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Does an Artificial Intelligence Energy Management System Reduce Electricity Consumption in Japan's Retail Sector?

Author

Listed:
  • Guanyu Lu

    (Faculty of Political Science and Economics, Waseda University, 1-6-1 Nishiwaseda, Shinjuku-ku, Tokyo 169-8050.)

  • Hajime Katayama

    (Faculty of Commerce, Waseda University, 1-6-1 Nishiwaseda, Shinjuku-ku,in the Tokyo, 169-8050.)

  • Toshi H. Arimura

    (Faculty of Political Science and Economics, Waseda University, 1-6-1 Nishiwaseda, Shinjuku-ku, Tokyo 169-8050.)

  • Shohei Morimura

    (Research Institute for Environmental Economics and Management, Waseda University, 1-6-1 Nishiwaseda, Shinjuku-ku, Tokyo 169-8050.)

  • Tomoichi Ishiwatari

    (iGRID SOLUTIONS Inc., 3-7-4 Kojimachi, Chiyoda-ku, Tokyo 102-0083.)

  • Tetsu Iwasaki

    (iGRID SOLUTIONS Inc., 3-7-4 Kojimachi, Chiyoda-ku, Tokyo 102-0083.)

Abstract

This study examines the impact of "Enudge" an artificial intelligence (AI) energy management system (EMS), on electricity consumption in the retail sector. As retail installations increasingly contribute to nonindustrial CO2 emissions, conventional EMSs frequently fail to manage the complex and variable energy demands in these settings. By leveraging a difference-in-differences framework on store-level data from over 1,700 retail stores in Japan between November 2018 and December 2023, this study finds that installation of AI EMS-Enudge reduces electricity consumption by an average of 1.9%. However, this reduction effect declines over time, with electricity savings diminishing within five to ten months. This decay effect is consistent with the decrease in user interaction with the recommendations provided by AI, suggesting that user engagement may play a crucial role in reducing electricity consumption. Heterogeneity analyses reveal that the system's performance varies across retail establishments and seasonal contexts. Moreover, a cost-benefit analysis aimed at exploring break-even tariffs and implied abatement costs highlights that the installation of an AI EMS can contribute to cost savings, especially under high tariffs and higher-carbon grids.

Suggested Citation

  • Guanyu Lu & Hajime Katayama & Toshi H. Arimura & Shohei Morimura & Tomoichi Ishiwatari & Tetsu Iwasaki, 2026. "Does an Artificial Intelligence Energy Management System Reduce Electricity Consumption in Japan's Retail Sector?," RIEEM Discussion Paper Series 2502, Research Institute for Environmental Economics and Management, Waseda University.
    • Handle: RePEc:was:dpaper:2502
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    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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