New Twists for Japanese Ene-Farms

Over the last two months, Japan’s Ministry of Economy, Trade and Industry (METI) has selected at least four energy utilities to participate in “verification projects” under its Building Virtual Power Plant Using Customer-Side Energy Resources program. Participating utilities so far include Osaka Gas, Tokyo Gas, Seibu Gas, and J Power. The program is intended to facilitate the development of renewable electricity in Japan and is shining a new light on the deployment of fuel cells in the country’s built environment.

Japan’s Photovoltaic Power Generation Association projects that, in the words of a Kankyo Business article, “in order to achieve the long-term goal of the Paris Agreement, by 2050, about 30% of Japan’s electricity demand will be covered by solar power.” As in other jurisdictions that are building significant renewables capacity, Japan will need to institute mechanisms that can buffer variability on both sides of the electric grid’s supply-demand equation. METI has apparently considered this challenge and identified a resource that can be marshalled to the cause: domestic fuel cells, known as Ene-Farms.

Ene-Farms have been described in previous Ammonia Energy articles. Residential models so far are being fueled with natural gas and generally have power capacities of less than 1,000 watts. They are cogeneration devices that produce hot water as well as electricity, and therefore have high levels of total energy efficiency. Polymer electrolyte fuel cells dominated when initial commercialization was occurring in the middle of the decade just completed, but solid oxide fuel cells have since appeared. (On-line journal Fuel Cells Works reported in December 2019 on a new SOFC unit engineered for very small living spaces.)

Osaka Gas Project

METI’s Ene Farm idea is illustrated by the Osaka project.  The utility will use approximately 1,500 Ene-Farms already installed on customer premises as a source of additional power when grid conditions call for a bump in electricity output.

We have installed the IoT function on our products starting at the ENE-FARM type S which was released in 2016, and approximately 50,000 units are currently connected to the server of Osaka Gas. In this verification project, we will verify that the output power of ENE-FARM can be controlled in accordance with the grid supply and demand situation, including the output fluctuation of renewable energy, by utilizing the know-how of remote control technology cultivated through the efforts to realize IoT applications.

Osaka Gas, “Osaka Gas to Start Verification Project to Establish a Virtual Power Plan (VPP) Using a Residential Fuel Cell, ENE-FARM,” June 5, 2020

Ene Farms are ideally suited to this role in that they are always on and can respond almost immediately to control signals.

Helping to solve renewable generation’s intermittency problem has real economic value. As the renewables contribution to electricity supply increases, hard generating assets must be deployed to take up the slack when the sun is not shining and/or wind is not blowing. One approach is to use conventional generating stations as the source of buffer electricity. But using stations in this way has a cost: when capacity is kept available but not used, expense is incurred and revenues are not generated. A virtual power plant consisting of Ene-Farms could provide the buffer at potentially lower cost. This is because Ene-Farms are able to fulfill their core mission of providing electricity and hot water for a residence while only occasionally running at 100 percent of capacity. Their surplus capacity at other times can be tapped for grid stabilization, with the homeowner and grid operator sharing the economic reward.

METI continues to provide subsidies for purchasers of Ene-Farms since the financial case for their adoption – based on energy bill savings — has not yet come together. The subsidies have been declining in association with decreases in Ene Farm production costs, but payments to homeowners for grid stabilization services, whatever form they take, could provide the missing increment needed for unsubsidized financial viability.

Ene-Farms in a Broader Context

But the economic story takes a different turn if Ene-Farms are considered in the broader context of hydrogen realization in Japan. That context was the subject of “Implementation of Hydrogen Energy Society and Global Collaboration,” a forum held in May by the Japanese media company Nikkei. A series of speakers considered different elements of a decarbonized national energy system. One of them, Emeritus Professor Takao Kashiwagi of Tokyo Institute of Technology, made the point explicitly that the VPP concept could help residential Ene-Farms “spread rapidly and approach the government’s target of 5.3 million” by 2030. But neither Kashiwagi nor any of the other speakers discussed the carbon footprint that those 5.3 million Ene-Farms will have. If they continue to run on natural gas, they will do little to help the country meet its Paris Agreement goals. Is there a plan, then, for fueling them with low- or zero-carbon hydrogen? For example, are the gas utilities upgrading their distribution systems for the safe delivery of hydrogen-rich gas?

Takeo Tachikawa, Professor of International Management at Japan’s International University, touched on this topic in his remarks. While “Japan is an advanced FC [fuel cell] country … ,” he said, “the development of hydrogen infrastructure has been delayed … In Europe, there is a plan to use the existing natural gas pipeline for hydrogen, but Japan lags behind.” With Japan implementing other aspects of the Hydrogen Society with evident commitment, the relative neglect in this area seems curious. But Tachikawa had already mentioned another option: “Attention is focused on methanation, which produces methane gas from hydrogen and CO2.”

It may be the case that synthetic methane derived from imported low-carbon hydrogen and distributed to a network of residential fuel cells will prove to be a cost-effective way to buffer the electric grid. At a minimum, though, one would need to investigate the scheme’s nitrogen-based analogue before reaching this conclusion. But before that question even comes into view, the fundamental economic viability of Ene-Farms appears to hang on the questions of fuel choice and distribution economics.