Mitsubishi Heavy Industries Technical Review Vol. 56 No. 2 (July 2019)1

Creating New Value through Private Power Generation
Systems in Domestic Power Supply
and Demand Balancing Market- Approach to Demand Response at Sagamihara
Machinery Works-

HIROYUKI SUZUKI*1

FUJIO EGUCHI*1

YUSUKE ISOBE*2

KEIZO KOSHIMIZU*3OSAMU NAKAKITA*4

Private power generation systems (including CGS (Note 1)) have been introduced so far mainly
for the purpose of being used in the event of a power failure or for energy cost saving such as
power peak cuts in summer. However, the rise of fuel prices following the rise of crude oil prices in
the Middle East has been a hindrance to the promotion of the introduction or the regular operationof private power generation systems, even while the adoption of CGS has been advanced.
Therefore, Mitsubishi Heavy Industries Engine & Turbocharger, Ltd. (MHIET, our company)
proposes to customers new methods for utilizing private power generation systems, that recognize
the advantages in introducing them through the approaches to demand response (hereafter DR)
and the open market of balancing power described below. Under the reform efforts of the domestic
power transmission and distribution system, a new power supply and demand balancing market
was established, and our company has also been promoting entry into the market with the aim ofcreating new value of private power generation systems.

|1. Introduction
Under the electricity system reform efforts led by the Ministry of Economy, Trade andIndustry, the electricity retail market was liberalized in 2016 and the open procurement ofbalancing power began in fiscal 2017. Figure 1 shows the milestones of the electricity system
reform efforts. Through these efforts, the open procurement of reserve capacities for power supply
and demand balancing(Note 2) that have been exclusively dominated and managed by large electric
power companies was added, and at the same time, negawatt trading(Note 3) was developed.
Consequently, in addition to power generation, the reduction of power demand (hereafter, demand)
is now also regarded as reserve capacity for power balancing.
There are various methods for reducing demand. Among them, DR using private power
generation systems is expected to be the main power supply source with a stable and large capacity
in negawatt trading. Figure 2 depicts an overview of DR trading and demand control(1). DR tradingis generally performed among electric power companies which request DR, aggregators who serveas commanders, and consumers who execute DR. By controlling the demand in accordance withrequests, electric power companies can save the cost for the maintenance and operation of facilities
for reserve capacity, and they pay incentives (rewards) to aggregators and consumers in return.

*1

Engine Technology Development Department, Engine & Energy Division, Mitsubishi Heavy Industries Engine & Turbocharger,*2

Manager, Engine Sales Department, Engine & Energy Division, Mitsubishi Heavy Industries Engine & Turbocharger, Ltd,

Ltd,
*3

Production Department, Production Division, Mitsubishi Heavy Industries Engine & Turbocharger, Ltd,

*4

Deputy Director, Engine Technology Development Department, Engine & Energy Division, Mitsubishi Heavy Industries Engine &Turbocharger, Ltd,

Mitsubishi Heavy Industries Technical Review Vol. 56 No. 2 (July 2019)2

There are three kinds of demand controls. As of 2019, Power source I'll describe later was
operated by “Down ward DR.” Consumers control the demand by predetermined methods such as
turning off air conditioners and/or lights, the suspension of the operation of production equipment ,and the operation of generators or batteries.

Figure 1 Milestones of electricity system reform efforts

Figure 2

Image of DR trading and demand control|2. Approach to demand response at Sagamihara Machinery Works
2.1

Start of approach to DR

The Sagamihara Machinery Works experienced four times rolling blackouts and operational
suspensions after the Great East Japan Earthquake in 2011. Utilizing this experience, the fifth
power station with six gas engine generator sets of 1500 kW output, which were the latest model atthat time, was constructed to enhance BCP(Note 4), and in 2014, the adoption of CGS in these engine
generator sets was completed. Table 1 gives the configuration of the private power generation
systems in the factory. Electricity purchased from the electric power company is still used and thefifth power station in which CGS was adopted is preferentially operated to supply energy to thefactory. As a result, a cost advantage has been obtained, and nine engine generators of the first to
fourth power stations have been used less frequently. Coincidentally, the DR demonstration started
in 2014, and our company decided to join the DR demonstration as a consumer. We were searchingfor new methods for utilizing the private power generation systems, and we tried utilizing them for
power supply and demand balancing and obtaining incentives. This was the start of our current
approach to DR.

Mitsubishi Heavy Industries Technical Review Vol. 56 No. 2 (July 2019)3

Table 1

Configuration of private power generation systems in the plant

Name
First power station

Kind
Diesel engine
Gas engine
Second power station
Diesel engine (for emergencies)
Third power station
Diesel engine
Fourth power station Gas engine
Fifth power station
Gas engine (cogeneration)
Sixth power station
Gas engine (cogeneration)
Seventh power station Gas engine, etc.

2.2

Number of units
1
1
1
3
3
6
1
1

Automatic DR
Available in 2017 at the earliest
Available
Not available
Available
Available
Not available
Not available
Not available

Steps of the demonstration

Table 2 shows the planned DR demonstration guideline for each year. In our company,
conventionally, a monitoring person has been stationed full time and operated the generators so thatthe power generation amount does not exceed the contract power under the supply and demand
contract with the electric power company.
In fiscal 2014, under the 30-minute advance notice demonstration, there was a sufficient
allowance of time left, and even if a larger amount of power than planned was generated, the kWhreward was obtained. Therefore, when a request was received by telephone or e-mail, themonitoring person operated the necessary number of generators at 100% output.
Table 2

DR demonstration guideline each year

FY2014DR scheme

FY2015FY2016

Demonstration project

FY2017FY2018FY2019Open procurement of balancing
power

DR contract amount (%)(suppression amount/ contract
amount of power supply anddemand)

47.6%

35.3%

37.5%

Advance notice of DR
command issue

30 min.
beforeissue

Number of commands

7 times/4
months30 min.
beforeissue
12times/4months10 min.
beforeissue
16
times/5monthsPhone/
e-mailOnlineOnlinePhone/e-mail/on-line

Phone/
e-mailOnlineOnlineOnline――70% orhigher

90 to
110%

Power
company→
Command
Aggregatortransmission
methodAggregator→
ConsumerCriteria of judgment forsuccess or failure

56.3%

30 min. before issue
12 times max.

80% or higher

90% orhigherIn fiscal 2015, the scheme design was developed and the criteria of determining success or
failure in demand response were set. Figure 3 illustrates the baseline(2) and the target receiving
power, and Figure 4 provides an example of the determination of success or failure(2). “High 4 of
5,” which is the average demand in 4 highest-demand days out of the last 5 weekdays, was set as
the demand baseline and the amount of electric power reduced from the baseline was evaluated. As
a result, even if a larger amount of power than the contract reduction amount is generated, it is hardto obtain additional incentive. In addition, as the demand itself largely fluctuates as a result of
production variation, etc., at factory, the power generation amount is controlled according to thereceiving power in real time. It is difficult for the monitoring person to operate power generation
amounts of multiple generators at the same time. Therefore, in fiscal 2015, an automatic DR
control system was implemented.
In fiscal 2016, the demonstration was conducted to meet the strict criteria, within ±10% todetermine success or failure with 10 minutes advance notice. The start-up time of the gas engine
generator was shortened to about 8 minutes, and the result demonstrated that the scheme wascapable of quick DR and controlling the receiving power, assuming that the 30-minute balancing
rule was applied.
In fiscal 2017, the public procurement of balancing power, rather than a demonstration,
began, and our company made a contract for Power balancing capacity I' for extreme weather,Mitsubishi Heavy Industries Technical Review Vol. 56 No. 2 (July 2019)4

emerging continued in 2018. We will continue to provide power balancing capacity on DR in fiscal
2019 as well.

Figure 3 Baseline and target receiving power

Figure 4

Example of determining success or failure|3. Automated DR system
3.1

System configuration and command transmission flow

Figure 5 is the system configuration and the command transmission flow in the DR system.
The resource aggregator (hereafter, RA) and the Sagamihara Machinery Works communicate with
the DR gateway which is installed in our factory, through the aggregator DRAS. When DR isordered, the command is received concurrently. At the same time, the monitoring person is notified
by e-mail or phone. The actual receiving power amount data is sent from our factory to the RA inreal time to be used in the calculation of the baseline. The final determination of success or failure
is made using a verified watthour meter for electricity charge settlement which was installed by theelectricity transmission and distribution utility.
Table 3 lists the functions and control items of each device. The scheme of the DR systemcommenced in 2015, but the RA changed every year and so the system configuration has been

Mitsubishi Heavy Industries Technical Review Vol. 56 No. 2 (July 2019)5

somewhat updated. In fiscal 2015 and fiscal 2016, the RA at that time took charge of the functionsof the DR gateway and DR controller, and therefore, for security reasons, the system on the RA
side and the system on the factory side were separated by the PLC gateway. But it was difficult for
the RA to control the engine generators in full consideration of engine characteristics. So, the DR
controller was manufactured, and since fiscal 2017, the start/stop of the engine generators and thepower generation amount allocation to each power station has been controlled on the factory side.
As of 2019, the system has two gateways: the DR gateway between the RA and the factoryand PLC gateway between the DR controller and the engine generators.
Table 3
Device nameDR gateway

DR controller

PLC gateway
Each generator

Figure 5

3.2

Functions and control items of each device

Function
RA-Consumer communication
gateway function
Calculation of receiving power
amount pulse

Control item

1-minute integrated receiving power amount[kW・min]
Date and time of DR start, duration, target
Relay of DR control signal
receiving power every 30 min., baseline every
30 min.
Target value (from target receiving power andCalculation of target power
actual receiving power)
generation amountPower generation amount feedback command
Generator entry check
Power station Calculation of power
Control of multiple power stations
generation amount allocatedGenerator Start-up/stop command
Power station data summarization
and relay
DR ready status
Control of multiple units by
Possible power generation amountcommon control panel(Effective) power generation amount

System configuration and command transmission flow

Allocation control of multiple power stations

Engine generators are designed and developed at the Sagamihara Machinery Works of ourcompany. In all the power stations, the new engine generators at the time were introduced and haveMitsubishi Heavy Industries Technical Review Vol. 56 No. 2 (July 2019)6

been used for the verification test of various issues while being operated. Therefore, theSagamihara Machinery Works has a larger number of generators installed compared with domestic
general customers. The land engine generators are tuned so that the maximum efficiency isprovided at 100% rated output, and for long-term operation, 50% or higher rated output is suitablefor engine combustion.
Therefore, it has been decided that when DR is executed, the number of engine generators
which are started up and operated at 50% of the rated output or higher should be minimized. The
first priority of operation was assigned to the first power station which can be remotely controlled
only for the rated output operation or stopped, the second priority was assigned to the fourth power
station which consists of four gas engine generator sets, the third priority was assigned to thesecond power station which has one gas engine generator sets, and the fourth priority was assigned
to the third power station which consists of three diesel engine generator sets. The necessary
number of generators in the order of priorities will be started up. Basically, gas engine generators
are started up first, and then, if additional generators are required, diesel engine generators which
can start up fast are used. The minimum number of generators is used only at the time of start-up.
On the other hand, when in-factory demand is lowered, the number of engines to be stopped isminimized. This is because once the engine stop sequence is started, the load shift, synchronization
parallel-off, cooling operation, etc., are performed and it takes six minutes or longer to re-start theengine. Any generator that has been started up for backup of regular demand balancing before DR
is executed ,is excluded from the system.

|4. Results and issues
4.1

Results of DR by public procurement of balancing power

The DR results of Power balancing capacity I' for extreme weather, contracted in the public
procurement of balancing power in fiscal 2017 and fiscal 2018 are shown in Table 4. Powerbalancing capacity I' is used for DR which is executed when the supply-demand balance becomestight in extreme weather that would only occur once every ten years.
After the public procurement of balancing power commenced, the first DR was ordered at
18:00 on January 22, 2018 and the reduction time was from 18:30 to 20:00. On this day, in the
Kanto area, it snowed heavily as once in decades, and all the employees at the factory left work to
go home at 15:00. Most production facilities were already switched off, so the demand was low at
16:30, which was 2 hours before the DR order, and in that situation, adjustment on the day was
executed. As a result, the baseline became low. The baseline itself was lower than the contract
power reduction, and the DR was determined as a failure as a matter of course. This poor result of
the first DR due to the extreme weather was the chagrin of the persons concerned.
Table 4

DR results of power balancing by Generator I' for extreme weather

Fiscal 2017
Predicted system
reserve rate(3)[%]RD execution date
Time
(Predicted peaktime)
January 22, 2018 (Mon) 18.5-20
4.2 (18)
January 23 (Tue)
18-20
4.0 (10)January 24 (Wed)09-12
5.9 (19)
17-20
January 25 (Thu)09-12
3.5 (19)
17-20
January 26 (Fri)09-12
5.3 (19)
17-20
February 1 (Thu)09-12
4.6 (18)
17-20
February 2 (Fri)09-12
4.6 (10)17-20
February 22 (Thu)17-20
4.2 (19)

Fiscal 2018
RD execution date*3

Time

August 1, 2018 (Wed) 15-18
August 1 (Tue)
15-18
August 22 (Wed)15-18
August 27 (Mon)14-17
As of February 15, 2019

Predicted system
reserve rate(3)[%](Predicted peaktime)
8.7 (15)
7.3 (15)8.0 (15)8.0 (14)

Figure 6 is a graph detailing the results of DR on the morning of January 25 when there wassufficient demand in the factory It shows that the purchased electricity in blue, that is, the receiving
power, has been controlled well along the target value every 30 minutes. In cases where theMitsubishi Heavy Industries Technical Review Vol. 56 No. 2 (July 2019)7

demand in the plant is low, we enhanced the function of preventing a reverse power flow fromoccurring or the receiving power from falling below the minimum receiving power.

Figure 6

4.2

Results of DR on the morning of January 25, 2018

Issues in operation

The issue found in fiscal 2017 is that there was a mismatch between the contract power
reduction value, set based on the factory demand in the peak time zone in summer when a tightsupply-demand balance is expected, and the demand in the evening in winter. The contract power
reduction should be determined based on the factory demand throughout the year. Another failure
example can be seen in the DR in the summer of fiscal 2018. On a day when it was exceptionallyhot, the factory demand was extremely high due to the use of air conditioners, etc., and it wasnecessary to operate the engine generators to keep the receiving power at the maximum power ofthe supply and demand contract or below. Part of the fifth power station and the sixth power station
had not been operated because of maintenance and other reasons, and furthermore the operation ofsome engine generators for DR had been started as a backup before the DR was executed. As aresult, after the DR was executed, the receiving power couldn't be reduced, even while all theoperable generation systems were operated to generate electricity. Thus, in preparation for the
execution of DR, the consumer needs to keep the receiving power above the contract power
reduction level and below the maximum power of the supply and demand contract, withconsideration for maintenance plans, weather, etc. However, if the power receiving facility canmeasure the reverse power (power transmission) amount and the reverse power amount is accepted
as part of the power reduction in the DR system, it is not necessary to keep the receiving power at
the contract power reduction level or above and the operation can be simplified. In this point,
improvement of the DR system is desired.

4.3

Issue in DR system

Looking at Figure 6, we find that there is still an issue. It is especially clearly shown at the
point of 11:10, where the demand in the factory fluctuates largely as depicted at the upper edge ofthe graph, and the receiving power is not fully reduced. The evaluation is based on the average over
30 minutes, and there is no problem in terms of the average value. But if stricter balancing power
trading is started, it will be necessary to settle DR within ±10% in a short time.

4.4

Issues in providing the system to customer facilities

The aforementioned issues are from the perspective of a consumer who operates private
power generation systems as power sources for power balancing.
From the perspective of a manufacturer who modifies customers’ private power generation
systems and provides a system that can be used in power sources for balancing power, thefollowing issues were extracted:(1) If the RA business operator is replaced, the communication interface between the customer
side and the RA system is changed;(2) there is a cost associated with designing a system corresponding to the system configuration

Mitsubishi Heavy Industries Technical Review Vol. 56 No. 2 (July 2019)8of the generator site; and(3) modification of the engine generator should be minimized.
We are developing a DR control system for customers that can solve these issues.

|5. Conclusion
Our company has improved the DR system, by accumulating operational expertise through 5
years of demonstration tests and DR for balancing power by Power balancing capacity I' at the
Sagamihara Machinery Works and obtained findings for optimum proposals to customers.
On the other hand, under the electricity system reform efforts, the design of a balancing
power scheme which will be used more often than Power balancing capacity I' and a demonstration
with a frequency adjusting function is under development, as prescribed in the requirements for
products(4) in the power supply and demand balancing market in Table 5. Conventionally, such ascheme was applied to large thermal power stations, pumped-storage power stations, etc., and not
applied to private power generation systems such as engine generators. Going forward, we will
promote customer to utilize private power generation systems as stable and large-capacity powersources in DR/VPP(Note 5) operations and plan to enter the capacity/frequency balancing market tocreate new value through private power generation systems ,by leveraging the strengths of ourcompany as a manufacturer of engine power generation facilities with “engine power generation
control technologies and “telecommunication technologies.”
Table 5 Requirements for products in the market of power supply and demand balancing
Tertiary
Tertiary
Secondary
SecondaryPrimarybalancing power balancing power balancing power balancing power
balancing power
(2)
(1)
(2)
(1)
Frequency
Synchronized
Replacement
Frequency
Replacement
EnglishContainment
Frequency
Reserve-for FIT
Restoration
Reserve (RR)
designation
Reserve
Restoration(RR-FIT)
Reserve (FRR)(FCR)
Reserve (S-FRR)
Off-line
On-lineOn-lineOn-lineCommand/
On-line(own-terminal(LFC signal)(EDC signal)(EDC signal)
control
control)
Dedicated line:
On-line (partially,On-lineMonitoring
On-lineOn-lineOn-lineoff-line available)
Simple command
system: Off-line
Dedicated line
Dedicated line or(Not required for
Dedicated line
Dedicated line
Dedicated line simple commandLine
off-linesystemmonitoring)Response
Within 10 sec.
Within 5 min.
Within 5 min.
Within 15 min.
Within 45 min.
time
Product blocking Product blocking
Duration
5 min or more
30 min or more 30 min or moretime (3 hours)
time (3 hours)
Parallelrequired/not
Required
Required
Voluntarily
Voluntarily
Voluntarily
required
0.5 to several tens
Around 1 toAround 1 toCommand
30 minutes(own-terminalof seconds
several minutes several minutes
interval
control)
Monitoring
Around 1 to
0.5 to several tens Around 1 to 5
Around 1 to 5
Not definedinterval
several seconds
of seconds
seconds
seconds
Output can bechanged within
Output can be
Output can be
Output can be
Output can be
Possible
45 minutes
changed within changed within 5changed within 5 changed within
output(upper limit of theminutes
10 seconds
minutes
15 minutes
amountrange adjustable(upper limit of(upper limit of(upper limit of the (upper limit of the(upper limit
on-line (including
LFC range on
GF range on
range adjustable range adjustableto bidding
the simple
equipment
equipment
on-line)on-line)amount)commandperformance)
performance)system)Dedicated line:
5MW
Minimum
5MW(1 MW for
5MW
5MW
5MW
bidding
Simple command
off-lineamountsystem: 1MW
monitoring)
Increment
1kW
1kW
1kW
1kW
1kW
(bidding unit)
DR category
UP/Down
UP/Down
UP/Down
UP/Down
UP/DownMitsubishi Heavy Industries Technical Review Vol. 56 No. 2 (July 2019)9

To that end, in cooperation with major electric power companies and aggregators and also incoordination with the ENERGY CLOUDTM(5)(Note 6) Service which has been promoted by the Power& Energy Solution Business Division of Power Systems of Mitsubishi Heavy Industries, Ltd., in
the same corporate group,, we will not only sell system equipment alone, but also develop a DR
control system with a view to offering a service business allowing RAs and customers to easily
enter the power supply and demand balancing market using private power generation systems.
Note 1: Abbreviation for “cogeneration system.” CGS is a system that reuses the waste heat of an engine
generator.
Note 2: Power supply or capacity required for the transmission and distribution sector of the electriccompany to conduct system stabilization operation in a supply area
Note 3: Trading in which the demand reduction amount (negawatt) is regarded as the amount of power tobe supplied for power balancing performed by a general electricity transmission and distribution utility,
and can be purchased and sold in the same way as generated electric power.
Note 4: Business Continuity Planning: Planning of methods and means for continuing business inemergencies
Note 5: Virtual Power Plant: Controlling a group of small power stations or facilities as if they were asingle power station
Note 6: ENERGY CLOUDTM is a registered trademark of Mitsubishi Heavy Industries, Ltd. in Japan andother countries.

References(1)

Demand Response Handbook , the Ministry of Economy ,Trade and Industry
http://www.meti.go.jp/press/2016/12/20161228004/20161228004-1.pdf(2) Guideline for Energy Resource Aggregation Business , Agency of Natural Resources and Energy
http://www.meti.go.jp/press/2017/11/20171129001/20171129001-1.pdf(3) Cross-regional organization system “Publication, Relevant information on Supply and Demand,
Reference for Power Demand forecast・Peak hour supply power , Power Demand forecast・ Peak hour
supply power” On the day forecast in TEPCO area.
http://occtonet.occto.or.jp/public/dfw/RP11/OCCTO/SD/LOGIN_login#(4) Organization for Cross-regional Coordination of Transmission Operators, JAPAN(OCCTO)
Sixth study subcommittee for Supply and Demand Balancing Market
Document 2 “Review of Product Requirement”
https://www.occto.or.jp/iinkai/chouseiryoku/jukyuchousei/2018/files/jukyu_shijyo_06_02.pdf(5) Tanabe, T. et.al., Mitsubishi Heavy Industries Technical Review Vol. 55 No. 4 (2018) “VPP: New Stage in
Energy Management Smart Utilization of Self-Generation Facilities with Automated DR System”
https://www.mhi.co.jp/technology/review/pdf/e554/e554030.pdf