Demand response

Amid the shortage of supply capacity since the Great East Japan Earthquake, Demand Response (DR) is on its way to commercialization. After a four-year demonstration project, as a public offering of balancing reserve by TDSOs from FY2016, it is transitioning into the Capacity Market operated by OCCTO as a dispatchable peaking resource from FY2024 onward. In addition, the increased need for demand-side resources has been signalled in both the wholesale energy market (JEPX), in the wake of the recent global energy crisis and soaring fuel costs, and the balancing market due to the expanding introduction of renewable energy resources in Japan. While the Government of Japan (GOJ) has been working to design a system in which DR is integrated into market mechanisms, a certain amount of know-how has been accumulated through the active competition among DR aggregators and their operation under tight supply-demand conditions. As a result, the effectiveness of DR has become widely known to the public. The legal status of aggregators as “Specified Wholesale Suppliers” has just been clarified in the Electricity Business Act, effective from FY2022. Most recently, a further expansion of incentive-based DR was presented at the GX Execution Conference as a measure to tackle immediate power supply shortage.


  • The EBC request that various systems be designed in a consumer-first manner that ensures consumer acceptance, predictability, and continuity.
  • The Japanese Government should design a system that enables both aggregators and consumers to make decisions on DR participation based on the economic rationality of price signals from various wholesale markets.
  • As indicated in the Clean Energy Package for Europe, the EBC requests that institutional design and market rules be developed so that not only retailers, but also independent aggregators can smoothly engage in DR operations in Japan.
  • Finally, to achieve Carbon Neutral target by 2050, the Government of Japan should consider the early introduction of equipment-point metering (sub-metering) so that not only DR, but also clean zero-emission distributed energy resources, including storage batteries, rooftop solar power, and electric vehicles, can participate in various wholesale markets.