Japan’s KEPCO trials Power Ledger’s blockchain-powered renewable energy trading
Kansai Electric Power Co Inc (KEPCO) is expanding the trial of a blockchain-enabled renewable energy trading platform created by Australian technology company Power Ledger, according to a blog post of Power Ledger on December 9.
Power Ledger has expanded its partnership with Japan’s second largest energy retailer KEPCO to include RECs called Non-Fossil Value certificates. The trial will give KEPCO the framework to provide customers the ability to use NFVs against RE100 claims. https://t.co/YiPLGr0CB0
— Power Ledger (@PowerLedger_io) December 9, 2019
Under the terms of the new agreement, KEPCO will use Power Ledger to create, track, transact, and deal with NVAs generated by rooftop solar systems.
This system uses the immutable and decentralized properties of blockchain technology to track certificates throughout their lifetime, thereby reducing the potential for duplication of use. Power Ledger generates REC tokens stored in centralized KEPCO wallets.
An early successful test between KEPCO and Ledger proved that allowing energy producers to exchange their excess energy through the platform that is an effective way for them to make money from renewable energy investments. This superficially helps provide consumers with lower-cost green energy sources.
The new trial will allow KEPCO customers to use their NFVs against the RE100 complaint. It is a global initiative by the non-profit organization of Climate Group in partnership with the global carbon disclosure network CDP. The initiative accepts NFV certification as long as they have tracking information from governments.
The trial is expected to begin in December, with results expected in March 2020.
Japanese renewable energy market
In 2018, Japan was the fifth-largest electricity consumer in the world but produced only 17.5% of energy from renewable sources.
Japan is one of the largest economies in GDP and also the fourth largest electricity consumer, after the US, China, and India in 2017. However, the country is also heavily dependent on fossil fuels, accounting for nearly 85% of its energy output in 2017. Although this is mostly a direct result of the suspension of nuclear plants following the Fukushima disaster after the 2011 earthquake, the progress in the industry Japan’s regeneration is lagging behind other developed countries.
Although Japan has been committed to reducing carbon emissions for a long time, the existing energy certificates and carbon credit systems are complicated and fragmented at best. For Japanese companies, who seek to shift their acquisition of energy to renewable energy, the complexity is posing additional cost constraints related to renewable energy in Japan.
The certification was established for use in the Japanese market, but the importance of international reporting is increasing. Especially for companies whose investors are interested in environmental commitments. In Japan, there are three ways in which the environmental value of renewable energy can be traded: Green Energy certificate, J-Credit certificate, and non-fossil value certificate (NFV).
Kansai Electric Power Company (KEPCO)
Kansai Electric Power Company, also known as Kanden, is an electric company with the operating area of Kansai area, Japan (including Kobe-Osaka-Kyoto megacities).
The Kansai region is Japan’s second-largest industrial area, and in regular times, it is most dependent on nuclear. Before the Fukushima nuclear disaster, a group of 11 nuclear reactors – north of large cities Osaka and Kyoto – provided nearly 50% of the region’s energy.
Since January 2012, only one of these reactors has been running. In March 2012, the reactor was finally removed from the power grid.
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