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2 June, 2021

Japan’s Advisory Committee Discusses Supply-and-Demand Measures in Summer and Winter 2021

On May 25, members of Japan’s Electricity and Gas Basic Policy Subcommittee of the Advisory Committee for Natural Resources and Energy discussed measures for electric power supply and demand for the upcoming summer and winter. The committee is chaired by Hirotaka Yamauchi, specially appointed professor in the Faculty of Business Administration of Musashino University.

On May 14, Minister Hiroshi Kajiyama of the Ministry of Economy, Trade and Industry (METI) had instructed the committee to formulate measures some time during the month based on expectations and assumptions that the domestic supply-and-demand balance for electric power this summer and winter would be the “tightest in recent years,” and that “power supplies necessary for stable service in the Tokyo area cannot currently be ensured.”

According to explanations given at the subcommittee meeting by representatives from the Agency for Natural Resources and Energy (ANRE), the capacity reserve margin in the Tohoku, Tokyo, Chubu, Hokuriku, Kansai, Chugoku and Shikoku service areas in the month of August—when maximum demand normally occurs—is expected to be just 3.8%, taking power interchange into account.

That would be the lowest capacity reserve margin level since FY17 (April 2017 to March 2018). It had been 6.4-9.7% last year, excluding Okinawa.

Nationally (excluding Okinawa), maximum demand for electricity in Japan is expected to be 166,090MW in August, against a supply capacity of 178,470MW. That is below the previous year’s capacity of 182,060MW, substantially affected by the reduced levels of thermal power being generated (down by approximately 6,800MW).

Given that some thermal power plants in Japan—primarily aged plants that had originally entered service in the 1970s and were still in operation last summer—now have either been put into unscheduled or scheduled suspension or have been discontinued altogether, a total of approximately 8,300MW in capacity owned by the leading power companies cannot be expected to be available this summer.

For the upcoming winter as well, there is no outlook at the moment for securing the capacity reserve margin of 3% necessary to ensure stable supplies in the Tokyo area.

Based on that severe outlook, ANRE, taking the supply-demand experience of last winter into account, will implement the following measures for summer 2021:

— requests to major power companies (such as those to conduct thorough security management and ensure sufficient fuel)

— requests to independent power producers and suppliers (PPSs)

— creation of a system to respond to stringent situations (such as rules for cooperation among operators, and enhanced visibility and public awareness of “electricity forecasts”)

— appeals to power users (such as those for energy conservation)

ANRE further indicated that it would determine, during June, its supply measures for the upcoming winter.

In response to the above, the JERA Co..—a merger of the thermal power businesses of the Tokyo Electric Power Co.. (TEPCO) and Chubu Electric Power Co. in 2019, with plants now in the Tokyo and Chubu areas—called forcefully for the creation of a “nationwide mechanism to cover risks regarding stable energy supply,” given that there are limits to what operators alone can do in dealing with liquid natural gas (LNG) procurements.

Concerning the severe current state of aged plants, JERA cited the example of the Kashima Thermal Power Plant (oil), which began operation half a century ago. “The entire facility is deteriorating inexorably,” it said, resulting in maintenance costs that “swell further year by year.”

Power-source comparisons for the month of August—when maximum demand occurs—show 2,000-3,000MW additional capacity this year for hydro and solar than had been achieved last year. Meanwhile, nuclear supply capacity this summer is also expected to increase slightly, reaching 6,740MW in comparison with 5,340MW the previous year.

Last summer, the Sendai-1 and -2 NPPs (PWR, 890MW each), owned and operated by the Kyushu Electric Power Co., had both been suspended for periodic inspections to develop anti-terrorism “specific safety facilities.” Both units appear on track to return to service this summer.

Additionally, the Mihama-3 NPP (PWR, 826 MW), owned and operated by the Kansai Electric Power Co. (Kansai EP), is scheduled to return to full operation as early as the end of July, becoming the first reactor in Japan to operate beyond four decades.

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