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Examining the causality structures of electricity interchange and variable renewable energy: a comparison between Japan and Denmark


Shifting from fossil fuels to renewable energy to cut CO2 emissions while achieving sustainable development is an important challenge worldwide. Wind power and solar photovoltaics are classified as types of variable renewable energy (VRE), which have both pros and cons. Interregional trading of VRE is a key factor to make the most of it. Early studies of demand response or smart grids demonstrated the effective matching of supply and demand in a region. Studies of virtual power plants provided important implications for the selection of control parameters. However, questions remain when regions are crossed. The purpose of this study is to clarify the role of cross-border interconnectors in achieving high VRE penetration and to find the causality structures of interconnector operations for VRE. By developing multi-regression models for Denmark, a nation that has accepted VRE, and comparing them with 3 areas with different VRE progress stages in Japan, who is trying hard to achieve the target of 44% zero-emission sources in its generation mix by 2030, the general configuration of cross-border interconnectors with VRE that can be extended to other countries was clarified. This is the first report on the direct effects of power exchange to VRE using newly developed models. The results show that Japan still maintains traditional network planning. If countries such as Japan use flexible policies, a much higher VRE penetration might be achieved, thereby reducing the CO2 emissions. This model might also be applicable to other developing countries in which electricity supply is crucial for economic growth.

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Source: IEA (2018a) and own calculation

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Source: IEA (2018a) and own calculation

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Source: Drawn by the author using MANDARA, GIS software

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Source: Drawn by the author using MANDARA, GIS software

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I would like to thank Professor Hitoshi Mitomo and Dr. John W. Cheng for useful comments about the logical structure of this study, potential references, and relevant ideas. My thanks also go to Editage ( for the proofreading and English language editing.

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Correspondence to Shinichi Taniguchi.

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Taniguchi, S. Examining the causality structures of electricity interchange and variable renewable energy: a comparison between Japan and Denmark. Asia-Pac J Reg Sci 4, 159–191 (2020).

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  • VRE
  • Cross-border interchange
  • Flexibility
  • Causality structure
  • Multiple regression

JEL Classification

  • C32
  • O18
  • Q21
  • Q42
  • Q54
  • R15