Evolving Initiatives for Securing In-House Power: Virtual PPA Case Studies from Tokyo Metro and JR West

Introduction

As the adoption of renewable energy progresses, the methods companies use to secure their own energy supplies are diversifying. The virtual Power Purchase Agreements (PPAs) utilizing renewable energy sources other than solar power, recently introduced by Tokyo Metro and JR West, are attracting attention as prime examples. This article provides a detailed explanation of these cases and explores new possibilities for renewable energy utilization.

What is a Virtual PPA?

A virtual PPA (Power Purchase Agreement) is a mechanism where a power generator and a power consumer (such as a corporation) enter into a long-term power purchase contract. In this agreement, rather than supplying physical electricity, the contract involves purchasing the environmental value associated with power generation, such as non-fossil fuel certificates. This allows companies to obtain environmental benefits equivalent to using renewable energy, even if they do not receive the electricity actually generated.

Tokyo Metro and the Small-Scale Hydroelectric Virtual PPA

Background and Details of the Agreement

Effective July 1, 2024, Tokyo Metro concluded a virtual PPA utilizing small-scale hydroelectric power with Marubeni Retail Electricity. This is a first-of-its-kind initiative in Japan and represents a significant step for Tokyo Metro in diversifying its renewable energy sources.

Based on this agreement, Marubeni Retail Electricity plans to build multiple new small-scale hydroelectric power plants across the country, securing a total output of approximately 5 MW. The non-fossil fuel certificates generated from this, totaling about 35 million kWh annually, will be provided to Tokyo Metro, with the company anticipating a reduction of approximately 13,650 tons of CO2 per year.

Contribution to Environmental Goals

Tokyo Metro has set a goal to reduce CO2 emissions across all group businesses by 50% by fiscal year 2030 compared to fiscal year 2013, and to achieve net-zero emissions by fiscal year 2050. This virtual PPA will serve as a crucial tool for the company to achieve its environmental targets.

JR West and the Wind Power Virtual PPA

Choosing Wind Power

Also on August 7, 2024, JR West signed a basic agreement for a virtual PPA utilizing wind power with Cosmo Eco Power and Cosmo Energy Holdings. Through this, JR West is expanding its use of renewable energy in its railway business and advancing the procurement of sustainable energy.

Cosmo Eco Power's Track Record

Since its founding in 1997, Cosmo Eco Power has developed 220 onshore wind power facilities across 41 locations in Japan, and as of the end of June 2024, it operates 130 wind power plants at 18 locations. Building on this extensive track record, JR West is leveraging virtual PPAs to strengthen its use of renewable energy, aiming for net-zero CO2 emissions by 2050.

Significance of Virtual PPAs and Future Outlook

Promoting the Use of Diverse Renewable Energy

Until now, the use of renewable energy has relied primarily on solar power. However, as seen in these cases, by utilizing diverse energy sources such as small-scale hydroelectric and wind power, companies can secure energy more flexibly and effectively. This is expected to further expand the use of renewable energy, leading to greater supply stability and technological innovation.

Environmental Contribution and Corporate Sustainability

Promoting the use of renewable energy through virtual PPAs not only contributes to a company's own environmental goals but also enhances the sustainability of society as a whole. As demand for renewable energy grows, the launch of new power generation projects will be encouraged, driving further technological evolution and cost reductions.

Summary

The virtual PPAs introduced by Tokyo Metro and JR West are excellent examples of how the use of renewable energy is evolving and diversifying. These cases demonstrate that companies are further strengthening their efforts toward securing sustainable energy, marking a significant step toward achieving carbon neutrality for society as a whole. It is expected that the continued expansion of such initiatives will accelerate the realization of a sustainable society.

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Major Railway Operators Adopt Virtual PPAs Beyond Solar Power https://project.nikkeibp.co.jp/ms/atcl/19/news/00001/04399/?ST=msb&n_cid=nbptec_tectw