Why Japan is primed to become a leader in energy change

After launching two major new projects in Japan, LO3 Energy co-founder Bill Collins explains why the country and the whole region could be one of the leaders of the Energy transition.

The announcement of our latest projects with Marubeni and Kyocera in Japan is a landmark moment for LO3 Energy as a business.

Japan is one of the most progressive nations on the planet in terms of its focus on energy change. It is home to some intelligent, forward thinking companies and its regulators understand the need to evolve the market to accommodate the growth of renewable energy.

They are very focused at liberalizing their marketplace, moving from the traditional vertical operational approach to a more distributed model – and it is going to result in a major shift of emphasis in the industry.

No doubt, these are exciting times for energy in the region.

Establishing where the current major players in the existing system will sit within new industry models is important for their future – and that’s exactly why both Marubeni and Kyocera are working with us.

The technology we have developed is very much aligned with the Japanese government’s efforts around addressing the carbon intensity of their economy.

New innovations and business models that help with that decarbonization effort are welcomed with open arms, and the many companies we’ve spoken to there have been very keenly interested in what we’re doing.

A lot of people know of us because of the Brooklyn Microgrid in New York, because that has been a truly groundbreaking project and it was where we launched the concept of transactive energy and blockchain.

We have come a long way as a company since we began that project, having identified many different use cases for our unique technology around the world – from peer-to-peer trading to dynamic EV charging.

Our 2019 aims are heavily focused on developing fully active commercial operations around the world.

Having these two new projects in Japan opens up exciting opportunities in the immediate term. And, in the longer term, it will help us grow across the entire Asian region.

In fact, if you count Australia, more than 30 percent of our projects are now in the wider Asia region, along with the presence we have built up in the UK, Germany and the USA.

Our project with Marubeni will be building on the potential for peer-to-peer transactive energy.

In Japan, there is about to be hundreds of thousands of PV owners coming off their original feed-in tariffs. They will go from getting significant income for their excess energy to earning scraps.

Allowing them to sell that energy to their neighbors, via Marubeni, will offer them the potential to start earning more again.

You could describe it as ‘utility-enabled peer-to-peer’

By using our technology, Marubeni will be able to facilitate trades between neighbors within the existing regulatory boundaries, allowing prosumers to make more profit from their excess energy and local consumers to purchase renewable energy more cheaply than they currently do from a traditional relationship.

It works within the complex regulations required for a peer-to-peer market, which are traditionally a barrier to transactive energy.

No doubt, regulations will be developed in the future to allow direct peer-to-peer relations, but for now this kind of hybrid peer-to-peer solution is what is needed for the technology to flourish.  And it’s what companies like Marubeni need to help them establish their place in the evolving marketplace.

For Kyocera, it’s a totally different proposition. Our project with them centers on flexibility.

The existing grid operations model, which focuses on using distant power stations to provide power and balancing, is being broken down and reconstructed. The future is about using resources closest to the consumer to keep the grid ticking along – and the aggregation of distributed renewables into local virtual power plants is a big play in that.

Our technology will provide the transactive fabric to allow Kyocera to do this, making the whole process more efficient through incentivization. Efficient means cost effective. And cost effective means good business.

Flexibility in Japan is big, and the marketplace is now in a testing phase to evaluate how it can evolve. In the future, it will open up even further.

Ultimately, Japan chose itself as the next focus for LO3 Energy, not only because it is liberalizing the marketplace, has aggressive climate change objectives and has capital available for development…but also because it has an outward looking focus.

So, this is not just about Japan. It’s not even just about Asia. For us, and for these two companies, it’s about global potential.

Marubeni has a deep history in the energy markets and a keen interest in them internationally. They have a number of energy businesses that relate to what we’re doing domestically and internationally.

Likewise, Kyocera is a progressive company with a strong interest in developing renewable energy technologies and virtual power plants offer them huge potential for their global business ambitions.

Japan in general is very domestically focused in terms of infrastructure and the first aim of these projects will be to determine how to apply this technology on home soil and give proof to regulators and senior people within these companies that there’s commercial value.

Once the understanding of the technology and applications becomes clearer to some of the counterparties we’ve got there, I believe these projects will not only be very successful domestically but they will quickly move to an international focus.

And it is going to be interesting to see how it all develops.