Social Issues addressed by Sumitomo —Compass for the Future—
Energy resource aggregation business launched.
Supply-demand adjustment for renewables based on “virtual power plant” technology
Carbon neutrality is a key concept in the drive to achieve sustainable economic growth in harmony with the Earth. The attainment of carbon neutrality goals is greatly dependent on measures taken in the energy sector, which accounts for the majority of greenhouse gas emissions.
In these circumstances, NEC is emphasizing carbon neutrality-related businesses in order to resolve social issues through its business. Specifically, NEC has been exploring the possibilities of the energy resource aggregation business, which seeks to realize more efficient and optimized energy management, development of decarbonization solutions, and commercialization in a circular economy. In October 2021, NEC entered the electricity supply-demand adjustment market as a resource aggregator (RA), with an eye to the eventual achievement of carbon neutrality in the energy sector. Amid the transition from fossil fuels to renewables, NEC intends to achieve carbon neutrality while also sharpening the company’s competitiveness.
NEC’s focus on the energy resource aggregation business is primarily prompted by recognition of the urgent need to decarbonize the energy sector. Increasing the ratio of renewable energy contributes to decarbonization, but it is difficult to balance supply and demand because the amount of renewable energy generated fluctuates greatly depending on weather conditions, which impedes the transition to renewables. NEC is proposing socially beneficial solutions through its energy resource aggregation business.
There are three principal issues. Firstly, a capability is needed to balance supply and demand. Secondly, it is necessary to decarbonize this capability by shifting from thermal power generation and other sources to renewable energy. Thirdly, demand must be optimized through demand response (DR) and other means in accordance with fluctuations on the supply side. While seeking solutions to these issues, it is essential to promote renewable energy so as to position it as the main power source, and sophisticated control of demand corresponding to fluctuations in power supply is essential. By utilizing its virtual power plant (VPP) technology, NEC realizes advanced supply-demand control, facilitating progress toward carbon neutrality as a resource aggregator managing and providing power facilities.
In order to equip the market with the capability to balance supply and demand, it is necessary to monitor the change in electricity demand in real time and respond to ever-changing conditions. This requires sophisticated control utilizing IT and forecasting technology, areas in which NEC excels. A VPP, which can serve as a balancer, is a virtual plant comprising various distributed power sources, such as solar power, wind power, in-house power generation facilities at business sites, and storage batteries for business use. IoT, artificial intelligence (AI), and other technologies are deployed to achieve sophisticated control.
NEC is not only a leading source of cutting-edge IT but also offers cloud services for resource aggregators. By providing DR-enabled functions for VPPs and interfaces with other service providers, such as an aggregation coordinator (AC), as a service, NEC offers greater convenience to the many stakeholders involved in balancing supply and demand.
In addition to the business targeting the supply-demand balancing market, NEC is also supporting municipalities that are pursuing initiatives to achieve zero-carbon cities and local production for local consumption of energy. To meet the electricity demand of local companies within a particular area, such as a municipality, renewable energy generated in the area will be used to balance energy supply-demand through local production for local consumption of energy. Locally generated renewable energy and CO2-free electricity will be used, and any surplus electricity identified by monitoring the supply-demand relationship will be stored in storage batteries and discharged whenever there is a shortage of electricity supply in the grid. NEC’s technologies accumulated for VPP are well-suited for deployment in the supply-demand balancing market that the company believes is poised for growth going forward.
With its expanding energy resource aggregation business, NEC advocates a “cyclical ICT model” as a global concept that it aims to implement. In this model, NEC as the resource aggregator and resource partners, which have power generation facilities, play the key roles in circulating value in the energy sector. In pursuit of carbon neutrality, resource partners will invest to introduce renewable energy systems and storage batteries. NEC provides part of the energy generated by the equipment introduced by the resource partners to the supply-demand balancing market via the aggregation coordinator (AC) and gains revenue, which leads to revenue for resource partners. This cycle encourages new investment in decarbonization by resource partners.
NEC will establish a cyclical ICT model to circulate value and achieve sustainable carbon neutrality, rather than engage in piecemeal investment in pursuit of carbon neutrality.
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