Toshiba and Next Kraftwerke prepare for Japan’s energy transition

The Energy Systems and Solutions business of Japanese electronics giant Toshiba has announced plans to set up a ¥180 million ($1.73 million) joint venture with German virtual power plant operator Next Kraftwerke ahead of the opening up of Japan’s grid control reserve market in April.

Toshiba, which will hold a 51% controlling stake in the new Next Kraftwerke Toshiba Corp entity, said the JV will offer support services to renewable energy owners ready to enter the control reserve market, which will pay generators for grid frequency balancing services.

Clean energy generators – and companies which aggregate small-scale generation facilities into virtual power plants (VPPs) – will be able to take on responsibility for balancing electricity supply and demand once the control reserve market is opened up to renewables and energy storage operators in four months’ time.

Toshiba says the planned JV will draw upon the experience gained by Next Kraftwerke in Europe to offer accurate forecasting and energy trading expertise to enable companies to minimize grid imbalance risk and maximize earnings from the power wholesale market and from power purchase agreements, as well as the control-reserve income stream.

The Japanese renewables incentives regime is set to switch from fixed feed-in tariff (FIT) payments to a feed-in premium system in April 2022, which will instead involve top-up premium payments dictated by wholesale energy prices. Toshiba yesterday pointed out, in a press release issued to unveil the JV, Cologne-based Next Kraftwerke already has plenty of energy transaction experience in feed-in premium-driven clean energy markets in Europe.

In terms of its own VPP chops, Toshiba added it “has been accumulating achievements through the [megawatt] aggregation business – which provides energy-saving flexibility based on requests from domestic utilities where energy reduction from multiple consumers is aggregated – and VPP demonstration projects that have the characteristics of utilities.”

Toshiba said the JV is set to start operation this month and will initially focus on Japan but “will consider expansion by leveraging [the] overseas commercial flows of both companies [Toshiba and Next Kraftwerke].”