a CEO dialog on the aims behind the initiative and how they will respond to changing corporate energy needs
Produced FOR UNIFIED SERVICES
by Toyo Keizai Brand Studio
In recent years, the energy landscape has been changing, driven by factors such as the promotion of carbon neutrality and rising fuel costs. Sustainable energy strategies have become a critical issue for many business leaders. How is the power industry responding to these evolving needs?
We explored this in a dialogue between TEPCO Energy Partner, Inc. President Momoko Nagasaki and Unified Services, Inc. President Eiji Uda, who provides CIS (Customer Information Systems) services for the power industry.
Q: Could you share recent developments in the energy sector?
Nagasaki: In 2016, electricity was fully liberalized, allowing all customers, including households, to choose their electricity retailers. The competition, especially in the Greater Tokyo Area, became intense, leading to a reduction in our sales volume. However, around 2022, fuel prices surged globally, and the market price of electricity rose sharply. As a result, many customers returned to the contracts with traditional utility companies like Tokyo Electric Power, which ensure a stable supply of electricity.
Uda: The electricity price hikes were severe, causing significant impacts across many countries. For example, Italy saw electricity prices in November 2022 rise by approximately 260% compared to January 2020, and the UK experienced a 90% increase. In contrast, Japan’s energy policies were relatively successful, with price increases limited to around 26-28%. I believe the Japanese government managed the situation well, but still, electricity prices inevitably went up.
Nagasaki: While the global situation remains uncertain, electricity market prices have begun to stabilize since the second half of 2023. As a result of these market shifts, the needs of corporate customers receiving high-voltage and special high-voltage electricity have changed. In the past, the biggest value was low-priced electricity, but recently, customers have shown a preference for electricity with low volatility, even if it's slightly more expensive. Conversely, some prefer electricity pricing models that fluctuate with market prices, accepting volatility in exchange for flexibility. Another significant trend is carbon neutrality. There is growing demand for electrifying fossil fuel-based energy and utilizing energy certified with environmental value.
"We strive to respond quickly and in detail to customer requests, which we believe is the value we provide."
Momoko Nagasaki,
President of TEPCO Energy Partner, Inc.
Q: How should power companies respond to these changing needs?
Nagasaki: For example, we have introduced market-linked pricing plans to meet the specific needs of our customers. While the specific plans themselves are important, the key is speed. In fact, the number of corporate contract applications for fiscal year 2023 was so high that the contracts sold out within three days of the start of acceptance. However, the internal operations took time to process these requests. For fiscal year 2024, to avoid repeating the same situation, we improved our operations to handle the entire process—from accepting applications to signing contracts—seamlessly. Additionally, from the perspective of improving internal coordination and providing prompt services to customers, we implemented Unified Services' cloud-based CIS system. Responding quickly and in detail to customer needs is the value we offer, and this series of operational improvements was recently recognized with an internal award.
Uda: Flexibility and immediacy are some of the main advantages of cloud technology. Furthermore, implementation is faster and more cost-effective compared to on-premise systems. In the case of Tokyo Electric Power Energy Partner, a leading company in the energy industry, this was a large-scale project. However, thanks to our teamwork, we were able to complete system development and begin operations within approximately six months—much faster than the two years it would have taken with an on-premise system. Moreover, cloud technology is highly secure. It is constantly evolving to meet technological advancements, and it also has built-in backup services to ensure continuity in the event of a disaster, providing a resilient environment that customers can rely on.
Q: So it's essential for management to understand the characteristics of cloud technology.
Nagasaki: Yes. I started to truly understand the benefits of cloud technology when I introduced a cloud-based CIS system at TEPCO Customer Services, a subsidiary of Tokyo Electric. Before that, I didn't fully grasp the features of cloud systems. However, I believe that in order to reform a system, it’s essential for management to first learn about and understand the technology before making decisions. Once the management team understands it, the knowledge can spread throughout the organization. This is why the cloud implementation with Unified Services progressed smoothly.
Uda: Social infrastructure requires heavy, long-lasting, and secure systems, so many companies in the industry are somewhat conservative. However, in this rapidly changing era, not changing itself is a risk. President Nagasaki listened carefully to our proposal, understood the cost-saving potential, and decided to implement the cloud-based system for the core infrastructure. This decision from the top leadership is extremely important. I believe this move will have a significant impact on the entire power industry. Our company has also been entrusted by the Ministry of Economy, Trade, and Industry (METI) to manage the feed-in tariff (FIT) system for solar power generation for many years. Additionally, we have provided cloud-based CIS solutions to over 30 new electricity suppliers, accumulating valuable industry expertise, which we incorporate into our services. Our SaaS model, which charges based on the number of customers, is another strength. Building a large-scale, in-house system with many anticipated needs can become difficult to adapt to sudden market changes. This is another reason why our solution can be safely implemented. We have established an agile development process that repeats the cycles of design, development, testing, and improvement in a short period, ensuring smoother and more reliable development.
Q: What are the specific characteristics of your products (services)?
Uda: Our industry cloud service is built on the Salesforce platform, on top of which we have constructed systems for calculating electricity rates and coordinating across regions. Salesforce manages and monitors this platform 24/7, supporting our service's stability, speed, security measures, and disaster recovery capabilities. Our system can seamlessly integrate with other systems through Salesforce, which is another key feature.
With years of accumulated know-how in the electricity industry, Eiji Uda has led Unified Services to provide solutions tailored to the sector's unique needs.
Eiji Uda,
President of Unified Services, Inc.
Q: Carbon neutrality is also a topic of high interest for companies.
Nagasaki: Our research laboratory analyzed carbon neutrality measures and examined which actions provide greater societal benefits than the associated costs. Some of the most common initiatives mentioned by customers were adopting electric vehicles (EVs), electrifying water heaters, and installing solar panels.
We aim to support customers in achieving "local production, local consumption" of electricity, not just sticking to the traditional business model where utility companies supply power. This could involve customers owning their own power sources and consuming the electricity they generate.
Uda: During the Noto Peninsula earthquake in January 2024, many power poles in the affected areas collapsed, causing power outages. There is a system in place to use renewable energy power plants as emergency backup sources during disasters. However, only one of the approximately 3,500 facilities in the northern part of Noto Peninsula met the requirements for this.This experience has prompted action at the national level, with legal frameworks already in place for regional use of renewable energy power plants. Our company has consulted with the Digital Rural City National Strategy Office about regional utilization of power plants, and we have proposed using them as EV charging stations to local government leaders. We may also be able to support companies in achieving 100% renewable energy usage. Carbon neutrality is a global challenge. By collaborating with power companies, we aim to help Japan become a leader in this area.
※Originally published in the August 24, 2024 issue of Weekly Toyo Keizai.
