In a landmark deal, Centrica and TEPCO collaborate to augment demand response services for the Japanese power grid

Posted by MarketsandMarkets on Apr 2, 2019 7:47:21 PM

Tokyo Electric Power Company (TEPCO) and Centrica recently collaborated on demand response services with Centrica (a UK-based organization) likely to assist TEPCO with FlexPond, an electricity demand response platform, to ensure that TEPCO provides stable electricity distribution services in the Kyushu region. FlexPond will be delivered under an innovative commercial “software-as-a-service” (SaaS) model, which will allow utilities, like TEPCO, to use the application platform to build its own virtual power plants (VPPs) and deliver the demand side response capability through a variety of flexible generation and demand facilities.

MarketsandMarkets™ View Point:

Somik Das – Strategic Growth Analyst : Energy and Power, at MarketsandMarkets™, shares his Point of View as mentioned below:

In order to understand the larger ramifications of this deal, it is imperative to understand the functioning of a virtual power plant. A virtual power plant is a network of decentralized, medium to high scale power generating units such as onshore and offshore wind farms, small, medium, and large scale hydro power plants, solar parks, etc. The interconnected units are displayed through the central control room of the virtual power plant but nonetheless remain independent in their operation and ownership. The objective of a virtual power plant is to relieve the load on the grid by smartly distributing the power generated by the individual units during periods of peak load.

Why does TEPCO need FlexPond?

As we know, Japan is a nation that has been plagued majorly by earthquakes. With every earthquake, the national electricity grid experiences instability in its functioning. In addition to this, it will be interesting to note that Japan is the only advanced nation in the world with two separate power grids; One for the northeastern half of the country, which includes Tokyo and Tohoku and another for Nagoya, Osaka, and the rest in the southwest.

The two grids operate on different frequencies, making it almost impossible to share electricity if one half suffers a supply problem. As it operates on different frequencies, there exists the requirement of frequency converter stations. There are 3 frequency converter stations, however, their joint capacity is 1 million kilowatts, which is not enough when compared to the electricity shortfall the nation faces. All the above signify the fact that there exists a major incompatibility between the grids. Integration with the renewable sources for the grid also becomes an issue. The above factors eventually lead to frequent power outages and electricity shortages.

Electricity Sales in Terawatt-Hour(TWH)

Source: TEPCO Integrated Report 2018

The following diagram depicts the phenomena discussed above, where due to incompatibility and instability existing in the distribution system (which, in turn, leads to frequent power outages), the electricity sales, in volume, has gone down and is forecasted to plummet further.

How would FlexPond help?


FlexPond offers a virtual power plant operating platform. A virtual power plant consists of a central IT control system and distributed energy resources like solar, wind, hydropower, and biomass units. By networking all participating units through a remote control unit, it establishes a data transfer between the central control system and the participating units. The central control system is then able to monitor, forecast, and dispatch the networked units. This, supported by the presence of flexible usage consumers (consumers whose electricity usage pattern compliments electricity availability), ensures that too much of load is not created upon any single unit in case of surges in the electricity demand.

In accordance with this development, renewed focus is on the demand response market, on which MarketsandMarkets™ has already done a deep dive study, dedicated to virtual power plants. The Virtual Power Plant market is projected to reach USD 709.2 million by 2021, from an estimated USD 193.4 million in 2016, at a CAGR of 29.6%. The market for demand response technology was estimated to be USD 133.9 million in 2016 and is projected to reach USD 498.4 million by 2021, at a CAGR of 30.0% during the forecast period, while distributed generation records USD 97.4 million by 2021, from a base of USD 29.8 million, at a CAGR of 26.7%.


Japanese energy firms and TEPCO, in particular have always looked towards the UK market for innovative and technological solutions to problems posed by issues in the electricity distribution. Centrica’s FlexPond has already gained popularity in the virtual power plant space. TEPCO might just have found the best panacea to its electricity distribution woes, with the collaboration with TEPCO. With proper monitoring of its distributed resources, the response to surges in demand will be efficiently addressed. The VPP platform will ensure proper analytical management of the resource units, at the same time will not allow excessive stress on any one unit and the demand load and an equally distribution among all the other units. The resultant of the above will be a seamless and smooth compatibility between the grids and alleviation of frequent power outages, which the Japanese grid has been longing for, in years to come.

Topics: Energy and Power, virtual power plant market, TEPCO, flexpond

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