How tech can enliven Japan’s energy market

As the Japanese government targets more than a third of its power supply to come from clean sources by 2030, new technologies supporting the renewables market have sprung up. Kansai Electric Power manager Naoki Katayama shares more.

Naoki Katayama, deputy general manager of Kanden
Mr Naoki Katayama, who is an alumnus of Hitachi Young Leaders’ Initiative (HYLI) in 2005, believes in investing in companies providing environmentally friendly solutions across national borders.

In the transition to a low-carbon world, the sun accounts for an increasing amount of energy produced and consumed. But the energy generated is difficult to regulate as it is dependent on the weather. That is why accurate weather forecasting tools are gaining more traction, as researchers want to know in advance, as closely as possible, the amount of solar energy supply going into their power systems. 

In Japan, where the government targets to make renewable sources of energy account for up to 36 to 38 per cent of the power supply by 2030, new technologies supporting the renewables market have sprung up. One of them is Apollon, a solar power generation forecasting system developed by Kansai Electric Power (also known as Kanden), which is based in Osaka and is the largest privately-owned electric utility in Japan. 

Apollon, an acronym that stands for areal solar power forecasting system using satellite imagery estimation, uses imagery from the Japanese weather satellite Himawari-8 to predict solar radiation levels, and hence energy supply in the Kansai region in Japan.

Kanden’s manager Naoki Katayama says that while figures for absolute cost-savings cannot be disclosed, “Apollon can save millions of dollars, depending on the commodity prices such as oil and gas”. “If you don’t have good forecasting of solar power generation,” he adds, “then you would have to make fossil fuel power stations stand by, possibly in a wasteful way.”

Accurate forecasting systems can help make energy marketplaces more competitive. Katayama explains: “If you have good forecasting systems like Apollon, you can trade your excess energy with others on P2P (peer-to-peer) markets more easily and economically. With a wider spread use of this technology, more and more independent and individual energy distributors will have access to the energy marketplace, and the market will become livelier and competitive.”

“If you have good forecasting systems like Apollon, you can trade your excess energy with others on P2P (peer-to-peer) markets more easily and economically. With a wider spread use of this technology, more and more independent and individual energy distributors will have access to the energy marketplace, and the market will become livelier and competitive.”

Naoki Katayama, manager, Kanden

Katayama is also in charge of the company’s corporate venture capital arm named K4 Ventures. K4 Ventures invests in firms developing low-carbon solutions, storage batteries, AI and so on, and its fund constitutes approximately 9 billion Japanese yen

In this interview, Eco-Business chats with this industry stalwart, who was trained as a lawyer and is an alumnus of Hitachi Young Leaders’ Initiative (HYLI) in 2005, to learn more about his thoughts on ESG trends in the Asia-Pacific region as well as his experience at the youth development programme.  

How has the Covid-19 pandemic spurred investments in ESG-related companies? 

I speak in the context of “E”, for environment. As more people work from home, they become more incentivised to reduce their electricity bills, which can make them turn to sources of renewable energy, and take measures like installing rooftop solar panels. This could spur investment in companies whose products are related to the clean energy movement. 

What do you see as the key trends in ESG investing in the Asia-Pacific?

I see ESG investments, especially environment-related ones, growing not only within a single country, but across nations in APAC. As far as global warming is concerned, countries are interrelated and affected by one another. I believe that as neighbours living in the APAC region, we will see more movements to invest in companies providing environmentally-friendly solutions across national borders.

Which country is taking the lead for ESG investments in APAC and why? Is Japan poised to be a trendsetter in this area?

Yes, it is. Japan should be one of the leaders because it has been dependent on imports from the rest of the world for natural resources such as oil and gas. Therefore, this country is very keen to develop low-carbon energy-related technology and solutions, especially as we’re currently facing a crisis in energy supply due to the current Russia-Ukraine situation. 

Why did you develop Apollon? How did that change how energy is distributed, managed, traded and governed?

Kansai Electric developed Apollon with its subsidiary company Meteorological Engineering Center two years ago, because the technology had the potential to help increase the use of renewable energy in the APAC region. Thanks to this technology, people can get a better forecast of the amount of energy produced by solar power stations, including their rooftop solar panels, and adjust their usage of fossil fuel energy, which also leads to cost reduction in their electricity bills. 

Moreover, improved forecasting will make it easier for them to trade excess energy with others, a process called peer-to-peer (P2P) trading. More of such P2P trading can be governed by smart contracts [programmes stored on a blockchain that runs when predetermined conditions are met]. This will help remove the burden on independent and individual energy distributors to make legal contracts by hand.

Can you tell us more about the concept of PEACE, and how your team at HYLI came up with it?

We came up with PEACE (Process for an East Asia Common Economy) to accelerate the integration of economies in East Asia. “Challenges and Opportunities of Asian Economic Integration” was one of the sub-themes at the 7th HYLI. As our team members were aware that East Asian countries faced the challenge of participating in the opportunities of free trade, we came up with a win-win mechanism that would establish a so-called “PEACE Fund” comprised of voluntary contributions from member-nations. These nations could receive incentives, including prioritising sub-contracting and preferential tariffs, from other member countries.

How does Apollon fit into your team’s vision of PEACE?

Apollon will possibly make such an integration of East Asian economies happen by supporting cross-border transactions of solar energy and/or its environmental values on a P2P basis among independent and individual energy distributors in the region who will benefit from its forecasting technology.

How was your experience at the Hitachi Young Leaders Initiative?

PEACE was originally developed for East Asia, but the idea could be widened for the entire APAC. Free trade can potentially happen in the context of exchanging environmental value or carbon credits among different industry players and individuals in the region. My experience at HYLI has enabled me to think more broadly.

It has also motivated me to stay peace-oriented in the real world. Through my discussion with my team members, I learnt to build win-win relationships among different players with conflicting interests across borders. Currently, I always try to keep in mind that my professional skill as attorney at law can be used to make peaceful relationships, especially after long and severe negotiations between different parties.

What advice would you give to youths who are interested in participating in HYLI? 

With the Covid-19 pandemic, I imagine that students would have fewer opportunities to communicate with their peers from other countries. HYLI will be an excellent chance to discuss ideas with people from other backgrounds, and is a platform to create longstanding relationships. 

Even though I participated in HYLI over 15 years ago, I’m still in communication with my batch mates! Some of my HYLI friends became my classmates at Columbia University in New York, and some even came to my wedding in Tokyo. Make the best use of your time together and get to really know people. 

The theme for this year’s HYLI is Social Innovation in the New Normal. The event will be held from 18 to 21 July. 

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