Soon, artificial intelligence and big data analytics will help Japan’s largest utility provider carry out maintenance of their infrastructure, its Innovation General Manager has revealed to GovInsider.
“We can use big data to come up with a more effective maintenance, like predictive maintenance,” says Hirokazu Yamaguchi, Executive General Manager of Global Innovation and Investments of Tokyo Electric Power Company Holdings Inc. (TEPCO). It plans to start a proof-of-concept for predictive maintenance next month.
To put things into context, the events of the past few years have spurred this focus on innovation. TEPCO nearly went bankrupt following the meltdown of its Fukushima Daiichi Nuclear Power Station in 2011, Yamaguchi says on the sidelines of the Asian Utility Week conference. The utility must now regain customers’ trust, while keeping up with new technologies.
In 2012, TEPCO received a government bailout of ¥1 trillion (~US$8.95 billion) and is now semi-nationalised. In the years since, as TEPCO works to decommission the Fukushima nuclear reactors and clean up debris, “we have been undergoing a lot of reform,” Yamaguchi says.
Yamaguchi’s team is looking for ways to “disrupt the utility business model”, which includes focusing on distributed energy resources, and software and IT for managing these resources. “We need to disrupt ourselves first before someone disrupts us,” he says.
“We need to disrupt ourselves first before someone disrupts us.”
The predictive maintenance pilot will help the company preempt any failure to its infrastructure and avoid downtime for customers. “We can use all sorts of data, including weather data, sensor data, and temperature to analyse risk of breakdowns,” Yamaguchi explains.
TEPCO will provide the company carrying out the pilot with data regarding transmission, distribution and maintenance. “It’s going to be in certain areas. We’re trying to find out the risk of vulnerability of the transmission, substation data,” he says.
Partnering with startups
Another step is to work closely with startups and emerging companies to bring in their expertise, Yamaguchi says. TEPCO has invested £500,000 (~US$645,350) in Moixa, a UK-based company that builds software to control and aggregate batteries. “They can aggregate surplus electricity from their customers, and they can sell it to the market. This is an interesting model that we think will happen in Japan as well,” he says.
TEPCO has also invested in US-based United Wind, which leases small-scale wind turbines to farmers as a low-cost wind energy solution, according to Yamaguchi.
On the IT front, TEPCO is exploring Blockchain technologies to accelerate decentralisation of utilities in Japan. Eventually, TEPCO wants to enable peer to peer electricity transactions in the next five to ten years, according to Yamaguchi. “When there’s a consumer that has photovoltaics on their rooftop, they can sell surplus electricity,” he explains.
Within TEPCO itself, the R&D department is focusing on both new technologies and improving the current businesses. “Basically they are helping current businesses from generations, nuclear – we have some remaining nuclear power stations – thermal generation, nuclear, hydro-generation, transmission, distribution,” Yamaguchi says.
Japan’s utility landscape
The utilities space in Japan is more challenging for the traditional providers now. TEPCO has to contend with “a lot of changes” in the electricity business in Japan, Yamaguchi says. The use of renewable energy sources such as photovoltaic solar panels and wind power is increasing as prices of these technologies steadily fall. In 2015, the installed capacity of renewables in the country was 12.3 Gw, and this number is projected to rise to 74 Gw by 2030.
Furthermore, Japan introduced power retail deregulation to the market in April last year, allowing customers to choose other utility providers. As the largest electric utility provider in Japan, TEPCO serves a third of Japan’s population, or about 29 million citizens, but have already lost a million of them with this increased retail competition. “After the Fukushima crisis, TEPCO became a villain, and our reputation went down the tube,” Yamaguchi remarks. “We have a sense of crisis.”
Here, Yamaguchi introduces the 5 Ds of disruption: decentralisation, deregulation, digitalisation, de-carbonisation, and democratisation. He believes these factors will destroy the existing industry, and create a new market. “This is everywhere, especially in the States, Europe and Japan. Maybe not in Asia, but it’s going to come in Asia too,” Yamaguchi muses.
With TEPCO focusing their energies on innovation and enabling peer-to-peer transactions, Japan will have brighter days ahead – literally.