Problem
Consider installing additional storage batteries as a measure to cope with drastic curtailment, we encoiuntered questions such as “What is the most ideal scale for the storage battery capacity?” “How effectively can we optimize the profits?” etc. The criteria for making equipment investments was unclear.
Solution
Depending on whether there are installations of the storage battery and their scale, the profit simulation details how we can avoid risks for the curtailment and visualize the effects of installing storage battery equipment.
Problem
Consider installing additional storage batteries as a measure to cope with drastic curtailment, we encoiuntered questions such as “What is the most ideal scale for the storage battery capacity?” “How effectively can we optimize the profits?” etc. The criteria for making equipment investments was unclear.
Solution
Depending on whether there are installations of the storage battery and their scale, the profit simulation details how we can avoid risks for the curtailment and visualize the effects of installing storage battery equipment.
Background
The mitigation of the effects for curtailment; the beginning of application for the FIP (Feed-in premium) regulations
Daiwa Energy & Infrastructure Co. Ltd. (abbreviated below as “Daiwa Energy & Infrastructure”) engages in the development of solar power generation sites, O&M (Operation and Management), asset management, and so on. Starting in 2019, “Daiwa Energy & Infrastructure” started collaborating with CO2O (predecessor of the CO2OS Inc. (abbreviated below as “CO2OS”) ) to facilitate the development of solar power generation sites.
In 2020, together the two companies began developing the "Satsuma Green Power No. 2 Photovoltaic Power Plant" (Satsuma Town, Satsuma District in Kagoshima Prefecture). However, in the Kyushu area, problems regarding the operation of the power generation sites arose. Starting in 2018, Curtailment of renewable energy power generation facilities had been frequently implemented in the Kyushu area. “The fixed FIT prices are getting lower year by year. If the curtailment causes the electric sales to decline, it will be difficult to make precise calculations. Considering such circumstances, we decided to accept the proposal from the Toshiba Energy Systems & Solutions Corporation for the application of the FIP (Feed-in premium).” (CO2OS, Kobayashi)
Under FIP (Feed-in premium) regulations, though the curtailment strategy had been executed, the premium may be allocated to other periods, which could minimize the effects in the most effective way possible. Over there, in May of 2022, before the start of power plant operations, Daiwa Energy & Infrastructure injected capital for an SPC (Special Purpose Company) and signed an electricity supply contract with the Toshiba Energy Systems & Solutions Corporation. In July of the same year, the electricity generation site began operating; the FIP regulation was adopted in April of 2023.
Note: In May 2023, all of CO2O's businesses were merged and absorbed by CO2OS, a subsidiary of Daiwa Energy & Infrastructure.
- Investment by a silent partner in a partnership formed by the operator and silent partner entering into an agreement concerning investment and profit distribution.
Initial Challenges
With the abrupt addition of the curtailment, profits were significantly lower than planned.
Initially, Daiwa Energy & Infrastructure schemed to loosen the curtailment for the application of FIP regulations. However, the 3.1% curtailment for the Kyushu area deteriorated at the beginning of 2023, then there was a surge of 26.2% in April alone.
“In both March and April, the electric sales declined because of the large-scale curtailment, so we had to take the next step. We decided to install additional storage batteries. If the generated electricity wasn’t flowing, we might as well store it first and then release it if needed. There was no other solution than storage batteries. Also, another wonderful feature was that one-fourth of the additional installation costs could be covered by subsidies (subsidies for supporting the implementation of the PV-Plus-Battery Project.) (CO2OS, Kobayashi)
Yet, problems regarding the additional installation of the storage battery also emerged. On the technical side, not only was it difficult to install additional storage batteries for power generation sites but the cost was high. Thus, the future of the curtailment for the Kyushu area still couldn’t be foreseen. Whether the business can succeed or not remained unclear. Although we knew that installing additional storage batteries was the best solution for curtailment, regarding how these investments would be recovered or whether the business was viable in the first place, we didn’t have a clue yet.
Why the Challenges were Overcome
Depending on the profit simulation, the effects of the storage batteries could be visualized.
Through Daiwa Energy & Infrastructure, Toshiba Energy Systems & Solutions Corporation sought the profit simulation for the additionally installed storage battery system.
“Usually for profit simulation, we calculated profits based on the actual data from the power generation sites and data referring to electricity trading market data. Yet, we as a power generation company couldn’t calculate. For that reason, with Toshiba Energy Systems & Solutions Corporation’s know-how, we asked them to run the profit simulation.”
The fact that Toshiba served as the aggregator for the profit simulation was very relieving to Daiwa Energy & Infrastructure. “While this was not our first time to consult with an energy-related company, we still didn’t want to blindly believe the simulation system. This time, the profit prediction came from Toshiba Energy Systems & Solutions Corporation, which purchased the electricity generated by us, thus the data became much more trustworthy.” (Daiwa Energy & Infrastructure, CO2OS, Fujita)
Depending on whether there was a storage battery system and its size, and how to avoid risks for the curtailment, we provided advice and numerical predictions in the event that curtailment expanded in the future. With that result, Daiwa Energy and Infrastructure decided to install a 580kWh storage battery system.
"Satsuma Green Power No. 2 Photovoltaic Power Plant," storage battery
Daiwa Energy and Infrastructure and CO2OS Fujita
Benefits following Implementation
Anticipation of a 50% increase in the electric sales
The installation construction of the storage battery was finished by December 2023, after a wide variety of trial tests, the operation began in the middle of February 2024.
"The curtailment for the Satsuma Green Power No. 2 Photovoltaic Power Plant" was 450kW; the ratio between its power generation output and storage battery capacity was 1:1. The scale of the power plant didn’t necessarily guarantee large battery storage capacity. “From profit simulations, we knew that the optimal balance would be to store electricity that is equal to or double the amount of power generation, so we concluded that the scale was sufficient to ensure profitability.” (Daiwa Energy & Infrastructure, Fuchigami)
At the moment (as of February 2024), the operation had just begun. Though the actual data was not yet published thus we didn’t yet know how profitable it had been to install additional storage batteries, we were anticipating 1.5 times more return for electric sales. The operation of the storage battery was not about avoiding impacts on the curtailment but aiming to sell at the best price possible.
Moreover, beginning with the "Satsuma Green Power No. 2 Photovoltaic Power Plant," Daiwa Energy & Infrastructure started looking into other power generation sites.
“We know that there’s a rise in profit with the installation of storage batteries, in the future we will look into other projects. As we have received a proposal from Toshiba, we hope to move forward and accomplish our goals together.” (CO2OS, Kobayashi)
Comparison with and without the curtailment
Feedback from the Customers
Daiwa Energy & Infrastructure Co. Ltd.
Renewable energy investment division, deputy manager, Soichiro Fuchigami
I would like to request another simulation for the power storage plant business.
In May of 2022, as the Electricity Business Act was amended, large storage batteries with a capacity of 10,000 kW or more, directly connected to the power grid, will be considered part of the power generation business. Right now, large-scale power generation sites are in progress. Though we established a 580kWh for the "Satsuma Green Power No. 2 Photovoltaic Power Plant," we should be operating sites that are 100 to 200 times larger. For the storage battery business, the key point to securing profit is to purchase electricity when it’s inexpensive and sell electricity when it's expensive. To know when to purchase and sell electricity, and how to maximize the profit, we kindly welcome you to consult with Toshiba.
CO2OS Inc.
CEO, Naoko Kobayashi
In the future, not only do we install additional power generation sites, but we enter the field of the power generation industry
As of 2023, Toshiba Energy Systems & Solutions Corporation was the only aggregator that we could consult about the operation of storage batteries under FIP regulations. Without Toshiba Energy Systems & Solutions Corporation, we don’t think the scheme system could be built today.
In the future, we’re certain to establish additional storage batteries for existing power generation sites. At the same time, we’re also considering developing power storage stations where only storage batteries are installed and electricity is traded.
Because the profit simulation system has become invaluable to the development of power generation sites, we would like to try our best to lend efforts to Toshiba Energy Systems & Solutions Corporation.
Company Profile
Company name
Daiwa Energy and Infrastructure Co. Ltd.
Foundation
2018
Representiative
CEO Morimasa Matsuda
Headquarter Location
Gran Tokyo North Tower. 1 Chome-9-1 Marunouchi, Chiyoda City, Tokyo 100-6701
Business Contents
Investment in the renewable energy field with a focus on solar power
Company name
CO2OS Inc.
Foundation
2023
Representiative
CEO Akihiro Morimoto
CEO Naoko Kobayashi
Headquarter Location
6th floor, Shibaura Renasite Tower, 3-9-1 Shibaura, Minato-ku, Tokyo
Business Contents
O&M (Operation and maintenance)/ site check and diagnosis/ design and construction
Hardware for reducing CO2/ Service development and selling software products
Hardware and software to decrease CO2
Solutions to this problem
I want to improve revenues by using storage batteries alongside renewable energy
Maximize the profit for renewable power generation sites for the PV-Plus-Battery Project. Last but not least, to reduce the initial fees for subsidy.
