New allocation of rules and business segments of established and new participants in the energy sector currently and within a future electricity market design

This project compared the Japanese and German Energy policy with respect to energy transition to enable mutual learningbetween Japan and Germany. As one out of four strategic topics, commissioned by the German Japanese Energy Transition Council (GJETC), this study represents strategic topic 3 focusing on electricity market design issues. The study was carried out in collaboration with the Japan Electric Power Infomation Center, Inc. (JEPIC) and was managed by Dr. Patrick Matschoss.

The first objective was to analyze the current legislation and reform proposals under consideration for Germany and Japan, respectively. A further objective was to judge wheter these are suitable for the next steps of the transition and what they mean for the stakeholders - new and incumbents - and their business models. This redearch was conducted as a desktop-study on existing results and knowledge to analyze the status as well as the most relevant proposals on potential solutions for future framework conditions in both nations.

The sudy revealed the large differences in terms of energy market setup and stages of liberalization between the two countries- Therefore, the study provides fundamental descriptions of the liberalization processes and plans for the countries' energy transitions. That way the reasoning behind different instruments can be understood so that comparisons may be drawn. After the description of liberalization, long-term planning and the structure of the generation system (chapter 2) different models for dispatching conventional and renewable capacties in both countries are explained (chapter 3) as well as instruments for financing these capacities and networks (chapter 4). Chapter 5 then deals with the business models - that is: market participants - that have been in the market before and taht may emerge due the transition. Chapter 6 deals with distributional impacts of the transition whereas chapter 7 compares possible opportunities of the transition on a sub-national level.

Due the large differences between the countries the study was set-up in a particularly communicative format. After the analysis itself the partners commented on each other's analysis and could then react to each other's comments in order to engage in a dialogue (chapter 8). Issues here include:

  • different issues arise from the different stages of liberalization vis-à-vis the start of energy transition;
  • the need for long-term planning in energy transition for infrastructure investments in general and - if deemed necessary - for Nuclear power in particular;
  • the necessity to either pursue the Nuclear or the VRE-path at one point as both technologies require different types of energy systems;
  • the importance of flexibility in a VRE-based system;
  • the insecurtity of cost estimates of the Fukushima-accident (level of costs) and its incompatibility with a liberalized energy market (distribution od costs);
  • the rising FIT surcharge and accompanying problems of acceptance;
  • the strategic role of electricity networks and priority grid access for RE;
  • the contribution of RE to broaden the energy mix reducing import dependence.

After that, areas of agreement and disagreement where pointed out in common conclusions and recommendations (chapter 9). The recommendations are (excerpt):

  • both countries need to create a market design that translates the Paris agreement into their energy markets by setting incentives for the decarbonization of their energy systems;
  • a common challenge is the reduction of the use of fossil fuels: Japan needs to establish a long-term plan; in particular, this plan needs to include clear guidance on the future role of nuclear energy in order to avoid (more) stranded investments;
  • both countries need to make use of their renewable energy source endowments;
  • reinforcement of the grid is of strategic importance for both countries and both countries do have the possibility to do so;
  • both countries need to set the framework for (more) sector coupling, i.e. for the inclusion of heat (and cold) and mobility;
  • both countries should examine the current scheme of refinance the FIT-surcharge;
  • there is a necessity for further research on how to create sufficient incentives for the various flexibility options necessary to integrate VRE;
  • there is also a necessity for research in instrument design for financing renewable energies;
  • there is a necessity for research on the integration of VRE and the integration cost as these are energy system specific;
  • economic barriers to sector coupling need to be removed, leading to the research question of a new distribution of taxes and levies;
  • another issue for research is the above-mentioned modification of a partly alternate refinanced FIT-system.

Strategic topic 2, focusing on sicio-cultural aspects of energy transitions was also hosted by IZES (>> see here).

 

Publications

    The studies have been published on the website of the GJETC
     >> see here

 

Commissioned by

German Japanese Energy Transition Council (GJETC), via Wuppertal Institute for Climate, Energy, Environment

 

Partner

  • Japan Electric Power Information Center, Inc. (JEPIC)

 

Laufzeit: 
12/2016 to 12/2017
Arbeitsfeld: