Reduce your energy costs in Japan and Japan’s energy situation post-Fukushima

Delegation of the European Union EU to Japan in Tokyo

Energy costs in Japan: A presentation to diplomats from the 28 EU countries (+ Norway and Switzerland) given at the EU Delegation in Tokyo on Thursday 18 May 2017

How can you reduce your energy bills?

Energy costs in Japan, how to reduce energy costs, and the current energy situation in Japan post-Fukushima are inherently linked and are the topics of this talk given by Gerhard Fasol at the EU Delegation (EU Embassy) in Tokyo on Thursday 19 May 2017.

Electricity prices in Japan compared to EU countries. Electricity charges in Japan are about 40% cheaper than in Germany.

Energy costs in Japan: Even now, post-Fukushima, electricity costs in Japan are not particularly high, if Japan was a EU country, Japan’s electricity costs would be ranked at about 15th or 16th rank.

Japan’s electricity charges are about 40% cheaper than in Germany, and on a similar level as in France or UK.

  • Ireland c€59.01
  • Germany c€40.28
  • Spain c€37.26
  • Sweden c€36.11
  • Portugal c€33.41
  • Denmark c€32.78
  • Czech Republic c€31.92
  • Cyprus c€31.79
  • Austria c€29.88
  • Finland c€29.20
  • Italy c€26.61
  • Slovakia c€26.30
  • France c€25.09
  • Luxembourg c€24.29
  • Croatia c€23.10
  • Japan c€23
  • Slovenia c€22.68
  • UK c€20.19
  • Poland c€18.80
  • Hungary c€18.35
  • ….

(source: Eurostat as of July 2013, energy costs in Japan: electricity costs for Japan are typical Tokyo household electricity charges)

Paradigm shift: redesign the electricity grid

We see a paradigm shift: we need to change how we think about energy. Our electricity supply system has been built over the last more than 100 years and many design principles have been decided 100 years and have then been frozen in, although they might not be the best choices any more in today’s world.

Traditional electricity grids are designed top-down, with large centralized power stations at the top, and a distribution system down to the end users.

This traditional hierarchical top->down integrated grid structure is globally in the process of reinvention. The different services:

  1. generation
  2. transport
  3. grid frequency stabilization
  4. distribution

are being split into separate businesses, and each one is being deregulated. In addition, the top-down structure is changed: renewable energy sources, micro-hydropower station and other sources feed electricity into the grid from the bottom-up, requiring changes in the design and management of power grids.

In Japan the traditional electricity grid has three hierarchical layers:

  1. Special high voltage (特別高圧)
    1. 500kV, 270kV, 140kV
    2. 60kV
    3. 20kV
  2. High voltage (高圧) 6kV
  3. Low voltage (低圧) 200V, 100V

These three markets (1) Special high voltage, (2) High Voltage, (3) Low voltage, are approximately of equal size in Japan, and represent each about 1/3 of Japan’s electricity market. The (3) Low voltage market was deregulated on April 1, 2016, and the other two market sectors earlier. Up to March 31, 2016, 10 regional electricity operators had the monopoly in the retail (low voltage) sector of their regions. Since April 1, 2016, all markets are liberated and low voltage segment consumers are free to buy their electricity from a number of suppliers.

50Hz/60Hz

Electricity started in Japan in 1893:

  • The first generator in Tokyo was from the German firm AEG, and therefore 50Hz
  • The first generator in Osaka was from the US firm General Electric, and therefore 60Hz

Event today the west of Japan has 60Hz, while the east has 50Hz. Since semiconductor electronics enables frequency conversion, and since long distance transport is frequently DC anyway, this 50Hz/60Hz split is very unlikely to change.

AC/DC

For historic reasons, most electricity is delivered to end customers as AC (alternating current), however most consumption today is increasingly DC (direct current). e.g. LED lighting, computers and most IT equipment including data centers require DC electricity. Solar power plants also produce DC electricity. Battery storage also requires and delivers DC electricity. So we might see an increasing shift to DC electricity supplies.

How to reduce your energy bill

Energy costs in Japan: in the past urban design typically maximized electricity sales:

  • “All Denka” was a long-term campaign by Japan’s electricity industry to maximize the consumption of electricity
  • design model:
    • build the town in order to sell as much electricity/air-conditioners/gas as possible
    • top-down: huge nuclear power stations far away + top-down distribution system
    • single windows, save money on insulation
    • heating in winter, air conditioning in summer

In the future

  • communities, companies and household take responsibility of energy locally
  • “positive energy buildings”: buildings generate and sell electricity instead of consuming. Example: MORI-Roppongi Hills
  • THINK: Marunouchi & MORI Buildings: “we want to be so well prepared for disasters, that people don’t run from our buildings, but that people come to our buildings for safety”
  • take responsibility!

How to reduce your energy bill > earn money selling electricity

    Plan, design and build energy positive buildings, sell electricity

  • cut consumption
    • Insulate
    • buy low-energy equipment, e.g. air-conditioner, washing machine
    • LEDs instead of bulbs and fluorescent tubes
    • energy management system
  • generate electricity:
    • solar, wind, heat-exchangers, heat-pumps, co-generation
    • fuel cells (e.g. Bloom (gas), or Enefarm, Panasonic) > off-grid
  • negotiate supply contracts, combine gas & electricity & phone/internet to get discounts
    • e.g. all three major phone companies (KDDI, Docomo, SoftBank) sell electricity, internet access etc + electricity. Combine: phone, internet, electricity to get discounts.

Nature governs energy – nature cannot be fooled

Today’s energy situation in Japan is directly a function of the outcome of the Fukushima-Dai-Ichi disaster.

To understand the reasons for why the Fukushima-Dai-Ichi disaster happened, it is necessary to go back in history, there is not one single reason for this nuclear disaster but many starting at the design decisions taken even before the construction started.

It is instructive to compare the situation of TEPCO’s Fukushima-Dai-Ichi nuclear power plant with Tohoku Electric Power’s Onagawa nuclear power plant:

  • TEPCO’s Fukushima-Dai-Ichi nuclear power plant: tsunami height = 13 meters, one of the worst nuclear disasters
  • Tohoku Electric Power’s Onagawa nuclear power plant: tsunami height = 13 meters: successful shut down without damage, served as a refuge for about 300 people from the neighborhood who had lost their homes in the tsunami and earthquake disasters

Why the difference?

  • TEPCO’s Fukushima-Dai-Ichi nuclear power plant: ground elevation was reduced from 35 meters to 10 meters to save cooling water pumping costs
  • Tohoku Electric Power’s Onagawa nuclear power plant: Yanosuke Hirai carefully research previous tsunamis, especially the Great Jogan Tsunami of July 13, AD 869, built 13.8 meters above sea level

Read in detail in our review of the Fukushima and Tohoku disasters, 6 years after, our blog of March 11, 2017:
http://www.eurotechnology.com/2017/03/11/tohoku-disaster-6-years/

A few days after the Fukushima-Dai-Ichi disaster, US President Obama sent 150 top nuclear engineers to Japan for 11 months to assist directly the Japanese Prime Minister and the Japanese Government and TEPCO to mitigate the nuclear disaster. The Leader of this team of 150 US nuclear experts was Chuck Casto, who I invited two times to talk at the Ludwig Boltzmann Forum events. Read Chuck Casto’s explanations of the Fukushima Disaster here:

I also invited the Kiyoshi Kurokawa, the former Chairman of Japan’s Parliamentary Commission into the Fukushima Nuclear Disaster, to speak at the Ludwig Boltzmann Forum:
Kiyoshi Kurokawa: “Groupthink can kill” (6th Ludwig Boltzmann Forum 20 February 2014)

Summary

  • Nature governs energy, and nature cannot be fooled (Richard Feynman)
  • Global trend: reengineering the grid. Localize, democratize, liberalize, deregulate
  • Renewable energy: wind power can cover all of Japan’s energy needs (in principle)
  • Energy, electricity and gas market liberalization is going ahead

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Copyright (c) 2017 by Eurotechnology Japan. All Rights Reserved.

Japan GDP growth and losses at Japan Post – Gerhard Fasol interviewed by Rico Hizon on BBC TV

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Japan’s economy grows five quarters in a row, and Japan Post books losses of YEN 400.33 billion (US$ 3.6 billion) for an acquisition in Australia

Japan GDP growth, growth of 2%/year. Still, Japan’s economy is the same size as in 2000, while countries like France, Germany, UK today are double the size as in the year 2000

Japan GDP growth: We have seen 5 quarters of economic growth in Japan, for the January-March 2017 quarter the consensus is that the Japanese Government is likely to announce economic growth corresponding to an annual growth rate of around 2%/year (update: Japan’s Government announced an annual growth rate of 2.2%/year).

Generally the business mood in Japan is optimistic now, personal consumption and industrial orders are growing. We see investments in preparation for the 2020 Olympics. Venture start-ups and venture investments are growing, while still at a low level, we see venture businesses developing not only in Tokyo, but also in regional centers around Japan.

One mid-term risk to Japan GDP growth is the potential implementation of the postponed consumption tax rate increase.

The big picture however is, Japan’s economy today is approximately the same size as 17 years ago in 2000. During the same 17 years most major economies, e.g. France, Germany, UK have doubled in size. France, Germany, UK’s economies today are about twice the size as in 2000, while Japan’s economy today is about the same size as in 2000. Quarterly GDP figures just measure the short term fluctuations of this long term behavior.

Rico Hizon: so what would Japan have to do to restart long term growth?

Gerhard Fasol’s answer

Japan would have to do three things to restart economic growth long term:

  1. Population: Implement policies to make it easier for families to have children, shift spending from the aged to children, improve eduction, shorter work hours, build children’s day care centers, gender equality
  2. Implement Prime Minister Abe’s “third arrow”, the reforms. Deregulation not just in a few “special zones” but nation wide.
  3. Improve corporate governance to improve company’s growth, globalization and management.

Japan Post trips up on globalization: books YEN 400.33 (US$ 3.6 billion) losses due to an acquisition in Australia – with a Toshiba connection

Japan Post announced a loss of YEN 400.33 (US$ 3.6 billion), and a resulting net loss of YEN 28.98 billion (US$ 260 million) for the fiscal year ending March 31, 2017.

Japan Post Holdings was launched on the Tokyo Stock Exchange with the IPO on Nov 4, 2015.

Investors expect major growth of Japan Post Holdings into a global business, such as Deutsche Post has with privatization and later the acquisition and merger with the global logistics group DH about 20 years ago.

Around the time of the IPO Japan Post announced the acquisition of the Australian logistics group Toll for about YEN 620 billion (US$ 5.5 billion), while Toll’s market cap previous to the acquisition was about YEN 410 billion (US$ 3.7 billion).

Japan Post’s recent write-down at Toll is about equal its pre-acquisition market cap, or about 65% of the acquisition prize.

The deep problem of Japan Post’s steep write-downs at the Australian acquisition Toll, is that this casts doubts on Japan Post’s developments into a global business.

The Toshiba connection: Japan Post’s former CEO, Taizo Nishimuro (西室 泰三), previously served as CEO and Chairman of Toshiba

CEO of Japan Post at the time of the questionable Toll acquisition was no other than Mr Taizo Nishimuro (西室 泰三), former CEO and Chairman of Toshiba, now honorary advisor of Toshiba, who spent all his career at Toshiba, working at Toshiba since 1961. Toshiba is currently in severe difficulties caused primarily by Toshiba’s acquisitions of US nuclear construction firms, however Toshiba’s fundamental problems go back much much longer.

Japan Post Holding [6178]

Japan Post Holdings was founded on 23 January 2006, following the path to privatization initiated by Prime Minister Koizumi of Japan’s national Post Office.

Japan Post Holdings is listed on the Tokyo Stock Exchange (No. 6178), IPO was on 4 November 2015, and has five divisions:

  1. Japan Post Service (日本郵便株式会社): mail delivery
  2. Japan Post Network (郵便局株式会社): Post Offices = retail and real estate
  3. Japan Post Bank (株式会社ゆうちょ銀行): Tokyo Stock Exchange No. 7182
  4. Japan Post Insurance (株式会社かんぽ生命保険): life insurance. Tokyo Stock Exchange No. 7181
  5. Toll Holdings: logistics

Copyright (c) 2017 by Eurotechnology Japan. All Rights Reserved.