Japanese Power Grid
Japan is a world leader in nuclear power plant technology. About 17% of Japan’s electricity comes from nuclear generation, but since the Fukushima Daiich nuclear disaster in March of 2011, caused by a tsunami, there are new challenges for nuclear reactor producers. While non-carbon emission energy technologies, like nuclear power, are attractive, the dangers of accidents and natural disasters now undermines the trend towards nuclear power.
For Japan, as for many other countries, this plays directly into their industrial cycle. After all, power generation and electric grids are the necessary infrastructure that support industry. All the new digital activities that are now growing up within older industries rely on power. There has been an active debate in Japan about which energy philosophy to follow: centralized power generation or distributed power generation.
Japan’s current power grid is a centralized structure, consisting of a fleet of nuclear generators and a fleet of coal and gas feed generators. Electric utilities are slow to change their technologies much less reach out for a whole new philosophy. A distributed power grid is built with smart grids and micro-grids deployed at a local level. Distributed power encourages generation at many places within a grid by various types of technology, like, solar, wind, biomass and geothermal. Smart distributed grids employ computer monitoring of usage and assign power to the places that need electricity when they need it and take power generation from sources when they are most able to offer surplus generation. It’s efficient.
Distributed grids also allow farmers, home-owners, small businesses and local communities to contribute power generation when they have excess power. So a farm with solar panels on barn roofs and windmills may need all of their electric some days but other days have excess to sell back to the grid. The advantages of this distributed structure are both efficiency and durability.
After the Fukushima disaster distributed power got a new boost of support throughout Japan. But even with the disaster freshly etched on their minds, the entrenched Japanese power industry resisted. At this point, only 2 to 3% of Japan’s electricity comes from renewable sources like solar and wind generation. There has been an increase in smart city projects throughout Japan since even before the 2011 nuclear disaster. The projected growth of Japan’s distributed power market by the year 2030 will include increased investment in storage battery use, smart grid development and new generation electric cars.
Investments in distributed power were stimulated by the introduction of a feed-in tariff (FIT) in July of 2012. This tariff is based on utilities purchasing power from renewable producers, including households, based on a set premium price. That price is high enough to make investments in renewable infrastructure worthwhile; the extra cost of purchasing power at higher prices is then passed on to consumers. This will help move Japan towards distributed power smart grid technology even with embedded power companies dragging their feet.
The Possiblity Of Change
The primary advantages of a distributed smart grid is that it is far more resilient to disasters and shut-downs. If power goes down in a centralized grid, everyone on the grid goes powerless. But in a distributed grid when one power source goes down it is seamlessly compensated for by power shifted over from other generation sources. Flexibility like this is mandatory with digital technology because so much of the technology is reliant on memory; therefore memory always has to be available, which means the power has to be on. Another major advantage of distributed power is water usage volume. Renewable energy tends to not use water for cooling in the grid. Traditional power generation requires lots of water for cooling or for steam to drive the system.
As it turns out, more and more places around the world are no longer able to supply the volume of water required for traditional power generation. Japan, being surrounded by ocean on all sides is less threatened by water cooling issues, except that to use ocean water also means placing power plants near the ocean. The siting of the Fukushima nuclear reactor near the water was the reason the tsunami was so damaging.
Japanese investment in distributed power smart grids serves a critical role in the Japanese industrial cycle. Japan has suffered low economic growth and periods of deflation for much of the last twenty years. Getting prices to rise enough to support an expanding economy is desirable. Fixed premium power prices are a way of stimulating price increases and because power is so central to all industry and economic activity it is likely to be passed along in many ways; far more than just the additional cost of the electricity.
In America people worry about inflation and hope it doesn’t take hold, but in an economy that has experienced deflation, which means falling prices, a period of rising prices is experienced more as a sign of stability than a signal of crisis. So in August (this year, 2013) when consumer inflation hit its highest rate in nearly five years, many economists saw it as a sign of recovery. The prices of personal computers and other consumer electronics rose by one tenth of a percent in August, which was the first rise in Japanese prices in consumer electronics since 1992.
There is another side to Japanese deflation; the long steady decline in prices and the accompanying economic downturn have affected the financial guarantees of the Japanese middle class. Since the Second World War, Japanese workers have lived with the benefit of lifetime guaranteed employment. People who worked at large corporations never lost their jobs. But with this last two decades of economic demise, lifetime employment is no longer a guarantee for everyone. More than a third of the country’s workforce is now under-worked and under-paid. When lifetime guarantees are displaced, workers are often kept on at lower salaries and with fewer responsibilities.
In Japan’s larger industrial cycle, the affect of price changes has undermined the stability of many people’s future. The institutional future is affected by the cycles downward phase. That future, the institutional future, is the various financial systems that allow a person to arrange a comfortable life with guarantees of retirement and health care. Pensions, insurance, and investments are all pieces of the institutional future, and all are affected by the balance between broadly distributed opportunities in a society and the control of corporate hierarchies. These central pieces of Japan’s economic system are now being rearranged by the downturn in their industrial cycle. Not only does the move towards distributed power bode well for a safer more reliable Japanese power industry, it seems it may also be helping to finally turn the world’s fourth largest economy upward towards positive growth. At minimum it’s an investment in a more adaptable and reliable industrial future.