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With storms wrecking grids, Japan seeks home battery networks

Tokyo

AFTER recent typhoons ravaged Japan's grid and disrupted power to almost 1.4 million customers, the government is encouraging homeowners to invest in storage systems, seeking to marry batteries with existing rooftop solar capacity to create backup electricity networks.

The backbone would be the 2.3 million rooftop solar installations across the country, which have been selling power to the grid for years under long-term contracts.

As those deals begin to lapse starting this month, policy makers in Tokyo see a chance to create networks more resistant to disruptions, which are expected to become more frequent amid climate change.

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Takuya Yamazaki, a director of the new-energy division at the Ministry of Economy, Trade and Industry (METI), said: "We need to make our power system more resilient to natural disasters. Storms are becoming more powerful, and the damage is getting more serious."

Last month, Typhoon Hagibis killed at least 91 people and left more than 400,000 customers in the dark; the month before, Typhoon Faxai triggered an outage that hit more than 900,000 customers.

METI plans to spend 7.5 billion yen (S$93.9 million) in the year starting April to promote purchases of devices, including batteries and electric vehicles, that can help form the base for so-called virtual power plants (VPPs), said Mr Yamazaki.

VPPs aggregate distributed energy resources into a network large enough to serve a market.

Contracts will lapse this year for about 2 gigawatts of solar capacity set up under the country's feed-in-tariff (FIT) system for homeowners, which paid as much as 48 yen per kilowatt-hour. Once the FIT system ends, it would be more economical for homeowners to use the power themselves - and store the extra for emergencies - than to sell it. This is because buying power from utilities costs about 25 yen per kWh, and selling it would earn homeowners only about 9 yen per kWh.

More of the 10-year residential solar contracts with utilities are scheduled to expire each year as Japan winds down the subsidised buy-back programme, which started in 2009 to spur rooftop solar capacity.

In addition to the 2 gigawatts to free up this year, contracts accounting for about 9 gigawatts of capacity will lapse through 2029.

Expiration of the tariff won't change the landscape of the distribution grid, but may offer opportunities for VPPs, said Bloomberg NEF analyst Miho Kurosaki.

Itochu Corp and Moixa Energy Holdings Ltd are already managing 100 megawatt-hours of storage capacity across 10,000 homes in Japan, which the UK-based company says is probably the single largest fleet of smart batteries managed globally.

Japanese industry is also finding new uses for old infrastructure to support the grid. A unit of the Japanese telecom giant Nippon Telegraph & Telephone Corp said this month it plans to invest 600 billion yen to set up a power distribution network built around its existing infrastructure.

The country aims to boost its clean-energy output to account for 22-24 per cent of its total by 2030, from 16 per cent in the year ended March 2018. It still gets 33 per cent of its power generation from coal and faces public resistance to restarting nuclear reactors after the 2011 Fukushima disaster.

The stability of the grid and its ability to absorb new renewable sources, has been impacted by the slow pace of upgrades by the nation's utilities. The focus has instead been on the funds needed for safety upgrades at the nuclear reactors. BLOOMBERG