By Ryoko Ward
Tokyoesque are experts in Europe-Japan relations and provide clients with unique cultural insights that can be used to accelerate business growth across the globe. In this week’s article, we outline five of Japan’s notable smart energy start-ups and what they’re doing to promote cleaner, greener energy.
Electricity deregulation and the rise of new players in Japan’s energy sector
In Japan, until April 2016 when electricity was deregulated, consumers could only buy their energy from a certain firm designated for their particular locality. Now people can buy electricity from 619 registered energy suppliers, according to the Agency for Natural Resources and Energy, Ministry of Economy, Trade and Industry. Although the biggest players are still the ones that have dominated the energy market across each region, such as Tokyo Electric Power Company (TEPCO), Chubu Electric Power, Kansai Electric Power Company, Kyushu Electric Power Company and so on, many consumers have been switching to buy energy from alternative suppliers. Among the many different criteria they use to decide which supplier to choose, sustainability is one of the key aspects to consider.
What challenges does Japan face in promoting sustainable energy?
For energy suppliers to offer sustainable options, however, there are several hurdles to overcome. One of the biggest challenges is the fact that the rate of energy self-sufficiency in Japan is currently only 5–6%, which means Japan needs to rely on imported energy and/or energy that is generated from nuclear power in order to secure a stable supply. For this reason, those energy firms that supply ‘sustainable’ energy tend to ‘mix’ the types of energy they provide, including energy generated from nuclear power plants. This is because it’s unlikely that they can generate enough environmentally-friendly energy on their own, so they have to purchase a portion from the major energy suppliers that usually deal with nuclear energy.
Furthermore, because Japan relies on imported energy, the country is at risk of being largely affected by global incidents. For example, over the past few decades, Japan has experienced major energy crises, exacerbated by several global events such as the oil shocks during the 1970s-80s and the Gulf War as well as the 2011 Tohoku Earthquake, which caused the nuclear power plants to shut down — not only in Fukushima but across the entire country. These have all been constant reminders that Japan needs to secure various sources of energy, including that generated by nuclear plants.
Nevertheless, Japan is joining the smart energy movement
To promote the use of renewable energy, the Japanese government introduced a Feed-in Tariff (FIT) in 2012, with which they guarantee a fixed price of renewable energy with a subsidy. Because renewable energy such as solar energy and wind power tends to incur high generating costs and unstable supply, it has a natural disadvantage when compared with, for example, thermal power which costs less and is easier to control in terms of the amount of energy produced. For this reason, the government is helping sustainable energy businesses by subsidising the gap between the fixed rate and the actual market rate for sustainable energy.
Top smart energy companies in Japan
1. Greena Denki
Greena Denki, electricity supply brand owned by Next Energy & Resources Co., Ltd., claims to be the first Japanese company that supplies 100% renewable energy.
Aqua Energy 100 is an electricity plan that supplies only electricity generated from hydraulic power, and is one of the few 100% sustainable energy brands that operate in Japan. Owned by TEPCO, the provider stresses that their wide network and the number of hydraulic power plants they own can guarantee a stable supply of electricity. The fact that they are not using FIT (Feed-in-Tariff) energy unlike many other smart energy suppliers demonstrates their confidence in being able to generate enough electricity from within their own network. TEPCO’s credibility as the largest electricity supplier in Japan also adds another layer of trust. Aqua Energy 100 also donate part of their sales to a charity for environmentally friendly causes.
Green People’s Power was established as an offshoot of a non-governmental organisation called People’s Power Network in 2017. Citing the Spanish energy supplier Som Energia as an example of what they aspire to become, they are unique in that they aim to supply renewable energy based on 100% citizen participation. This energy is generated from woody biomass and biomass waste, and includes FIT energy.
Shizen Denki, which directly translates as ‘natural electricity’, is an energy plan owned and supplied by telecoms giant SoftBank. They aim to maintain 50% of the electricity generated as FIT energy, and the actual ratio of renewable energy they provided last year (1 April 2018–31 March 2019) was 80%, which is still higher than many other ‘sustainable’ energy suppliers. Their key selling point is that they do not charge a basic fee, but customers are to pay only for the amount of electricity they actually used per month.
Minna-denryoku, Inc. is another electricity supplier whose FIT energy ratio is among the highest in Japan. One of the main features is that they connect their customers with the people who generate the energy they use. Calling it ‘Kao no mieru denki’, — or ‘electricity which allows you to see the faces of those who make it’ — Minna Denryoku acts as a platform where consumers can trace where the energy they use comes from and hence this enhances their sense of trust. Their website has a list of energy plants and customers are encouraged to ‘support’ their favourite energy generators (i.e. generators based in their home city, etc.) by clicking ‘support’. By doing so, a portion of the sales will be donated to each generator to whom the consumers showed their support.
Japanese energy companies are keen to learn from Europe
Japanese corporations are increasingly concerned with how they can fulfill Sustainable Development Goals (SDGs) that will be impactful on a global scale, not only within Japan. Therefore, they are looking at successful case studies from overseas upon which to model their own projects, and gain inspiration from them. No doubt there is significant room for European energy suppliers to share their expertise and collaborate with Japanese companies. Consumers also want to know that the companies they support are committed to delivering solutions towards those SDGs, so energy companies in Japan want to understand how this can be realised effectively.
Tokyoesque specialises in providing cultural and consumer insights through market research including both quantitative and qualitative methods to help you maximise your impact in the Japanese market. If you are interested, please feel free to reach out to us.