The area served by Tokyo Electric Power Co. Holdings (Tepco) had a supply capacity surplus of 3.3% in July, just barely over the required 3%. When this surplus dips below 5%, consumers are asked to reduce power consumption immediately to avoid the risk of a blackout.
Tepco and Chubu Electric Power, which serves the Nagoya area, procure fossil-fuel generated electricity from their 50-50 joint venture called Jera.
In March 2022, an earthquake off the coast of Fukushima prefecture shut down several fossil-fuel plants. An unseasonable cold snap and heat waves last year compounded the crunch. A power consumption warning was issued in the Tokyo area and elsewhere during March, followed by a less severe warning in June.
The Tokyo area’s reserve surplus for this winter initially was expected to dip temporarily below 0%. Restarting old fossil-fuel capacity lifted the estimate to 4%, but the medium- to long-term forecast is less than ideal.
Within Tepco’s area, the projected reserve in times of severe temperatures is 3.3% in July 2023, 4.2% in August and 4.4% in September, Japan’s Organisation for Cross-regional Coordination of Transmission Operators reported in October. Chubu Electric expects figures of 4.3% in July and 4.4% in September.
Both providers expect a 4.9% reserve for January 2024. Supply for fiscal 2023, which begins in April, will improve from the previous year, but the economy, trade and industry ministry predicts continued difficulty, especially in the summer.
As a countermeasure, power retailers looking to procure electricity receive a list of power plants that have been out of service for less than a year or are scheduled to leave service. If the power producer and retailer agree on the unit price per kilowatt and other matters, the plant will go into operation.
This matching period runs through January, and major power companies will use it to create a supply plan for fiscal 2023 in March. Fossil-fuel plants in the service areas for Tepco and Chubu Electric are expected to be candidates, including some slated to cease operation this year except during peak periods.
Many of these plants are old, making them prone to malfunctions. The use of old fossil-fuel plants increased in fiscal 2012 after the Fukushima nuclear disaster. During that time, the average Japanese plant in operation for at least 40 years shut down about 2.5 times yearly due to mechanical problems, the industry ministry reports, nearly twice as often as younger plants.
About 30% of Japan’s fossil-fuel plants are more than 40 years old. A Nikkei investigation found 182 unplanned shutdowns of such plants due to causes such as malfunctions between January and October 2022, a pace that approaches a record high and exceeds the number for all of 2021.
Procuring fuel also carries risks, as concerns grow about the risk of suspended shipments of liquefied natural gas exports to Japan from Russia’s Sakhalin-2 project due to the war in Ukraine. Three Japanese insurers at one point indicated they would stop covering ships for war damage in all Russian waters on Jan 1, making it risky to transport LNG after that point.
Sakhalin-2 supplies Japan with 6 million tonnes of LNG, about 9% of annual demand, equivalent to 3% of the country’s power supply capacity.
Structural factors also influence power shortages. As the liberalisation of Japan’s electricity market intensifies competition, major power companies are phasing out old, inefficient fossil-fuel plants. The profitability of fossil-fuel power is deteriorating with the spread of renewable energy, which does not incur fuel costs during generation.
Fossil-fuel plants with a combined capacity of 14.22 gigawatts (GW) were installed in the five years through fiscal 2021, while 21.36 GW were retired, decreasing net supply capacity by 7.14 GW, the industry ministry reports. Supply is expected to shrink in the five years through fiscal 2026 by 14.94 GW, and in the five years after that by another 11.75 GW.
The restart of nuclear plants could ease the supply shortage, but it is unclear whether the plants that supplied the Tokyo area can come back online. Tepco’s Kashiwazaki-Kariwa plant in Niigata prefecture, which has a capacity of about 2.7 GW, has yet to obtain local consent to restart.