Hitachi-UTokyo Laboratory: Seventh Industry-Academia Collaboration ForumToward Realizing Energy Systems to Support Society 5.0Promoting an Integrated Transition that Comprehensively Encompasses Society, Regions, and Industry

The Hitachi-UTokyo Laboratory’s Seventh Industry-Academia Collaboration Forum was held at the Hongo Campus of The University of Tokyo in January 2025. The Hitachi-UTokyo Laboratory seeks to resolve global-scale challenges from an overarching perspective that shares and combines diverse opinions through collaborative creation between industry and academia. In the nine years since it was established in 2016, the laboratory has been engaging with stakeholders from the public sector and industry in a dialogue on how Japan should address the issue of energy.

Teruo Fujii, President of The University of Tokyo, spoke the following words as he opened the forum, asserting the necessity of general intelligence that transcends the walls between academic fields and connects specialized expertise interdisciplinarily for resolving complex challenges that humanity confronts. He referred to how the energy that sustains human society must necessarily be considered in the context of what is happening in that society. And also referred to the more volatile global situation and the rising severity of natural disasters due to climate change. “Acknowledging the increasingly uncertain global situation and the rising demand for electric power driven by progress in digital transformation (DX) and green transformation (GX), the draft of the Seventh Strategic Energy Plan published at the end of 2024 reiterated the need for reliable energy supplies. The global-scale challenges that confront society cannot be addressed through any single academic field, having complex interrelated problems both in terms of their causes and how to resolve them. I hope that the discussions at this forum can offer clues about how to overcome the challenges that face humanity.”

Toshiaki Higashihara, Director and Executive Chairman of Hitachi, Ltd., likewise identified three key points, which he spoke about with reference to the draft of the Seventh Strategic Energy Plan. These are that our thinking on carbon neutrality and the various other challenges we face should consider these issues in broad terms, the rebuilding of Japan’s manufacturing capabilities, and the fostering of people with a sense of initiative who feel a personal engagement with the challenges that face society. “Resolving societal challenges calls for an empathetic approach in which we devise solutions in consultation with people from throughout the world. In addition to the questions of what to do about energy and what we mean by people’s wellbeing, I hope this forum can provide an opportunity for us think collectively about the issue of how to foster people capable of overcoming these challenges.”

Next were presentations on the activities of the Hitachi-UTokyo Laboratory that also touched on developments in the energy sector and in the domestic and international situations.

Naohiro Kusumi, General Manager at the Center for Sustainability, Research & Development Group, Hitachi, Ltd., spoke about how the circumstances surrounding the climate, energy, and environment are entering a new phase, with incumbent administrations being voted out in a number of national elections at a time when the volatile international situation is impacting people’s lives. Noting also that climate change is clearly worsening, with 2024 being the first year in which temperatures were more than 1.5°C above levels prior to the Industrial Revolution, he spoke about the need to plan for future electricity supply in expectation of rising energy demand driven by rapid growth in the information and telecommunications industries and that thought needed to be given to sustainable development.

Hitachi-UTokyo Laboratory has been studying energy supply and demand scenarios for achieving carbon neutrality in 2050. Reports have highlighted the need to undertake a wide variety of actions to address the obstacles to the wider adoption of renewable energy, which include output curtailment and the shrinking workforce in the electricity sector. It has also advocated an integrated transition that will enable a comprehensive and organic shift to sustainability through a dialogue in which the individual measures involved in the energy transition are debated in tandem with other policy priorities including restoration of biodiversity, promotion of regional prosperity, realization of a circular economy, disaster preparedness, and gender equality.

Next, Shinobu Yoshimura, Project Professor at the Graduate School of Frontier Sciences, The University of Tokyo, gave an overview of the research being done at Hitachi-UTokyo Laboratory and its activities in the 2024 academic year. Making reference to the clean tech agreement reached between Imperial College London, Hitachi, and The University of Tokyo in FY2023, he also spoke about initiatives for discussion and sharing based on scientific evidence that also involve young students and researchers. Since FY2017, Hitachi-UTokyo Laboratory has been publishing annual proposals entitled, “Toward Realizing Energy Systems to Support Society 5.0.” A number of the measures that have been discussed through the activities of Hitachi-UTokyo Laboratory have already reached the stage of practical application and the laboratory intends to continue engaging in debate that considers the increasingly confused situation in society and internationally.

Challenges that could never have been anticipated are emerging around the world at a time when only five years remain before the 2030 target date for achieving the Sustainable Development Goals (SDGs). While this has prompted growing calls for using digital technologies to deliver innovation and achieve the SDGs, hopes that the tools and techniques of data-driven decision making will help to boost efficiency must be set against the very large energy requirements that come with them. If the SDGs are to be achieved, we need to re-evaluate both governance and mechanisms while also stepping up our adoption of digital solutions.

At its Summit of the Future held in September 2024, the United Nations adopted the Global Digital Compact, the first ever comprehensive global framework for digital collaboration and artificial intelligence (AI) governance. There is a need to change people’s behavior based on the values that underpin governance, namely transparency, fairness, inclusivity, and accuracy. Inclusive governance that can respond with flexibility to the many changes taking place in the world will be essential if we are to overcome the multiple interconnected crises that confront us and achieve the SDGs.

A free and open international order built on an assumption of peace emerged in the years following the end of the Cold War between the United States and the Soviet Union in 1989, a process that continued up to the adoption of the Paris Agreement in 2015 as an international framework for addressing climate change. Since the decision by the first Trump administration to withdraw the US from the Paris Agreement in 2017, however, the global situation has become more fluid with ongoing uncertainty over international cooperation on climate change.

Meanwhile, it also appears that the reaction against decarbonization is taking the form not only of nations pitted against one another, but also of public opposition in the Western nations that have been the driving force behind action on climate change. One example is the proposition that people’s awareness of the cost of decarbonization measures will become much more tangible when those measures reach a level that directly impacts their daily lives, such as their cars or home heating, and that this will lead to opposition. On the other hand, this opposition could also be a reflection of other divisive factors that already existed in society, such as anti-immigrant and anti-elite sentiments. Differences are likewise evident between different nationalities and age groups. In Japan, for example, it is the younger generations who are less concerned about climate change whereas the opposite is true in the US. I believe that the concept of an integrated transition is important both for gaining the understanding of society as a whole and for achieving a balance of solidarity.

GX is about more than just reducing the emission of greenhouse gases, it is also a means of combining this with economic growth. The government of Japan is seeking to invest more than 150 trillion yen of public and private funds into GX over the next decade through a combination of three investment support measures. These are (1) the issuing and spending of Climate Transition Bonds (GX bonds, 20 trillion yen over 10 years), (2) carbon pricing, and (3) the promotion of transition finance and the establishment of a GX Acceleration Agency.

The GX 2040 Vision (draft) for the state of society and the economy around the year 2040 was published by the government at the end of 2024 with the goal of providing greater certainty over long-term investment in GX. This vision anticipated the emergence of an industrial structure around GX that would include the rise of new growth industries in the field together with greater competitiveness in existing manufacturing industries achieved through a combination of both DX and GX.

While decarbonized energy is crucial to economic growth under this scenario, these forms of electricity generation tend to be geographically dispersed. However, given the lack of both the time and the financing for the massive investment needed to build transmission lines and networks to those locations where demand is concentrated, it is hoped that progress can be made on practical policies for encouraging industry clusters. Examples might include enticing corporate investment into locations that are well-resourced with decarbonized electricity generation and the offering of incentives to these companies and to the local government agencies involved in putting this infrastructure in place near those decarbonized electricity generation sites.

Japan’s Strategic Energy Plan has undergone a series of revisions in an environment where the goal is to combine carbon neutrality with economic growth. The draft of the Seventh Strategic Energy Plan published in late 2024 includes the following three points related ot the electricity system.

1. Progress on decarbonization of electricity generation with security of supply as a prerequisite
   The use of renewable energy has been a topic for debate over the past decade. Given the anticipated growth in demand for electric power in the future, further investment in power sources will be necessary, and establishing a conducive environment for this purpose will be crucial.
2. Grid infrastructure, right-siting, and flexibility in supply and demand to enable efficient use of generation resources
   The potential for renewable energy varies between regions. It is anticipated that measures will be needed in the supply network to address the questions of how renewable energy scattered about different parts of the country can be put to use in major demand centers like Tokyo and Osaka, and how new sources of demand such as data centers can be clustered in locations that are favorable for renewable energy.
3. Creating an environment that enables retailers to supply consumers with stable pricing
   The cost of operating the electricity system is funded by the tariffs paid by consumers. As fluctuations in this pricing have a large impact on people’s lives and economic activity, there is a need to explore efficient trading practices while also taking account of the costs imposed.

Renewable energy faces three main difficulties. While the issue of high prices should eventually be resolved given predictions that costs will fall to levels similar to natural gas and other resources, the two problems that remain pose major challenges. These are the misalignment of where it is produced and where it is consumed and the intermittent nature of its generation. Here, I would like to use Chile in South America as an example with which to discuss these issues.

Chile and Japan have in common that they are both long, narrow countries that are entirely lacking in fossil fuel resources. Relying on imports from other countries for fossil fuels imposes high risks while the hydroelectric power that Chile has traditionally relied upon has the weakness that generation is impeded during droughts. It was to reduce these risks that the nation embarked on the development of renewable energy from around 2014.

In 2017, the government of Chile built a high-capacity, long-distance, high-voltage transmission line to link the Atacama Desert, the site of large photovoltaic power plants, to the centers of demand in the north-east. The resulting increase in the wholesale price of electricity generated in the Atacama Desert incentivized investment and led to low-priced electricity being supplied across the country. Progress is also being made on the installation of battery energy storage systems (BESSs) to make up for the inability to generate continuously. While not everything that was done would necessarily be applicable in Japan, there is much to be learned from this example.

While photovoltaic power generation has a low levelized cost of electricity (LCOE), it has become evident that, when integration costs are included, it becomes more expensive the greater the amount of variable renewable capacity there is in the system. While there are a number of reasons for this, including higher losses due to charging and discharging, the greatest impact comes from the increased loss of output due to curtailment. As a countermeasure to this, it has been estimated that demand response (DR) measures that use consumer devices such as heat pump water heaters and electric vehicles (EVs) to reduce curtailment can cut costs by up to 45%.

Hitachi-UTokyo Laboratory has for some time been researching energy supply and demand practices that can contribute to “security, energy security, economic efficiency, and the environment” (S+3E) through better utilization of renewable energy achieved by the exchange of data between the electricity market and consumer devices. The difficulty lies in how best to aggregate these small-scale resources. For example, while Japan currently has around nine million heat pump water heaters in operation, most of these are installed in people’s houses, only very few of which have home energy management systems (HEMSs) with external communication capabilities.

In response, The University of Tokyo has built a test bench where it is investigating the possibility of putting a mechanism in place whereby vendor apps are used to control these appliances remotely. Improving the availability of vehicle or appliance data has been identified as one factor that might facilitiate the use of these small-scale resources. It seems likely that the provision of some form of assistance for producing and installing systems that meet this criterion will be needed to incentivize green investment.

Rising demand for electricity means that industry, too, has a strong need for decarbonized generation. Countries around the world are accelerating action on renewable energy motivated by security of supply and price stability considerations. Australia, for one, has established 43 renewable energy zones within its borders based on a plan to eliminate the burning of coal and transition to renewables by 2038. This policy treats the infrastructure for the generation and transmission of renewable energy as well as demand and community acceptance as a single set of issues, with holistic consideration of matters such as how close regions with high renewable generation potential are to centers of electricity demand and industrial and regional policies that also consider the future of workers previously employed in the coal industry.

The Australian government is also investing public money to encourage private investment. For example, it is seeking to give greater certainty over investment in equipment by providing clarity about when and at what scale decarbonized generation will become available. It is also looking at schemes for supporting investment in renewable energy.

According to its GX2040 Vision (draft) published at the end of 2024, Japan is expected to follow a similar path. I believe it is important that we seek to realize a GX vision that treats generation, transmission, and demand in tandem with one another while also utilizing data and digital technology for planning and prediction, something that is being facilitated by progress on installing smart meters in Japan.

A key factor in the first round of system reforms introduced in 2020 was the liberalization provided by opening up access to the assets of existing operators. Unfortunately, these changes did not adequately anticipate the strong rise in electricity demand and the adoption of serious measures to achieve decarbonization. Although liberalization led to exploration of different forms of coordination, including the cross-regional redistribution of electric power, the concern is that this will only result in responsibility for supply becoming more dispersed.

Recognizing this, the second round of system reforms could address the following issues.

1. Short-term considerations predominate even in the electricity business, making it impossible to maintain business models for infrastructure development that involve recovering large investments over long periods of time.
2. GX needs to deliver all of the 3E objectives, including carbon neutrality.
3. There is a need to reset the balance between competition policy and policy support (industrial policy).

To realize the benefits of liberalization, I believe the second round of system reforms needs to move on to the phase of making the most of innovation by business operators. As well as reforming markets that are biased toward the short term, another factor that I see as important for accelerating investment in generation will be the attitude we choose to adopt toward practices that diminish the profitability and certainty of investment, such as rules on use of transmission lines. We need to foster an approach in which the associated markets clarify the concepts involved, not the least of which is encouragment for long-term infrastructure development, and for the stakeholders involved to make a commitment on the presumption of security of supply.

Following the three hours of presentations and discussion, Itaru Nishizawa, Vice President and Executive Officer, CTO, and GM of the Research & Development Group at Hitachi, Ltd., gave the following closing remarks. “Having been established in 2016, Hitachi-UTokyo Laboratory is now in its nineth year. While the initial focus of discussion at the laboratory was on the electricity system, its scope has since expanded to encompass the integrated transition and how best to achieve the transition to carbon neutrality and the electricity system of the future. Through dialogue with experts across a range of fields, I feel it has provided opportunities to consider specific actions for Japan’s Strategic Energy Plans and GX strategy. I look forward to the laboratory continuing to offer reliable and specific advice on the reform of the electricity system.”

Next, Atsushi Deguchi, Executive Director and Vice President of The University of Tokyo, who also heads the Hitachi-UTokyo Laboratory, had the following to say about the prospects for the future, also referring to how the concept of an integrated transition embodies a mix of interrelated meanings, involving a comprehensive approach to resolving diverse challenges that encompasses society, regions, and industry.

“While action on achieving carbon neutrality in 2050 is accelerating, the energy environment continues to experience tumultuous changes. If we are to build the energy system that is right for us, the debate needs to take onboard the new issues that arise as a result of the changes happening in society. By sharing the debates that take place at Hitachi-UTokyo Laboratory with a wide variety of stakeholders and building a platform for realizing a sustainable energy system, we will strive to provide a venue for ongoing mutual collaboration and dialogue.”

Informed by the discussions that took place at this forum, the seventh edition of the Toward Realizing Energy Systems to Support Society 5.0 proposal from Hitachi-UTokyo Laboratory is due to be published in April 2025.