Japan's Energy - myths versus reality (keynote at The Economist Corporate Network briefing)

(c) www.eurotechnology.com [email protected] April 24, 2014

Gerhard Fasol PhD Economist Corporate Network

Tokyo April 24, 2014

JAPAN’S ENERGY - MYTHS VERSUS REALITY

http://www.eurotechnology.com

mailto:[email protected]


JAPAN’S ENERGY - MYTHS VS REALITY

•Nature governs energy - nature cannot be fooled !

•Where are we and why? !

•Where do we go forward?




NATURE GOVERNS ENERGY

•“For a successful technology, reality must take precedence over public relations, for nature cannot be fooled” (Richard Feynman in the Rogers Space Shuttle Challenger report) •I am physicist and “energy” in my DNA…

•see: http://www.boltzmann.com/events/symposia/



http://www.boltzmann.com/events/symposia/


WHERE ARE WE AND WHY?Year action

February 15, 1883 Tokyo Dentou KK receives Government license, starts business in July 5,1886

1893 Tokyo Dentou KK introduces 50Hz equipment from AEG (of Germany) Osaka Dentou KK introduces 60Hz equipment from GE (of USA)

1896 33 electricity utility companies

700 electricity utility companies

1938-1939 Japan’s electricity industry nationalized

March 1942 Nihon Hassouden KK (Nippatsu) created (generation + transmission) 9 distribution companies (Tokyo Dentou dissolved March 1942)

May 1, 1951 US occupation government orders dissolution of Nihon Hassouden KK (Nippatsu), 9 regional electricity monopolies created,1972 + Okinawa Power Co

March 1, 1961 construction of first Japanese nuclear power plant (Tokai Nuclear Power Plant, UK Magnox type) starts (power generation starts 1966, decommissioned in 1998)

source: http://www.eurotechnology.com/store/j_energy/



http://www.eurotechnology.com/store/j_energy/


CAUSE OF FUKUSHIMA NUCLEAR ACCIDENT

•Parliamentary Commission chaired by Kiyoshi Kurokawa: Regulatory capture

•Kurokawa: “Group think can kill”, see: •http://www.eurotechnology.com/2014/03/09/kiyoshi-kurokawa-groupthink-can-kill/

•not a Japanese phenomenon •theory of regulatory capture: •George Stigler (Nobel Prize 1982) “Economic Theory of Regulation”



http://www.eurotechnology.com/2014/03/09/kiyoshi-kurokawa-groupthink-can-kill/


DANIEL KAHNEMAN2002 Nobel Prize in Economic Science !

Psychology of judgment and decision making !

“why clever people make stupid decisions”... !

Eminent US philosopher about Daniel Kahneman: “I am not interested in the psychology of stupidity”




PRIMARY ENERGY SELF-SUFFICIENCY RATIOS TRADITIONAL VIEW - NEGLECTS RENEWABLE POTENTIAL

Italy Japan S!Korea Germany France US India UK China Canada Russia0

20

40

60

80

100

120

140

160

180

200

Energyselfsufficiencyratio!""

Energy self sufficiencyratio !IEA, OECD, 2006!2007"

15"

!15""18"

!4""19"

!2""41"

!30""

51"

!8""

71"

!62""

76"

!75""

83"

!76""

92"

!91""

153"

!144""

183"incl. nuclear

!177""!excl. nuclear"

!c"2012EurotechnologyJapanKK

www.eurotechnology.com

Japan’s energy “self sufficiency” is 4% with nuclear power switched off, and 18% with nuclear power switched on. However, this reasoning does not include the potential of not yet developed renewable energy sources, which are 100% domestic, e.g. wind energy, geo-thermal. If wind energy, solar, geo-thermal, micro-water power and other renewable sources are fully developed, Japan could come close to or even exceed self-sufficiency in energy in the future. Source: http://www.eurotechnology.com/store/j_energy/





GENERATED ELECTRIC POWER

Jan 2007 Jan 2008 Jan 2009 Jan 2010 Jan 2011 Jan 2012 Jan 20130

10

20

30

40

50

60

70

80

90

100

110

120electricity

generated

perm

onth!Tera

Watth"mon

th#

Japan's electricity generation permonth !TeraWatt h# !Source: METI#

caloric

nuclear !red#

water power !blue#solar, wind, geothermal, biomassMarch

11disaster

!c#2013EurotechnologyJapanKK


source - includes about 200 pages of data and analysis of Japan’s energy sector: http://www.eurotechnology.com/store/j_energy/





WHY DOES JAPAN PAY SO MUCH FOR LNG?

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2008 2010 2012 20140

5

10

15

20

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NaturalGasprices!US$

"MillionBTU#

3.4 cent"kWh

6.8 cent"kWhMarch 11, 2011

Japan LNGUSA LNGExport

USA pipelineImport

EU

Natural Gas prices !US$ " Million BTU#

!c#2012EurotechnologyJapanKK


Japan pays about 5% of GDP for importing primary energy (detailed statistics: http://www.eurotechnology.com/store/j_energy/). Japan pays far more for LNG per unit than US costs or EU - why? • not one single reason:

• liquefaction + transport • political reasons • timing • negotiation know-how • competition reasons • project management • etc





THE CONTRIBUTION OF RENEWABLE ENERGY TO JAPAN’S ELECTRICITY GENERATION HAS FALLEN FROM 25% TO AROUND 10% FROM 1970 UNTIL TODAY

1970 1980 1990 2000 20100

10

20

30

percent!!"

Japan's generatedrenewable electric power as aratio of total generated power !!"

Water

Pump Storage

Renewable !except water power"



source and more details: http://www.eurotechnology.com/store/j_renewable/



http://www.eurotechnology.com/store/j_renewable/


INSTALLED WIND POWER GENERATION CAPACITY

China US Germany Spain India UK Italy France Canada Portugal Japan ROW0

10

20

30

40

50

60

70

80

90

100

windpower!Giga

Watt"

wind power !end 2012"75.6

60

31.3

22.8 18.4

8.4 8.1 7.2 6.2 4.5 2.6

39.9






THE WAY FORWARD

•global grid trends •democratization •liberalization •localization •renewable energy

•the new Government Energy Strategy




GLOBAL TREND: REDESIGN ELECTRICITY GRIDS

特別高圧(1) 500kV, 270kV, 140kV(2) 60kV(3) 20kV

高圧 6kV

低圧 200V, 100V

Power stations:(1) generate power(2) stabilize grid frequency

特別高圧(1) 500kV, 270kV, 140kV(2) 60kV(3) 20kV

高圧 6kV

低圧 200V, 100V

Power stations:(1) generate power(2) stabilize grid frequency

Traditional top-down energy grid. TEPCO’s supply grid for Tokyo and the region around Tokyo has been built over many years according to this top-down principle. Electricity flows one-way from large central power stations to customers.

In most countries traditional top-down grids are evolving to a new paradigm. As small local power plants, renewable energy sources such as wind and solar, geo-thermal or micro-water plants, are added on the distribution end of the grid, electricity flows both ways: top-> down, and bottom -> up. New technology need to be introduced to stabilize and synchronize supply/demand, and stabilize the frequency in such a modern grid.




TAKE AWAYS:

•Nature governs energy •Nature cannot be fooled (Feynman) •Global trend: reengineering the grid

•localize, democratize, liberalize •Renewable energy: wind can in theory cover all of Japan’s energy needs •Energy strategy plan has no KPI’s




CONTACT AND MORE INFORMATION

Gerhard Fasol CEO, Eurotechnology Japan KK Board Member, GMO Cloud KK !http://www.eurotechnology.com/ [email protected] !More information: http://www.eurotechnology.com/japan-energy/ !Detailed statistical data and analysis: http://www.eurotechnology.com/store/j_energy/ http://www.eurotechnology.com/store/j_renewable/



http://www.eurotechnology.com/japan-energy/


http://www.eurotechnology.com/store/j_renewable/

Technology

Japan's Energy - myths versus reality (keynote at The Economist Corporate Network briefing)