#Japan #Tokyo #Demand Response #VPP platform #Shizen Connect

Addressing Power Supply Crisis with Shizen Connect

Shizen Connect, known for its leadership in the Virtual Power Plant (VPP) platform market, is taking vital steps to enhance demand response (DR) controls for home batteries. This initiative aims to tackle the ongoing power supply crisis expected during the summer of 2026, as supported by the Tokyo Environmental Public Corporation's subsidized project for aggregation business implementation.

Background of the Crisis

The world is facing increasing geopolitical risks, notably due to tensions in Iran, while record heat this summer has caused a sharp spike in air conditioning demand. These factors have severely strained the country’s electricity supply and reserve levels, which have fallen below the stable supply threshold of 8%. Consequently, electricity prices in the Japan Electricity Market (JEPX) have soared, causing a pressing need for energy security and cost control initiatives.

To alleviate the tension between supply and demand, it is crucial to smartly manage electricity consumption from the consumer side. The role of distributed resources, including batteries, integrated and controlled by digital technologies in the form of VPPs and demand response, has become more important than ever.

Shizen Connect's Initiatives

1. Supporting Retail Electric Providers

Shizen Connect has emerged as a key player in the VPP space, collaborating with retail electric providers who have adopted their services, accounting for 38% of the market share. Through advanced DR controls, Shizen Connect manages over 2,000 household batteries, facilitating a diverse array of demand response services, including those responding to power supply shortages.

2. Utilizing Government Subsidies

Since 2022, Shizen Connect has participated as an aggregator in the Ministry of Economy, Trade and Industry's support program for household battery systems, aiding over 7,000 batteries in demand response operations based on contracts signed with customers. In particular, starting in 2024, Shizen Connect will have managed over 1,000 home batteries with proven success under the Tokyo municipal aggregator project, gearing up for the summer 2026 response which includes approximately 250 households benefiting from the project subsidy.

Objectives and Duration

The main aim of these demand response actions is to effectively manage household batteries to contribute to reducing power supply crises from July to September 2026. Shizen Connect will activate battery discharges in response to alerts issued by the Ministry of Economy and general transmission utilities concerning power supply shortages.

Social Impact of the Initiative

With the capabilities enabled by collaboration with battery manufacturers, Shizen Connect can remotely control about 100,000 home batteries. This has the potential to deploy around 500,000 kW of resources, equivalent to the output of several small thermal power plants, contributing to significant demand reduction—up to 50,000 kW—during critical periods.

In addition, simulations utilizing 2022 market price data highlighted that households could reduce their electricity procurement costs by up to 11.2% by participating in economic DR, thereby not only saving on individual expenses but also contributing to overall market price stabilization.

Shizen Connect is committed to expanding the VPP model, utilizing distributed resources such as batteries to foster energy security and carbon neutrality for a sustainable future.