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Ministry hopes to cut peak-hour demand

Administration eyes system for utilities to pay power-saving firms

Kyodo

The Abe administration is studying a plan to require that power companies make “cooperation” payments to firms that cut their electricity use when demand peaks, sources said Wednesday.

It hopes to have the new system ready to go by fiscal 2016, when the sale of electricity will be fully liberalized, they said.

The country’s electricity supply has become tight, mainly in high-demand summer and winter, as a result of the suspension of all reactors in the wake of the 2011 nuclear disaster at Tokyo Electric Power Co.’s Fukushima No. 1 facility.

The administration is trying to work out a more effective power-saving plan for the business sector, which accounts for some 60 percent of demand.

Under the plan from the Ministry of Economy, Trade and Industry, businesses would be required to work out beforehand their power-saving hours and amounts through an intermediary firm called an aggregator.

In times of tight supply, utilities would ask the firms to cut back on electricity use and pay those that do so, the sources said.

The United States and Europe are going ahead with so-called “negawatt power” transactions, which regard electricity saved as the equivalent of electricity generated, METI said.

U.S. aggregators and others with know-how are considering entering the Japan market, the ministry said, noting that they would also advise firms.

In the U.S., peak-time power demand has been cut by an estimated 10 percent through the program, METI said.

Currently, utilities cut power rates to firms that reduce consumption.

The new plan is expected to cover smaller businesses that have yet to join the current power-saving program, according to the sources.

The program would also lead to a cut in utilities’ investments in power stations, METI said.

The Federation of Electric Power Companies of Japan, an industry body formed by 10 regional utilities, said the peak time for electricity need in the summer mostly comes around 2 p.m., when the mercury reaches its peak.

The nationwide power supply reached its peak last year on Aug. 9 at 159.07 million kilowatts due to widespread use of air conditioners, the federation said, adding the supply in winter is about 140 million to 150 million kw.