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Energy Highlights: Listening to Key Persons
The Future Forged by DX - Energy Innovation Being Accelerated
by Digital Technologies (Chapter 1)

For this fourth volume of the series, we invited Hiroshi Esaki, a professor of the Graduate School of Information Science and Technology from the University of Tokyo who has been extensively involved in everything from research into smooth network utilization to policy recommendations as an information network expert. Professor Esaki is also driving the digital transformation of Japan as a senior expert at the Digital Agency. During this interview we talked about the key points for promoting the utilization of digital technologies that will accelerate energy innovation, the value that will be created, the future that will be brought, and other topics.

In chapter 1, starting with the subject of the H-UTokyo Lab. Industry-Academia Collaboration Forum, the discussion centered on the roles that companies have to play in regional energy management, as well as the effects of improved energy efficiency thanks to digital transformation (DX), the importance of user interfaces (UI) and the user experience (UX) in pursuing carbon neutrality (CN), and the legal systems in place.

Building an Ecosystem that is Good for Everyone

Yamada:In January this year during the Industry-Academia Collaboration Forum organized by H-UTokyo Lab. titled "Proposal Toward Realizing Energy Systems to Support Society 5.0," there was a panel discussion about value creation through energy and regional innovation led by data utilization. To start with, were you left with any impressions after listening to this discussion?

Esaki:I was told by a certain major chemical manufacturer that in addition to reducing total power generation, their challenge was how to make a structural switch to using renewable energy for plant operations that had been based on fossil fuels. On that point, I think an example shared by Hiroshi Komiyama, the former president of the University of Tokyo who is currently the chairman of Mitsubishi Research Institute, offers some insight.

In the 1960s, the area around Kita-Kyushu City had developed as a heavy industry and chemical industry zone, bringing economic growth and the rise of industry, but it also brought pollution issues that had never been experienced before. Initially, local companies were against the demands to make improvements, believing it would make it impossible to continue with business activities. But when there was a focus on a company's basic principles of improving profits and boosting productivity, pollution was eliminated as a result, and we saw the return of blue skies. After that, they sought to transform industry further, which led to the creation of a data center where a factory had once stood. This was an ecosystem, so to speak. I think this is one example of DX and even GX (green transformation).

As a company, there is a hesitance to invest in something that is good for the environment but not for profits, but if it is something that contributes to the development of a company, the company will invest in it. This approach is the model of the SDGs, and recently it is what even the Keidanren refers to as "sampo yoshi," meaning "good for everyone."

Yamada:This is the management philosophy of the Omi merchants, who thought that "what is good for the buyer and good for the seller is good for the world." I think in today's modern world, everyone has encountered a situation where the benefits only affect one person, and don't extend to everyone.

Esaki:And at the time, the wives of employees were putting pressure on their husbands, saying, "if I can't hang my washing outside. It's a problem. Do something about it!" This is similar to the "stakeholder capitalism" that has now become mainstream. When users, companies and countries try to solve issues together, they end up with an environment in which people can do their laundry comfortably under clear skies, and a management environment where companies can boost production efficiency while generating profits. This also contributes to the international commitment to eliminate pollution, and makes everyone happy. For the manufacturing industry, I think restructuring by making changes to production processes and creating this sampo yoshi (good for everyone) structure will be increasingly important going forward.

Making Companies the Hubs of Regional Energy Management Through Digital Adoption

Yamada:Now, companies are truly confronted with similar problems in terms of energy. During the recent pressure on the supply of electric power, I think we have been forced to think seriously about how to create circumstances that are beneficial to everyone. I'd like to ask you thoughts on this.

Esaki:In terms of how major companies that maintain extensive private electric power generating capabilities and have large-scale power consumption should achieve sampo yoshi (good for everyone), I think there should be a focus on ΔkW (delta kilowatts: adjusting output in the short term and matching it to actual demand), and efforts to contribute to regional energy adjustment capabilities. If companies can work to boost productivity on the premise of social contribution and play a part in adjusting electric power, then overall we should be able to reduce the fossil fuel-derived power plants that make up the bulk of current power regulating functions. At the same time, by engaging in transactions with power companies, we should be able to curb electricity prices.

In addition, considering the current vulnerability of power supply systems, having companies in regional areas that maintain private electricity generating equipment and can avoid power outages during emergencies also pose benefits to local residents. In other words, a four-party energy ecosystem can be created, including neighboring end users, plants, the national government and in this case the power companies as well. That kind of new structure is now coming into view.

Yamada:Companies, which are major consumers that generally use up vast amounts of energy, will take on the reverse role during emergencies, supplying local communities with energy. The idea that companies have the potential to contribute in those ways in regional energy management is very interesting from the perspective of energy resiliency.

Esaki:The example of Aeon mall is an illustration of that. In the town of Ishinomaki in Miyagi Prefecture, which was one of the places hit by the Great East Japan Earthquake, the Aeon Ishinomaki Shopping Center (now known as Aeon Mall Ishinomaki) continued operating without shutting down for even a day despite power outages, and became an evacuation shelter for about 2,500 residents. It hadn't been officially designated as an evacuation shelter, but it had food, medical supplies, parking space and private power generating equipment, so it had all the elements in place to function in that capacity.

In fact, the amount of electricity consumed by the Aeon Group overall in Japan is over seven billion kilowatts, which accounts for nearly 1%* of Japan's total power consumption. In other words, it's clear from the numbers that the power regulating capacity of commercial facilities such as shopping malls can contribute to regional energy management. On the assumption that shopping malls will become evacuation centers for local residents and energy supply hubs during an emergency, they might be able to coexist with local shopping districts.

Source: Nihon Keizai Shimbun electronic edition, "Aeon Mall to Switch All Electric Power to Renewable Energy at 160 Locations in Japan" (June 10, 2022)

Source: Agency for Natural Resources and Energy, Ministry of Economy, Trade and Industry "Outline of FY2021 Annual Report on Energy (Energy White paper 2022)"

The Keys to Improving the Efficiency of Energy Use are Automation and Transitioning to the Cloud

Yamada:Recently, various research has shown that if several percent of power consumption can be adjusted during peak power demand at times of power shortages, we can get by. At these times, I think the key will be how entities on the demand side utilize digital technologies for this adjustment amount. At the University of Tokyo, immediately following the Great East Japan Earthquake you played a central role in implementing Green University of Tokyo Project, and I heard that this produced significant results. What are the key points in the promotion of DX, and what are the effects of it?

Esaki:With that project, we succeeded in reducing average power usage on campus by around 30% within the short space of several months. At the time, we didn't have in place the infrastructure enabling automated control, so we visualized the status of electricity usage and called on people to conserve energy in an analog fashion. Even so, we managed some significant reductions. That's why if we digitalize that process to adopt automated control, power usage can be adjusted by several percentage points. Last year in Japan the then Minister of Economy, Trade and Industry Koichi Hagiuda called upon the public to cooperate with power conservation efforts, and we overcame the issue with each person making adjustments, but in the future, I think we should shift from those analog-level calls for cooperation to automated control using digital technology.

Additionally, in my lab we worked to shift away from bare metal (physical servers that occupy space) to the cloud, and as a result, we managed to reduce our power consumption by around 70% without any drops in performance. At the time, the NTT Group was conducting similar research, and it demonstrated that by shifting computers with poor electrical efficiency at each of its offices to the cloud, it could reduced its overall carbon footprint. As a result, in 2012, it showed this data to Tokyo Metropolitan Government Bureau of Environment, and recommended energy conservation measures through cloud adoption, in other words the shift on-premise computers to data centers. That has led to the environmental ordinances the Tokyo Metropolitan Government currently has in place, and to energy conservation support programs based on the use of cloud computing.

Yamada:The percentage of energy conservation that can be achieved through cloud adoption is quite a large figure, and I think the impact on users is also large. Major global IT companies are also concentrating on transitioning to the cloud.

Esaki:Google and Amazon tout that they are able to reduce their power consumption by 80% with the use of their own applications, and data centers are operated on 100% renewable energy. As I mentioned with the idea of "sampo yoshi" earlier, going forward I think how companies managed to transform these efforts into stakeholder capitalism will be the key points to DX and GX.

UI and UX Will Change With the Opening Up of Technology

Yamada:When pursuing GX on the consumption side in particular, scientific explanations based on data will be important, but in the case of Japan, as we saw in the example earlier, in some ways public calls from a government minister can be more effective than scientific evidence. It is difficult to link technology with human behavior. For example, even if people can obtain information such as times of day when there is pressure on the electricity supply and different electricity rates, whether or not that can alter the behavior of end users is another question. In terms of linking to people's behavior, UI and UX will be important.

Esaki:I think the role of UI and UX is very large. But at the moment, even if for example you tried to make an application with an attractive interface where your computer autonomously gathers data from the Internet and uses AI to automatically control the voltage of an energy system, it would be difficult to implement because each industry has closed systems that are locked up. It is only when the application, basic software and hardware are all integrated that you can create an attractive interface.

I noticed this issue when I worked on smart buildings, and I bought in a programmer with game development experience to develop the smart building system, and they created an attractive video game-like interface. What wasn't possible using a closed system was achieved at an early stage in 2010 by opening up the API (application programming interface).

It is possible to even change the structure of industry by introducing these experiences from different industries. To develop systems that pose benefits for users and power providers alike, it is important what physical structure and software structure you adopt. We need to bear in mind that if each industry perseveres with its existing business models, we could lose the UIs and UXs that are crucial to changing human behaviors.

Yamada:In the process of opening up systems, since a wide variety of data will be handled, standardizing that data will also be essential. How do you tackle that? And what other barriers are there to implementation, putting aside the issues of people's awareness and technologies.

Esaki:On the issue of standardization, discussions are under way in the Data Linking Infrastructure Working Group of the Council for Science, Technology and Innovation (CSTI). The data that is currently in circulation varies widely, and most of it is still in the form of raw data, and records needed to analyze it are not maintained. As it's probably not possible to arrange this data under a standard data format, in terms of a future direction, we are looking at enabling a transition by introducing the idea of Web 3.0 - a semantic web - where data is structured by appending metadata to it, improving its readability by computers (enabling the handling of data semantics).

But the barrier when we try to do this will be "analog regulations." Even if you try to take things that have traditionally been done by people, such as turning lights or air conditioners on and off or shutting down a machine at a factory, and switch them to computer-based control, there are currently laws and regulations requiring people to perform those tasks. That's why in the Working Group Sub-Committee on Technology-Based Regulatory Reform which I chair the Digital Extraordinary Administrative Advisory Committee, we are in the process of reviewing regulations.

As I mentioned earlier, it will be possible to shift peak electricity demand by simply heating baths during the day or late at night to avoid winter evenings when the supply of electricity is the tightest. In other words, if we are able to change regulations so that things like lighting, air conditioning and hot water systems in people's homes could be remotely controlled and if computers could automatically control these things, we can easily solve the issue of adjusting electricity demand by several percentage points.

Hiroshi Esaki
Completed master's program in the Department of Electrical Engineering and Computer Science, School of Engineering at Kyushu University in 1987. Joined Toshiba in April of that year. Spent two years from 1990 at Bellcore Inc. in New Jersey (USA) and two years from 1994 at Columbia University in New York (USA) as a visiting scientist. Associate professor at the Computer Center of the University of Tokyo since October 1998, and at the Graduate School of Information Science and Technology since April 2001. Professor at the Graduate School of Information Science and Technology since April 2005 (current position). Representative of the WIDE Project. Representative of MPLS-JAPAN, Senior Director of the IPv6 Promotion Council, President of JPNIC, Director of the Japan Data Center Council and Chairperson of its Steering Committee, concurrently serving as Chief Architect (now Senior Expert) at the Digital Agency from September 2021 Doctor of Philosophy (the University of Tokyo).

Tatsuya Yamada
Division General Manager, Energy Business Administration Division and Business Planning & Strategy Division, Hitachi, Ltd.
Vice President, Institute of Electrical Engineers of Japan, and Regular Member, The Japan Society of Public Utility Economics.
Tatsuya Yamada joined Hokuriku Electric Power Company in 1987, and was seconded to The Institute of Energy Economics, Japan in 1998 before joining Hitachi, Ltd in 2002.
He has engaged in tasks involved in the planning of strategies for energy-related businesses, and became Director of the Management Planning Office, the Strategy Planning Division in 2014, Senior Manager of the Business Planning Division, the Energy Solution Business Unit in 2016, General Manager of the Business Planning Division, the New Age Energy Business Co-create Division in 2019, and assumed his present positions in 2020.

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