Tokyo Gas - Optimizing Across the Entire LNG Value Chain with PLEXOS

Tokyo Gas: Operating Across the Entire LNG Value Chain

Established in 1885 as a private gas company, Tokyo Gas Group now has over 15,500 global employees and an annual consolidated revenue of 2.66 trillion Yen (approximately 16.97 billion US dollars). The company serves around 13 million energy service accounts and operates across the entire LNG value chain, including procurement, transportation, residential and commercial gas supply, natural gas power generation, and retail electricity contracts. 

Market & Industry Evolution Drives the Need for a Co-Optimized Strategy

In recent years, the gas industry has undergone significant transformations due to geopolitical influences and a global focus on decarbonization. These transformative forces have impacted both the power and gas industries, leading to increased volatility and complexity in gas prices and quantities, creating substantial challenges for energy operators. 

As Tokyo Gas operates across the entire LNG value chain, from procurement to power generation and retail sales, it is particularly affected by these significant changes and uncertainties. This has made predictive planning capabilities for the future more challenging. 

To successfully manage and navigate this industry transformation, Tokyo Gas has implemented a medium-term management plan with three key strategies, one of which is balancing stable energy supply and decarbonization. The specifics supporting this strategy include: 

• Creating value by fully utilizing flexibility across the value chain 
• Generating a cycle of decarbonization and growth through responsible transitions 
• Promoting advanced utilization of natural gas and decarbonization of gas and electricity 
• Enhancing advanced business operations and the resilience of supply networks 
• Strengthening revenue bases overseas, contributing to decarbonization goals 

To achieve these strategic objectives, Tokyo Gas has recognized the need for a co-optimized approach to planning and operations. This approach aims to mitigate risks associated with volatility and complexity and to improve predictive capabilities. 

Simulating the Entire Value Chain with PLEXOS®

To adopt a co-optimized approach across the entire energy value chain and enable advanced and accurate predictive capabilities, Tokyo Gas identified several key requirements for a future solution. The first requirement was the ability to consider a wide range of future scenarios. This capability is vital for making accurate decisions and gaining the best possible insights into the future. Secondly, the organization needed to flexibly combine its owned assets according to circumstantial changes and displacement in both the short and long term. The chosen solution would also need to account for market trends and supply-demand situations while simulating across the entire energy value chain—from LNG procurement to gas and electricity supply. All of this needed to be achieved through a solution that leverages digital technology. 

After careful consideration of a proof of concept developed by the Energy Exemplar team, Tokyo Gas selected PLEXOS® as the solution that met these requirements. PLEXOS enables Tokyo Gas to balance reliable supply and decarbonization simultaneously. One of the key capabilities and advantages of PLEXOS is its ability to co-optimize the gas and power systems within a single platform, which proved to be a significant advantage for Tokyo Gas. Additionally, Tokyo Gas found that PLEXOS is highly scalable, has a robust solver, and offers advanced results display capabilities. 

As a co-optimized model, some of PLEXOS' additional unique capabilities include: 

• The incorporation of a wide range of gas and electricity system elements.
• Optimization of LNG transactions.
• The ability to build different scenarios that capture uncertainties surrounding the LNG spot market price, gas demand caused by temperature variations and more. 

Co-Optimization & the Energy Transition

Ready to learn more about the drivers of co-optimization & the global dynamics behind it? Explore our Co-Optimization Resource Guide to dive deeper into co-optimized planning.

Access the Guide

Implementing Key Strategies with PLEXOS

With PLEXOS selected, Tokyo Gas enlisted the help of Energy Exemplar’s implementation team to get its models up and running as quickly as possible. This collaboration resulted in the development of a range of deterministic and Monte Carlo models that accurately represent the supply and demand system and typical operations. The models highlight the interrelationships between different components of the system and markets, with key outputs including: 

• The optimal schedule for the entire LNG value chain operation 
• Cash flow prediction 
• Incident impact assessment 

We believe that with PLEXOS, Tokyo Gas will be able to facilitate optimal operations, optimize LNG facility investments, mitigate risks arising from demand fluctuations, and identify opportunities for additional profits under low-risk conditions. 

From a broader perspective, PLEXOS enables Tokyo Gas to implement key strategies in its medium-term management plan. With PLEXOS, the organization is moving towards a one-stop solution for decision-making and the development of forward-looking strategies. This has also provided a fresh perspective to enhance the decision-making process, which is essential in a dynamic and changing industry landscape.