Making Renewable Energy a Mainstay Power Source through Local Production for Local Consumption ―The key is to transform consumer behavior with electricity rates that reflect costs ―

 The government has set an ambitious goal of achieving carbon neutrality by 2050. To realize this goal, renewable energy must become the main source of electricity. In the case of power systems that mainly use renewable energy, (1) the cost of adjustment of supply and demand, such as investment in storage batteries and demand response (DR, Adjust Power Consumption on the Demand Side), and (2) the cost of investment in the transmission network from the new power plant to the place of demand will additionally arise. Therefore, even if the cost of generating electricity from renewable energy is reduced, the total cost is expected to increase compared to the current electricity system centered on thermal power generation. These costs must be kept as low as possible and the benefits must outweigh the costs.

 The share of renewable energy in Japan's power generation is just under 20%, lagging behind Europe. While wind power generation using westerlies has been the driving force in Europe, solar power generation has been the driving force for the expansion of renewable energy in Japan. In the case of solar power generation, there are frequent occurrences of power surpluses during the daytime, and strengthening supply-demand adjustment is an urgent issue in Japan. In this situation, large users are promoting the use of DR, but among small users such as housing, DR has barely spread at all because electricity rates are on a pay-per-use basis and incentives are scarce.

 Conventional electric power systems, mainly thermal power generation, can be said to be large-scale centralized, but considering the following four points, it would be more efficient to switch to a local production for local consumption type electric power system in Japan in order to make it a main source of renewable energy.
The first point is an increase in the burden of grid maintenance. The cost of maintaining the transmission network can be reduced by promoting local production for local consumption, while the cost effectiveness of maintaining the transmission network is expected to deteriorate due to depopulation in many regions. The second point is underinvestment in interconnections due to regional monopolies. In Japan,
transmission networks have been established within the jurisdiction of major electric power companies, and investment in interconnection lines connecting regions has been kept to a minimum. If large-scale concentrated renewable energy sources such as offshore wind power are to be used as a main source of electricity, it will be necessary to invest heavily in the construction of a new power transmission network that will link supply areas such as Hokkaido with major consumption areas such as Tokyo.
The third point is that there is a shortage of suitable sites for large-scale centralized renewable energy. In Japan, where wind conditions are poor, offshore wind power is more expensive than other renewable energy sources. In addition, there are fewer shallow beaches, limiting the locations where ground-based offshore wind systems can be installed. Mega solar plants also have limited room for additional installation due to the small flatland area.
　The fourth point is the existence of ECHONET Lite, a standard for the consumer electronics IoT. In order to promote local production for local consumption type renewable energy, it is essential for small consumers such as houses to participate in DR. For this purpose, Japan has already developed a standard that can collectively control home appliances. Globally, there is no standard that allows unified control of home appliances from different manufacturers other than ECHONET Lite.

 The measures taken by the preceding regions will be useful for studying specific aspects of local production and local consumption of electricity and measures to promote them. Fujisawa SST, a smart city centered on low-rise houses, has installed solar power generation facilities and household storage batteries in all of its households, and has established a system that allows each household to consume its own electricity. At Kashiwa-no-ha Smart City, which consists of mid-to-high-rise buildings, solar power generation facilities have been installed on the rooftops of the buildings, and supply and demand have been adjusted among users in the area using large shared storage batteries and private lines. In Iida City, Nagano Prefecture, which is blessed with a rich natural environment, in addition to photovoltaic power generation for residential use, various renewable energy sources, such as mega solar power, small and medium hydroelectric power, and biomass, are being introduced to promote local production and local consumption of electricity.

 From these examples, the following issues emerge. The first is the installation of a distributed power source. Residential photovoltaic power generation, which can make effective use of roofs, is one of the most promising distributed power sources in the limited area of flat lands, but some kind of device is required to promote its introduction nationwide. The next issue is the adjustment of supply and demand within the region. Under the current system, it is necessary to establish a self-employed line in order to obtain economic benefits through adjustment of supply and demand among users in the region. In order to promote local production for local consumption nationwide, it is necessary to make use of existing power distribution networks to adjust supply and demand within the region.

 In the case of electric power systems that mainly use renewable energy for local production and local consumption, the role of users will be significantly expanded, such as installation of power generation facilities and implementation of DR. In order to encourage consumers to change their behavior, it is effective to reflect costs in electricity rates and make the most of market mechanisms. Specifically, the following three points are required.
The first point is the introduction of carbon pricing such as a carbon tax. If the introduction of a carbon tax could raise electricity rates, it would be economically reasonable for consumers to consume their own electricity by installing solar power generation facilities.
The second point is the spread of dynamic pricing. Because electricity rates fluctuate according to supply and demand conditions, consumers can benefit from DR. In order to promote dynamic pricing, it is essential to mature the wholesale market, which is an index of electricity rates.
The third point is reform of the consignment fee. At present, the wheeling fee, which is the cost of transmission and distribution, is fixed regardless of the distance of wheeling, and this hinders incentives to adjust supply and demand in neighboring areas. Transportation fees should take into account actual costs such as distance.

 The main objective of promoting the use of renewable energy sources for local production and local consumption is to achieve carbon neutrality efficiently, but at the same time, it is expected to achieve other benefits. Specifically, (1) creation of local jobs and revitalization of local communities through installation and maintenance of power generation facilities, (2) realization of smart homes through integrated management of home appliances, and (3) utilization of power data in other fields such as business area analysis and advertising.

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