WEC Japan seminar sought path for an industry in transition

WEC Japan gathered five top executives from the Japanese energy industry in a seminar last month (5 December) to discuss the critical issues affecting the sector.

Tada

Guest speaker Mr Akihiro Tada Director-General of the Electricity and Gas Industry Department Agency for Natural Resources and Energy

Since the 2011 Fukushima nuclear event and the subsequent phase-out of nuclear energy, the Japanese energy industry has undergone drastic changes. LNG and oil have largely been making up for the supply shortfall (see graphic). A feed-in tariff (FIT) system for renewables, introduced in 2012, brought an unexpectedly rapid penetration of solar PV energy, raising concerns that it could threaten the stability of power system operation.

The North American shale gas revolution has affected LNG exports into Japan, while the continual fall of the oil price is already impacting on domestic suppliers. On the demand side, energy efficiency has been significantly improved, particularly in the transport sector where the deployment of high-efficiency cars has reduced gasoline consumption.

Mr Makoto Yagi, chairman of the Federation of Electric Power Companies of Japan (FEPC), reviewed the current state of the Japan’s electric power industry in the context of the challenges post-Fukushima. He pledged that the FEPC, the industry body, would devote itself to identifying the best generation mix for the economy, energy security, safety and the environment, including the case of an early restart of nuclear plants. Mr Yagi said the organisation would strive to improve energy efficiency and customer satisfaction by developing smart meters and providing a variety of rates.  The electric power industry should continue to undergo reforms to ensure that its services are beneficial to customers, he added.

Changes in daily load dispatching

Changes in daily load dispatching

Mr Yasushi Kimura, President of the Petroleum Association of Japan, discussed challenges for the Japanese petroleum industry. Despite the country’s abundant oil stockpiles being seen as an essential resource, the Japanese oil industry is facing declining domestic demand for the fuel due to the increasing uptake of fuel-efficient cars. This has forced Japanese energy companies to curtail their refinery plants and to become integrated companies entering into the electric power and gas markets. To dampen the decline in domestic oil demand, Mr Kimura called on the Japanese government to cut taxes on gasoline prices, which currently stand at 43% of the retail price, and particularly to abolish the VAT on gasoline tax.

Mr Yoshihiko Nakagaki, Chairman of the Japan Coal Energy Centre (JCOAL), pointed out that recent developments may signal tough times for the coal industry. The Obama administration has imposed strict environmental regulations on the US coal industry, while governments such as the US and UK have decided to stop funding coal in developing countries. These moves are unrealistic, argued Mr Nakagaki, as coal does play a substantial role in fulfilling the power demands in some. Clean coal technologies would therefore help those countries meet their supply needs while mitigating emissions. Japan, a country where coal accounts for 25% of electric power generation, could contribute by sharing its clean coal technologies which are known to have high thermal efficiency.

Mr Hiroaki Nakanishi, Chairman of the Japan Electrical Manufacturers’ Association, spoke about the challenges facing the country’s electric manufacturing industry.  These include accelerating the development and deployment of innovative technologies; maintaining the output of domestic manufacturers and expanding exports; taking the lead in establishing international standards by creating a clear energy and environmental strategy; and fostering talent and skills while sustaining advances in environmental and energy technologies.

Mr Hiroshi Ozaki, Chairman of the Japan Gas Association, identified the challenges confronting the Japanese gas industry. These include realising secure procurement at an affordable price by diversifying sources, terms of contract and transport; making the city gas supply system more resilient against disasters; and expanding the scale of the city gas market by entering into new business while seeking an optimal output of heat and electricity.

More than 180 delegates attended the seminar.