Gov't eyes system for utilities to pay power-saving firms

The government has launched studies to require electric power firms to make "cooperation" payments to firms that reduce their use of electricity mainly in summer and winter when demand peaks, government sources said Wednesday.

The government plans to launch the new system by fiscal 2016 when the sale of electricity will be fully liberalized, the sources said.

The country's electricity supply has become tight mainly in summer and winter when demand increases as a result of the suspension of nuclear power reactors in the wake of the 2011 nuclear disaster at Tokyo Electric Power Co.'s Fukushima Daiichi power plant.

The move comes as the government seeks to work out a more effective power-saving plan for the business sector, which accounts for some 60 percent of all the electric power demand.

Under the industry ministry plan, businesses would be required to work out beforehand their power-saving hours and amounts through an intermediary firm called an aggregator.

At times of tight supply, utilities would request the firms to save on electricity and pay those which comply for their cooperation, the sources said.

In the United States and Europe, schemes are in progress for so-called "negawatt power" transactions, which regard electricity saved as the equivalent of electricity generated, the Ministry of Economy, Trade and Industry said.

U.S. and other aggregators with know-how are considering launching business in Japan, the ministry said, noting that aggregators would also advise firms, the ministry said.

In the United States, peak-time power demand has been cut by an estimated 10 percent through the program, it said.

Currently, utilities cut power rates to firms which save on power consumption.

The new scheme is expected to cover smaller businesses which have yet to join the current power-saving scheme, according to the sources.

The scheme would also lead to a cut in utilities' investments in power stations, the ministry said.

The Federation of Electric Power Companies of Japan, an industry body formed by 10 regional utilities, said the peak time for electricity need in the summer mostly comes around 2 p.m. when the mercury reaches its peak.

The nationwide power supply reached its peak last year on Aug. 9 at 159.07 million kilowatts due to widespread use of air conditioners, the federation said, adding the supply in winter is about 140 million to 150 million kw.