Due to the limited capacity of interconnection grids, Japan’s wholesale electricity market is divided. Two or more power company can purchase and supply to the consumers. The concepts of split supply and partial supply have played crucial roles in Japan’s electricity market, significantly aiding the spread of renewable energy and encouraging the entry of new power companies. However, these systems have been under review in recent years, and the abolition of partial supply is being considered for 2024. This article delves into the history of partial supply, the current challenges it faces, and the future prospects for split supply.
History
The concept of partial supply was introduced in 2013 to encourage the entry of new power companies and balance electricity supply and demand. It was specifically designed to leverage the power generation capacity of new companies in response to the tight supply and demand situation following the Great East Japan Earthquake. Under this system, if a new power company lacks sufficient supply capacity, the former general electricity companies compensate for the shortfall, ensuring a continuous electricity supply.
Types of partial supply type
There are three methods for partial supplies.
Type 1: Cross-mixing
The cross-mixing type is a method where both new and old electric companies transmit electricity using the same wires simultaneously. This collaborative approach means that electricity is delivered to consumers without specifying the time or amount from each company. As a result, while it is unclear which company supplied the electricity, it reaches the consumer as a combined effort.
Type 2: Notification type
The notice type is a method where electricity is transmitted by notifying the other partiesrom each supplier. The schedule and amount of electricity to be transmitted are decided in advance. For instance, a new electricity company might transmit electricity during the daytime, while an established company handles nighttime transmission. This information is announced beforehand, and a detailed plan is created.
Type 3: Scheduled type
The vertical-cut type is a method of transmitting electricity by dividing it according to the time of day. For example, the new electric company handles all daytime transmission, while the long-established company manages nighttime transmission. This approach clearly delineates roles based on time, so consumers know exactly when and from which company their electricity will arrive.
Shortcomings of partial supply system
The original purpose of the partial supply system was to compensate for the insufficient supply capacity of new power companies. However, in recent years, cases have been identified that contradict the intent of the system from the perspective of ensuring a level playing field in the competitive environment. For example, in the case of notification type partial supply, it has been observed that new power companies procure the entire amount of electricity during periods when prices on the Japan Electric Power Exchange (JEPX) are low, and leave the supply of electricity to deemed retail electricity suppliers during periods when prices are high. New power companies only purchase electricity when it is cheap. However, when electricity prices rise, they notify (or more precisely, inform in advance) other large power companies (the old established ones) that they will no longer purchase electricity, leaving those companies to supply the electricity instead. As a result, new power companies can always obtain electricity at low prices and save money.
Future of partial supply system
In the past, partial supply served as a temporary support mechanism, where established electricity companies would assist new companies to ensure successful electricity supply.
However, with the creation of the baseload market and the expansion of the wholesale electricity market, new power companies can supply ample electricity independently. As a result, the partial supply system is deemed unnecessary, and a plan to abolish it has been announced in Japan.
Additionally, a rule has been established to discontinue the initiation of a partial supply method such as “notice type system” and existing contracts will also be reviewed.
Split supply
Split supply is a system where multiple retail electricity suppliers provide power to a single consumer. There are two types of split supply: demand-following supply and non-demand-following supply, each serving a different role.
Type 1: Demand-Following Supply:
In demand-following supply, the electricity provided adjusts according to the consumer’s usage. If the consumer uses more electricity, the supply increases, and if they use less, the supply decreases. This type of supply is flexible, adapting to changes in demand.
Type 2: Non-Demand-Following Supply:
In non-demand-following supply, a fixed amount of electricity is provided regardless of the consumer’s usage. The supply remains constant, delivering a steady stream of electricity without responding to fluctuations in demand.
Adjustment by the suppliers:
- Demand-Following + Non-Demand-Following:
- In this format, one supplier adjusts the electricity supply based on demand (demand-following), while the other maintains a fixed supply (non-demand-following). This approach ensures a consistent base level of electricity while accommodating changes in usage.
- Demand-Following + Demand-Following:
- In this format, both suppliers adjust their electricity supply according to demand. There are two methods within this format:
2-1. Frame Division Type:
- Both suppliers provide electricity simultaneously, adjusting their supply every 30 minutes to match the consumer’s needs. This ensures that the total supply aligns with demand at all times.
2-2. Time-Sharing Type:
- Here, the two suppliers alternate in providing electricity. One supplier handles one 30-minute time slot, and the other takes over for the next. This method divides the supply responsibility between the two suppliers over time.
Cost sharing
Each company sends its own share of the electricity in either of the method. For paying the wheeling charge, a coordination is required to determine fairly who pays how much . For example, since a new power company and a former power company use one power line to transmit electricity, they need to share the usage fee (transmission fee) fairly .
- If a common transmission lines are used, the total basic charges for the new power company and the old power company will be calculated so that it is the same as when electricity is transmitted by a single company.
- The company that sends a lot of electricity pays more, and the other company pays the remaining small amount. In other words, we will divide the cost fairly and make arrangements so that both companies pay for what they have used
