accelerating Introduction of Renewable Energy : Toward Grid Parity in the Mid/Long term Appropriate implementation of FIT, improvement of environmental assessment procedures, R&D, enhancement of grids, etc. Composition of annual electricity generated in Japan Combined total capacity of renewable energy generating facilities 940.8TWh Source: ANRE,METI 15

17 Ministry of Economy, Trade and Industry Agency for Natural Resources and Energy 3. Market Reform 16

18 Electricity Market Reform in Japan: Roadmap April 2, 2013, Cabinet decided the Policy on Electricity System Reform to realize three objectives in Japan s market with a three-step approach. 3 Objectives (1) Securing a stable supply of electricity (2) Suppressing electricity rates to the maximum extent possible (3) Expanding choices for consumers and business opportunities (1 st Bill) 2013 (2 nd Bill) 2014 (3 rd Bill) st Step nd Step rd Step Apr. 2, 2013 Cabinet Decision Nov. 13, 2013 Jun. 11, st reform 2 nd reform 3 rd reform Cabinet Decision on the Policy on Electricity System Reform The 1 st Bill The 2 nd Bill Establishment of the Organization for Crossregional Coordination of Transmission Operators (OCCTO) 小売全面 Full retail 自由化 competition ( 参入自由化 ) ( At around 2015:Transition to new regulatory organizations) Period of transitional arrangement for retail tariff Abolishment of retail tariff Legal unbundling of transmission /distribution sector 17

19 Electricity Market Reform in Japan: 3 Steps 1 st step: Establish the OCCTO in 2015 (OCCTO : Organization for Cross-regional Coordination of Transmission Operators) Aggregate and analyze EPCOs supply-demand plans, and order to change EPCO s plans such as tie lines construction. Order EPCOs to reinforce generation and power interchanges under a tight supply-demand situation. 2 nd step: Full Retail Competition in 2016 Expand retail competition to the residential sector, opening new market. However, maintain regulated tariffs to 10 big EPCOs until around Provide the last resort service of supply, and secure a stable supply in isolated islands at a price comparable to the mainland. No choice Standard rate plan (Supplier A) Standard rate plan (Supplier A) Many choices Green Power rate plan (Renewables 100%) Standard rate plan (Supplier B) Time-of Use rate plan (Supplier B) Power rate plan combined with Electric vehicles 3 rd step: Unbundle the T/D sector at around Ensure fair third-party access to grid, through legal unbundling of transmission/distribution sectors of big EPCOs. Generation company Competitive Holding company Transmission/Distribution 送company 配(Transmission/ 電(System distribution 設operation) facilities) 備Regulated Retail company 18 Competitive

20 Gas Market Reform in Japan On November 12, 2013, the Gas Market System Subcommittee was established for discussing on the Gas Market Reform. 4 Objectives (1) Enhancing new services and new business (2) Suppressing gas rates to the maximum extent possible through competition (3) Promoting construction of gas infrastructure (4) Securing consumers interests and safety Direction of the Reform (under discussion) Expansion of the scope of retail deregulation - Full retail competition - Abolishment of retail tariffs Improvement of accessibility to gas infrastructure - Improvement of third party access to LNG terminals 19

21 Challenges of the Electricity and Gas Markets 1. New Energy Mix 2. Security of supply in the fully liberalized market Nuclear Capacity mechanism 3. New regulatory authority Desirable relationship between the government and the regulatory authority, in order to secure stable power supply Measures to ensure independency 4. Grid investment 20

22 Ministry of Economy, Trade and Industry Agency for Natural Resources and Energy Thank you!! 21