Improvement and Integration of Electricity Policy Impact Assessment Model-Enabling Estimation of Japanese Prefecture based Local Electricity and Ancillary Service Supply, Demand and Currency Flow in Kyushu Area

Author Name KAINOU Kazunari (Fellow, RIETI)
Creation Date/NO. October 2019 19-J-060
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Since 2016, Japanese Government finalized regulatory reform of Electricity industry and liberalized the power generation and retail sales sector of Electricity for all market segment. So Electricity Policy related discussions are emerged to change its focus on rather establishment of Ancillary service market and market regulation, economic welfare improvement of Electricity transmission sector that remains regulated even after the legal de-bundling planned in 2020, than conventional Electricity demand and supply related discussion.

This paper explains the improvement of Electricity Policy Impact Assessment Model developed by the author in 2016 enabling the estimation of stochastic Electricity and Ancillary service demand and supply at once by estimating scale and probability of Electricity demand fluctuation, uncertainty of renewable energy supply and accident of power generators from factual data for 24 hours by 10 domestic regions. And in addition to that, forecasting the future policy discussions on the Electricity transmission sector, the author improved the model enabling the estimation of regional Prefectural based Electricity and Ancillary service transmission currency and LMC; Local Marginal Cost of Electricity supply from Prefectural based Electricity demand statistics and detailed location of power generators.

As a demonstration of the improved model, the author used factual data from 2016 to 2018 by various official statistics such as "Denki-Yoho" (Electricity Demand and Supply Forecast Report) provided by regional Electricity company and estimated demand, supply and equilibrium price for Kyushu region for 365 days and 24 hours, and converted the demand and supply into local currency flow style among the seven Kyushu Prefectures. This paper provides evidence for the usefulness of estimation and evaluation by the improved model such as checking potential problems of local Electricity and Ancillary service demand and supply, estimating LMC of Electricity and impact evaluation of construction of new transmission line and so on.

Hereafter the author further plans to develop and improve the model such as expanding the coverage to all 47 Japanese Prefectures and so on, and expects contribution to the practical Electricity related policy impact analysis.