Changing Energy for a Better World

Achieving decarbonization is a critical global challenge, with the Japanese government committing to ambitious targets for 2050 in line with the Paris Agreement, aiming to limit global temperature rise to 1.5 degrees Celsius. While there is consensus on the need for action, questions remain about whether world governments can collaborate effectively to meet these goals, particularly in light of recent political developments, such as the re-election of Donald Trump as President of the United States. As someone deeply engaged in this field, do you believe the 2050 target is achievable? What do you see as the primary challenges companies will need to address to help achieve these objectives?

It’s difficult to determine whether the 2050 targets are fully achievable, but we must explore every possible avenue to make them a reality for future generations. Current estimates indicate that existing technologies can address 60-80% of energy-related emissions. However, the remaining 20-40% presents a significant challenge, requiring substantial investment in the innovation and development of entirely new technologies.

We are already taking steps in this direction, such as investing in carbon capture systems and exploring solutions tailored for high-emission industries like aviation and freight. These sectors are among the largest contributors to greenhouse gas (GHG) emissions and will require specialized approaches. Ultimately, meeting these ambitious targets will demand flexibility and a willingness to adopt emerging technologies.

Adequate funding is also critical, and the current investment levels are drastically insufficient. According to a recent Forbes article, climate change could cost the global economy approximately $38 trillion annually over the next 25 years. Despite this staggering figure, investments aimed at mitigating climate change remain far below what is required.

These numbers highlight a fundamental truth: the current scale of investment is not only insufficient but lags by orders of magnitude. At ENECHANGE, our investment strategy focuses on accelerating progress in addressing the 20-40% of emissions that cannot be reduced using today’s technologies. Even achieving the 60-80% reduction won’t be enough to keep climate change in check, making bold, forward-thinking financial commitments more urgent than ever.

There is a common misconception about the energy transition: renewable energy sources don’t necessarily replace fossil fuels—they are often added on top of existing energy capacity. For example, data centers require enormous amounts of energy, prompting companies like Microsoft and Amazon to invest in their own energy generation plants. Which applications or sectors do you believe offer the greatest potential for your business?

The rapid advancements in AI and the surging energy demand from data centers represent one of the most significant challenges in today’s evolving energy landscape. However, alongside this growing demand, it’s crucial to emphasize the role of distributed energy resources (DERs) and grid flexibility.

As renewable energy and diversified energy resources grow, grid volatility increases as well. This highlights the need to prioritize demand-side efforts in decarbonization. Solutions like demand response and the aggregation of DERs will play an increasingly vital role in the future energy mix, ushering in a shift toward what we call Energy Retail 2.0. This evolution presents significant opportunities for our Data business to meet these emerging needs.

As both a company and a global citizen, we are committed to advancing the United Nations 24/7 Carbon-Free Energy Compact, which aims to ensure round-the-clock renewable energy provision aligned with demand. Currently, one of the biggest challenges is the excess solar power generated during the daytime, much of which must be curtailed. Effective energy storage, coupled with the aggregation of distributed resources, will be critical in creating a more resilient and sustainable future energy mix.

One of the core challenges with renewables is their intermittent nature. As you mentioned, companies must manage energy peaks, where there are times of excess supply with no corresponding demand, and other times when demand far exceeds supply. How much progress can we make in optimizing this balance through better data utilization?

Japan has already rolled out smart meters nationwide, which provides a significant advantage. With better utilization of the current 30-minute interval consumption data, we can achieve more precise demand response. Looking ahead, this optimization could extend to controlling individual devices, such as air conditioners or microwave ovens, enabling even more granular energy management. The more frequent and accurate the data we gather, the better energy companies can respond to demand. By leveraging this data, we can make meaningful strides toward achieving the 2050 target.

At ENECHANGE, we’ve invested broadly in addressing the grid’s challenges, focusing on themes like smart metering and smart response. As we shift toward a decentralized energy system, the complexity of managing resources increases significantly. The first challenge is generating more renewable and sustainable energy. However, we quickly realize that simply adding more generation capacity isn’t enough. The key lies in optimizing existing systems and infrastructure to achieve maximum efficiency with what we have today.

Our current energy systems are outdated, and while building additional generation capacity is important, there’s much to be gained from reducing or shifting demand to better align with supply. Relying solely on voluntary behavioral changes by consumers can have some impact, but it’s only part of the solution. Identifying and automating load-shifting opportunities will be critical to scaling demand response effectively.

Fortunately, Japan is well-positioned to benefit from its widespread adoption of smart meters, but there’s still a long way to go in fully leveraging the available data. Optimizing these systems is crucial for ensuring a sustainable and efficient energy future.

You mentioned that energy systems need to move toward decentralization, but this shift brings several challenges, such as potential blackouts in isolated areas and the need for entirely new connections and infrastructure. Why do you believe decentralization is so critical today? Do you think the technologies currently available are sufficient to achieve reliable energy decentralization in a country like Japan?

Decentralization is an important trend because we’ve shifted from a world where energy was exclusively generated by large power plants—such as thermal and nuclear facilities—to a system where decentralized assets, like rooftop solar panels, can be installed by individual consumers. This marks a fundamental transformation of the energy system compared to how it was designed decades ago, introducing new challenges across the entire chain of supply, distribution, and demand.

To create a future grid capable of handling large amounts of distributed and decarbonized generation assets, we must also focus on cost and resilience. Decentralization offers a unique opportunity to reduce the impact of widespread outages. For instance, if a home or neighborhood has invested in rooftop solar panels and batteries, it can draw energy locally rather than relying solely on the grid, especially during high price periods or unforeseen outages.

A similar potential exists with electric vehicles (EVs). In the event of high energy prices or grid outages, the energy stored in an EV could act as a personal microgrid. Now imagine millions of EVs, rooftop solar installations, home batteries, and more, all working together as part of a secondary grid. While this level of deployment hasn’t been achieved yet, it represents the direction we are heading toward—a more decentralized, resilient, and collaborative energy system.

One of the major debates in the automotive industry today is the future of EVs versus hydrogen power. Both technologies face challenges, and the idea of powering a microgrid, which you mentioned in the context of EVs, is also being explored with hydrogen. Considering this ongoing debate, what role do you see hydrogen power playing in our future energy landscape?

I see hydrogen playing a distinct role in specific use cases. For standard cars and shorter distances, EV batteries are the preferred option. However, when it comes to sectors like aviation or long-distance freight shipping, hydrogen could become a clear choice due to its advantages in these contexts.

For the foreseeable future, EVs will likely remain the primary alternative to internal combustion engines (ICE) in the automotive sector. That said, I believe hydrogen and EVs can coexist, each serving different purposes and complementing one another in a diversified energy landscape.

ENECHANGE is still a relatively young company, founded in 2015 in Cambridge. On your website, you outline the ENECHANGE 2.0 plan. Could you share some of the key initiatives included in this plan and how they align with your vision for the future?

Data is the lifeblood of our operations, and we see a tremendous opportunity in concepts like vehicle-to-home (V2H). By gathering data and connecting the dots, someone must manage that information and determine the optimal timing for energy release. This, alongside decentralization, forms the foundation and central theme of our Data business.

Our primary customers are energy companies, but large energy consumers, such as industrial manufacturing groups, are also key prospects. These groups often have decentralized generation capabilities and significant energy demands, making them ideal candidates for our solutions. We see immense opportunity in both areas.

On the platform side, our focus has been on educating and guiding customers. We help them understand how to keep their energy costs low while introducing greener propositions. What we offer feels almost like a financial product, as we help customers weigh the risks and benefits of various energy plans. This was our original business model, and I still see significant potential for growth in this area.

Both of these businesses are currently profitable, and our strategy is to expand them carefully while maintaining cost control. The next layer for us is EVs, which present unique challenges due to the capital-intensive nature of the business, particularly for smaller companies. In this space, we are still exploring different options. While nothing is certain, we strongly believe that EV charging infrastructure is vital to decarbonization. However, given the constraints of our current balance sheet, we are considering the use of external capital and operational enhancements to accelerate charger installation and support this critical transition.

Another key aspect of your business is the Japan Energy Fund, which connects investors with sustainability startups, collaboration opportunities, and other initiatives. From an investor’s perspective, what are the main advantages of your platform?

Through the Japan Energy Fund, our investment activities unlock a range of strategic opportunities within the climate-tech space, enabling us to identify and support innovative solutions that can accelerate the energy transition. The fund, in collaboration with our partners, allows us to source groundbreaking technologies not limited to our core businesses but across the broader climate-tech landscape. This positions us at the forefront of understanding key insights in the sector.

Within this space, we are particularly focused on technologies that decarbonize the grid, capture carbon, and electrify transport—key drivers for advancing the decarbonization of energy systems.

The global climate-tech ecosystem is an exciting and dynamic space, with significant potential for expansion into the Japanese market. We aim to capture these opportunities early, acting as a bridge to connect international innovations with Japan. Our objective is to complement existing developments within Japan or, where necessary, help leapfrog areas where innovation scaling has been delayed.

Importantly, we are committed to learning firsthand—not only from the successes but also from the challenges and failures that companies face across different geographies. These insights are critical for informing the direction of our future business strategies.

Your approach seems to have two key components: the financial aspect and the synergistic benefits. Could you share a case study of a company you’ve invested in where you successfully created strong synergistic effects through the platform and ecosystem you’ve developed?

We aim to balance financial and strategic returns with our investments. While the Japan Energy Fund is still in its early stages—having focused primarily on capital deployment in the first few years—we are now beginning to engage in multiple strategic discussions with the companies we’ve invested in. However, these discussions are not yet ready to be disclosed publicly.

Our global portfolio spans North America and Europe, encompassing technologies that decarbonize the grid, capture carbon, and electrify transport. We invest in both hardware and enabling software, and we are excited to explore various opportunities for these companies in the Japanese market. These opportunities are not limited to scaling their operations in Japan but also include connecting Japanese corporations as suppliers and accessing the broader APAC region.

Additionally, our ENECHANGE Insight Ventures program plays a critical role in connecting Japanese corporations with a global network of climate-tech startups. This initiative fosters new collaborations and partnerships, further accelerating the energy transition and strengthening the ecosystem we’ve built.

Looking at the next three to five years, how important do you think this arm of your investment business will be?

Looking ahead to the next three to five years, we anticipate significant success for many of our investments. Our goal is to facilitate collaboration with our investors to bring overseas technologies into Japan, which in turn helps shape the design and direction of our products. Currently, this arm of our business serves as indirect support for our core operations, but we hope to see it accelerate and expand further over time.

That said, this initiative is not intended to be the main pillar of growth for the company. Instead, it is designed to provide strategic foresight and clarity about the direction in which both our company and our investors should move. Many of the areas we’re invested in require thought leadership to drive industry transformation and formation. Policymakers, government agencies, and other companies all have roles to play, and our role is to inspire, motivate, and emphasize the importance of aligning with these future pathways. This is the unique insight we bring to the table, and it’s a responsibility we are committed to continuing.

Equally important is the ability to learn from both the successes and failures of other companies. This aligns with the core purpose of our international business: gaining a deeper understanding of developments beyond Japan’s borders and reflecting those learnings back into the Japanese market.

You’ve highlighted the significant role policymakers play in shaping the future of energy. However, public awareness often remains a barrier, with many misconceptions surrounding energy and sustainability. One of the key strengths you’ve mentioned is your ability to visualize data and help consumers understand where they can save money. Since policymakers in many countries are elected, how important do you believe public opinion is in achieving your vision? To what extent do you focus on educating your clients and the broader public to build greater sensitivity to these critical issues?

This topic is incredibly important. When we launched our Platform business, our primary value proposition was focused on cost reduction for consumers’ households. However, moving forward, our value proposition will increasingly shift toward sustainability and green initiatives. When it comes to green issues, public awareness and mindset play a pivotal role, and I believe this will become even more critical in the future.

To support this, we have a dedicated team that regularly engages with the government, discussing both existing and future policies. These conversations not only focus on what is best for ENECHANGE but also consider what will benefit consumers as we work together to advance a more sustainable energy system.

How important are partnerships in achieving public awareness?

Our Demand Response (DR) service, which we provide to multiple electricity retailers, has been very successful. We’ve been able to effectively communicate with customers on how to reduce their energy usage, though these are still early steps toward achieving a much larger vision.

In the summer of 2024, our DR campaigns made a notable impact, reducing 4.9 GWh of electricity across all services—a reduction equivalent to 2,000 tonnes of CO2. While this is just a small first step, it’s also a meaningful accomplishment. The more we expand the use of DR and collaborate with additional partners, the greater the overall impact we can achieve.

By continuing to work closely with large energy companies, I believe we’ll be able to amplify this impact significantly, helping to drive meaningful progress in reducing emissions and supporting a sustainable energy future.

One of ENECHANGE’s core strengths lies in acquiring data and transforming it into actionable visualizations and simulations. Why wouldn’t large clients choose to handle this in-house, and what advantages does ENECHANGE provide in this regard?

Some large firms could potentially handle parts of our service in-house, but the reason they choose to work with us is that our offerings are highly specialized and address a niche role. While they need these capabilities, it often doesn’t make sense for them to invest the time and resources to build these solutions themselves.

Our services were developed years in advance of the current market shifts, and they are fully operational and delivering value today—a factor that large electricity retailers greatly appreciate.

Energy pricing and contracts have also become increasingly complex. We maintain a dedicated team that gathers all tariff data from various companies and consolidates it into a single database. This database enables us to perform detailed simulations, a task that is both cumbersome and resource intensive. Another key reason clients prefer our services is the speed we offer. Developing such capabilities internally would take them significantly longer, whereas we can deliver immediate results.

ENECHANGE has demonstrated a clear global focus, with involvement in projects around the world. Are you able to share any details about new or upcoming international projects you are working on?

A global perspective has always been essential to our company—it’s even reflected in our original motto. However, our primary focus right now is Japan, where we see tremendous opportunities, particularly in the EV charging business. We remain globally attuned because it allows us to stay forward-looking, learning from successes and failures abroad and bringing the best solutions back to Japan to benefit our customers.

In terms of specific international projects, one example is in Australia, where we’re involved in renewable energy initiatives. Australia is a particularly attractive location for Japanese investors due to its favorable geopolitical climate, time zone alignment, and the presence of English-speaking media. Moreover, the country is highly advanced in its adoption of solar panels and energy storage technologies, making it an excellent environment for innovation.

Globally, we also explore opportunities in locations like Korea and East Asia, though emerging markets often come with unique challenges. This is why much of our focus remains on advanced markets in North America and Europe, where we can leverage more mature infrastructures and ecosystems.

As a relatively new CEO, do you have a specific objective or ambition that you hope to accomplish during your tenure?

Successful energy ventures in Japan remain relatively rare. For ENECHANGE, achieving profitability and driving accelerated growth are our near-term priorities. We aim to transition from our current position in the growth market to the prime market.

During my time as CEO, my objective is to elevate ENECHANGE to the next stage of corporate maturity, positioning it as a true driving force in the energy transition sector.

For more information, please visit their website at: https://enechange.co.jp/en/