Japan NRG Weekly 20260824

August 24, 2026

NEWS: GENERAL OUTLOOK AND TRENDS

METI says oil procurement levels fully restored

(Government statement, August 18)

• METI published July and August oil import data, showing that public and private sectors restored levels to 100% of the 2025 average for the same period.
• Since spring, crude oil procurement has been diversified to the Americas and Africa.
• METI is considering JOGMEC subsidies to cover rising transport costs of non-chokepoint imports, and will support firms investing in alternative pipeline construction and expansion.
• CONTEXT: The U.S.-Iran war has led to one of the most serious oil-supply shocks Japan has faced since the 1970s, but so far, measures and systems put in place since then have allowed the global economy to maintain resilience, avoiding the more extreme predictions.
• TAKEAWAY: The three pillars of Japan’s emerging response are diversified procurement, improved maritime insurance and expanded stockpiles. The latter will aim to include vulnerable products like naphtha. This month, ANRE proposed to strengthen oil and naphtha supply chains, to combine strategic stockpiling with source diversification. The stockpile system mitigated recent supply shocks, but reserves are now insufficient. By late FY2026, ANRE aims to restore national stocks to IEA 90-day standards, and match the 90 days of net crude imports by FY2027. The govt has proposed subsidizing the higher transport costs of alternative routes with levies on petroleum importers.
• SIDE DEVELOPMENT:
• Govt to help shipping companies with marine insurance
• (Nikkei Asia, August 15)
  • As geopolitical tensions rise due to war and conflict, shipping firms face difficulties securing marine insurance.
  • Domestic insurers share high-risk maritime liabilities by securing “reinsurance” from global firms.
  • If domestic insurers cannot secure reinsurance from overseas, the govt would step in under a new bill to be submitted to the autumn extraordinary Diet session.
• TAKEAWAY: This move mirrors the U.S. International Development Finance Corp setting up a $20 billion reinsurance system to stabilize disrupted shipping lanes. In March, major domestic insurers expanded the boundaries of their exclusion zones – geographic areas that require extra premiums for marine war insurance. Such measures are crucial to protect Japanese crude oil imports.

Japan’s rare-earth imports plunge as China export controls tighten

(Asia Nikkei, August 15)

• As China’s export controls tighten supply, Japan struggles to secure rare earths used in EV motors and chipmaking equipment, forcing materials firms to tap into inventories.
• In 1H of 2026, Dysprosium-iron alloy imports fell 82% compared to two years earlier, to 13 tons. There were zero imports in Jan, Feb, May and June. Yttrium oxide imports fell 74% from 1H2024 to 204 tons, the lowest level on record.
• Japan expanded sourcing, importing yttrium from 12 countries and regions outside China, compared with three in 1H of 2024, but volumes are insufficient.
• Firms including Mitsui Kinzoku, Proterial and AGC face supply constraints, though downstream production bottlenecks remain limited for now.

Govt to strengthen Energy Conservation Act, promote energy efficiency

(Government statement, August 18)

• ANRE plans to strengthen the Energy Conservation Act to promote energy efficiency and the transition to non-fossil energy.
• The benchmarking system will be reviewed to reflect actual energy efficiency.
  • The main target sectors are power (electricity supply, coal-fired power) and paper/paperboard.
  • The power-sector benchmark requires at least a 43% generation efficiency; about 46% of firms currently meet it.
• A new non-fossil energy transition classification system will be created.
  • This system will recognize high-performing firms that boost use of non-fossil electricity.
  • On-site rooftop solar power and corporate PPAs will also be appraised.
• The new efficiency targets will apply once the companies file their FY2027 energy data to the govt in July 2028.
• CONTEXT: The Energy Conservation Act’s benchmark sets energy efficiency indicators for each industry and sector, allowing energy-saving performance to be evaluated and compared with one’s peers. The current system classifies designated firms into four categories – S, A, B, and C – based on energy-saving performance, with differentiated measures for high- and low-performing firms.
• TAKEAWAY: The proposal is a shift from focusing mainly on energy efficiency toward a more comprehensive framework that also encourages businesses to increase non-fossil energy use and investment. For the power sector, the focus on thermal efficiency needed to be reassessed in light of the expansion of renewable and other non-fossil power sources.

J-Power launches first data center business in Hokkaido

(Company statement, August 17)

• J-Power will launch its first data center (DC) business in Kaminokuni, Hokkaido, with services to start in summer 2027.
• The DC will use the latest Nvidia GPUs to provide computing capacity for generative AI development and simulations.
• The project aims to develop a “Green DC” by linking computing workloads with renewable energy sources.
• J-Power plans to explore workload shifting and expand its DC business by utilizing its renewable energy portfolio and environmental value platform.
• CONTEXT: Kaminokuni, known as the “Town of Windmills,” declared itself a Zero Carbon City and is promoting renewable energy, particularly wind power. J-Power has a long-standing relationship with the town through its wind power business.
• TAKEAWAY: The project gives J-Power a way to test whether renewable generation, environmental value and flexible computing demand can be packaged into a new business model. If workload shifting proves practical, power companies may have a larger role in regional data-center development than simply supplying electricity. Additionally, the project could stimulate regional economic development and serve as a model for expanding integrated “Power + DC” business models across Japan.

NEWS: ELECTRICITY MARKETS

July spot power trading volumes hit record highs

(Exchange report, August 7)

• In July, the electricity spot market set record highs for monthly sell bids, buy bids and contracted volumes, as well as daily averages and single-day bid volumes.
• Sell bids likely increased as more thermal units returned from scheduled maintenance, while buy bids strengthened as Japan entered the summer peak demand season.
• While early July demand was at a record-low level, at 22.79 TWh, due to mild temperatures, in mid-month heat intensified across Japan except in the north; Tokyo’s peak demand exceeded 55 GW on some days.
• JEPX spot prices fell MoM in Hokkaido and Tokyo, but rose in Tohoku, Chubu, Hokuriku, Kansai, Chugoku, Shikoku and Kyushu, reflecting weather conditions.
• Fuel prices rose as the U.S. and Iran returned to conflict. Preliminary June trade data showed crude oil prices rose ¥3,668/ kl MoM to ¥117,684/ kl, a record high for the third consecutive month.
• LNG fell ¥6,875/ ton to ¥92,103/ ton, while coal rose ¥739/ ton to ¥23,200/ ton.
• SIDE DEVELOPMENT:
• TOCOM power futures trading rose in July
• (Exchange report, August 7)
  • TOCOM power futures trading volume rose in July to 1,131 lots, including 1,116 monthly contracts and 15 fiscal-year contracts, up from 711 lots in June.
  • Trading remained subdued overall, with 57 transactions, all negotiated off-exchange. Some market participants said demand for smaller-lot trading is increasing.
  • From Aug 31, the JJ-Link Phase 2 will begin, allowing declared futures positions to be submitted into JEPX’s next-day delivery market, strengthening the link between physical and futures trading.
  • Final settlement prices for July monthly contracts included ¥19.86/ kWh for East baseload, ¥17.19/ kWh for West baseload, and ¥23.07/ kWh for East daytime-load.

OCCTO accepting applications for FY2026 reserve power sources

(Agency statement, August 19)

• OCCTO began accepting applications (until Sept 15) for FY2026 (3rd round) reserve power sources to apply in FY2027 and FY2028.
• Volume is 1 GW in the East (50 Hz), and 680 MW in the West (60 Hz).
• Eligible bids are thermal power plants (LNG, oil, coal, etc.) with a transmission-end capacity of at least 100 MW.
• The indicative maximum bid is ¥14,860/ kW-year, based on the average price caps for the 4th–6th Capacity Market Main Auctions.
• CONTEXT: The Reserve Power System is a mechanism to maintain standby power sources that can be brought online quickly when additional supply is needed, such as after major disasters or sudden demand increases.
• TAKEAWAY: In the 1st round (FY2024), no bids were received, as the indicative price of ¥6,429/ kW-year was insufficient to cover maintenance costs. In the 2nd round, the price was raised to ¥14,399/ kW-year, resulting in about 1.36 GW awarded in West Japan, but no bids in the East. The 3rd round will cover both FY2027 and FY2028 operations to better align with the Capacity Market. Key points are whether the 1 GW target in the eastern area can be secured, how bid prices will change, and how much thermal capacity should remain as reserve power.

New rules discussed to prevent ‘phantom’ grid connection requests for large demand

(Government statement, August 6)

• ANRE discussed new rules to prevent phantom grid connection requests and make effective use of limited capacity amid growing localized demand from data centers and other facilities.
• Two rules will be introduced for large-scale customers (30 MW or more).
  • If supply is delayed or capacity declines for over one year, the reserved grid capacity will be released. This applies mainly to grids with less than 30 MW available capacity.
  • Part of grid reinforcement costs will be settled based on the shortfall between contracted and actual capacity for over one year, covering both upstream grids and supply lines.
• The maximum term for phased contracts is six years, with longer terms allowed only for exceptional cases such as prolonged grid reinforcement or public projects.
• Capacity reductions within one year, after reaching the final contracted capacity, would also incur demand-based cost settlement to prevent circumvention.
• The new rules are targeted for April 2027, following revisions to the relevant wheeling service terms, and would also apply to existing contracts.
• CONTEXT: “Phantom grid connection requests” rules are developed separately for capacity release and cost settlement, reflecting different objectives. The goal is to encourage applicants, mainly large consumers, to set contracted capacity based on actual demand and business plans, and to maintain contracts accordingly.
• TAKEAWAY: The new rules aim to encourage large-demand customers to set realistic, contracted capacity from the outset and adhere to those plans, thereby promoting efficient use of grid capacity, ensuring fair access for new customers, and limiting increases in wheeling charges borne by other customers.

Poll: as electricity bills rise, few Japanese consider switching providers

(Nikkei, August 22)

• An ENECHANGE survey found that 74.2% of people feel electricity bills are rising.
• Despite concern, only 8.9% consider switching providers while 53.8% simply aim to save energy, underscoring enduring inertia.
• Many cite barriers to switching: 35.8% find it cumbersome and 33.4% say they see no benefit.
• There is a further issue in terms of lack of awareness. Over half of the consumers in their 20s have not heard of electricity liberalization reforms. Older consumers prioritize price or reliability. Those who switched often report satisfaction and easy processes. Even after ten years, awareness remains uneven across age groups and locations.
• TAKEAWAY: That more than 90% of Japanese consumers still don’t consider the option of switching power suppliers despite rising costs indicates there are deeper issues at play. The survey showed that many consumers are also put off by what they say are opaque pricing plans. Comparing the offerings of various providers is complex. If most consumers still do not see switching as a realistic option, the competitive impact of retail liberalization remains weaker than the formal market opening suggests.

KEPCO to revise electricity rates

(Company statement, August 19)

• On Nov 1, KEPCO will revise its electricity rates, in response to the revision of wheeling charges by TSOs.
• The revised charges will be reflected in electricity rates for extra-high-voltage, high-voltage, and low-voltage customers.
• Also, KEPCO plans to revise its standard rate menus for extra-high-voltage and high-voltage customers due to rising costs.
  • Both basic and energy charges will increase by about 10% for many standard rate menus.
• It will also update the assumptions for fuel-cost and market-price adjustments based on the latest power procurement conditions in the retail supply.
• CONTEXT: In July, METI approved amendments to the wheeling service provisions submitted by the ten TSOs under the Electricity Business Act. This was due to revisions to revenue forecasts underpinning wheeling charges, reflecting higher prices, labor costs, and interest rates.
• TAKEAWAY: Corporate customers in Kansai with large electricity consumption may face an increase in electricity costs from November. But, the actual increase in total electricity bills will depend on the customer’s rate menu, electricity consumption pattern, market-price adjustment, and the final wheeling-charge revision. Also, electricity rates are being revised not only by KEPCO but also by other major utilities. This month, Kyushu Electric announced a rate revision starting November. Although TEPCO and Chubu Electric revised their rates for extra-high- and high-voltage customers in April, they have not yet announced any additional revisions in response to higher wheeling charges. Large electricity customers should prepare for rising electricity costs nationwide.

NEWS: HYDROGEN

Iwatani and Sunray start sales of hydrogen cofiring hot air generator

(Company statement, August 17)

• Iwatani and Sunray Reinetsu, a subsidiary of Sumitomo Electric, developed and began sales of hot air generation devices using a hydrogen cofiring burner that adjusts the ratio between hydrogen, LPG, and city gas without changing parts.
• The devices can be used in a range of industries, such as drying foodstuffs, chemicals and fertilizer. There is a low-temperature version of 200–500°C and a high-temperature version of 600–1,000°C.
• CONTEXT: Since 2022, Iwatani and Sunray have collaborated on developing a hydrogen co-firing hot-air generation device. Iwatani has extensive expertise in the hydrogen industry, while Sunray offers factory-use burner technology.

NEDO and Kyoto Univ to set up world’s first hydrogen energy beamline

(Organization statement, August 20)

• NEDO and Kyoto University will build BL34XU, the world’s first beamline specialized in hydrogen energy.
• The beamline will use X-rays to fully examine materials with multiple measurements while in operation in fuel cells or during water electrolysis; this will significantly reduce analysis time.
• Construction of BL34XU will begin in FY2027, and operation will start in FY2029.
• NEDO and Kyoto Univ plan for the beamline to serve as a platform for collaboration between industry, govt, and academia in the hydrogen energy sector and provide a foundation for further development.
• TAKEAWAY: Such R&D efforts are meant to maintain Japan’s leadership in hydrogen fuel cell development and water electrolysis. This technology will help scientists view structural changes and material degradation at a microscopic level under actual operating conditions – a prerequisite to moving fuel cell use into a more mature development stage. But, early leadership in innovation is no guarantee of commercial success, so the benefits of such steps will only be apparent when business applications are announced.

NEWS: SOLAR AND BATTERIES

ANRE discusses new measures for BESS to accelerate grid connection

(Government statement, August 6)

• ANRE discussed further improvements to grid access procedures and rule revisions to enable earlier grid connection of generation facilities and also grid-scale BESS.
• Several measures have been introduced, such as limits on connection study applications per developer, land-right requirements, higher security deposits, and minimum upfront construction payments.
• Further “entry-point” measures are considered, such as higher study fees, stricter land requirements, measures for low-voltage grid-scale BESS, etc.
• For existing applications, the govt plans to assess project progress and consider reallocating reserved grid capacity when delays are developer-related.
• The current framework enables early connection with charging restrictions, but monthly or quarterly limits reduce flexibility. Broader application and other measures will be considered to improve effectiveness.
• CONTEXT: An existing measure allows BESS to connect without grid reinforcement if they accept charging restrictions at specified times. But, the TSO-operated system has limited flexibility to respond to daily changes in grid conditions.
• TAKEAWAY: The rapid growth of grid-scale BESS connection applications is also affecting renewables and demand-side connections. Of particular interest in the latest discussions is the idea that developers could be penalized if project progress is stalled due to their own actions. The difficult question will be how ANRE distinguishes genuine development delays from speculative capacity hoarding, since BESS projects can be delayed by land rights, financing, equipment procurement and grid-side processes outside the developer’s direct control.

Tokyu Land launches agrivoltaic power plant in Saitama

(Nikkei, August 17)

• Tokyu Land and Saitama Fukko began operations at the ReENE Solar Farm Kumagaya agrivoltaic power plant in Kumagaya, Saitama Pref, on Apr 1.
• The project consolidates 35 fragmented agricultural parcels, including some abandoned farmland, into a roughly 4 ha site. Wheat is grown under elevated solar panels, making it one of Japan’s largest single-site agrivoltaic projects for wheat cultivation.
• The plant has 2.63 MW of panel capacity, 1.99 MW of grid-connection capacity and expected annual output of about 3.296 GWh.
• The project uses JA Solar panels, Huawei PCS and UI Solar agrivoltaic mounting systems. Okui Gumi handled EPC; ReENE Energy will handle O&M; and the power producer is ReENE Midori Farm, an SPC wholly owned by Tokyu Land.
• The electricity will be supplied through an off-site PPA to office buildings and commercial facilities owned by Tokyu Land. Part of the power sales revenue will be returned to Saitama Fukko as farming cooperation payments and paid into local community association fees.
• Tokyu Land also began operations on May 1 at the smaller ReENE Solar Farm TENOHA Higashimatsuyama project. The rice-field agrivoltaic project has 60.6 kW of panel capacity, 50 kW of grid-connection capacity and expected annual output of about 82 MWh.
• TAKEAWAY: Tokyu Land is combining off-site PPA supply for its own buildings with farmland consolidation, continued crop production and local revenue sharing. The smaller Higashimatsuyama project adds a trial element, testing how different panel types and sunlight conditions affect rice cultivation. The capacity and output are still small compared with conventional utility-scale solar, but the model gives developers a way to build renewable capacity in areas where land use and local acceptance are harder to secure.

NEWS: WIND POWER AND OTHER RENEWABLES

Sumitomo invests in UK offshore wind project

(Company statement, August 10)

• Sumitomo bought a 33.3% stake in the Gwynt Glas Offshore Wind Farm under development in the Celtic Sea by EDF and ESB.
• It will cover about 40 square km, with 1.5 GW total capacity.
• Application for permits/ licenses begins in 2028; construction in the early 2030s.
• Sumitomo has been involved in offshore wind projects in the UK since 2014, but this is its first investment in a floating offshore wind project.
• CONTEXT: In 2025, Sumitomo inked an MoU with the UK Department for Business and Trade to encourage investment in the UK.
• TAKEAWAY: The UK has largely filled shallower waters suitable for fixed-bottom turbines. Floating technology unlocks deeper waters. Round 5 is the UK’s first major commercial floating wind leasing round. In July, Sumitomo signed an MoU with the UK govt to invest ~£7.5 billion by 2035 in offshore wind, hydrogen, CCS, grids, and related infrastructure. Gwynt Glas is one of the projects. It builds on Sumitomo’s existing UK offshore wind involvement (such as Five Estuaries). Sumitomo Electric also has HVDC cable factory plans in Scotland. Participating in a large European floating project gives Sumitomo the experience it can apply in potential future Japanese floating projects.

Nichirei offsite corporate PPAs use wind power at Tohoku sites

(Company statement, August 18)

• Nichirei introduced an offsite corporate PPA using wind power provided by Tohoku Electric in 14 locations, including manufacturing plants and refrigerated warehouses.
• The Kuroshio Wind Power plant will generate the power.
• CONTEXT: Previously, Nichirei has developed solar power generation facilities for offsite corporate PPAs; but it’s now expanding into wind power in order to generate and utilize electricity during all parts of the day.
• TAKEAWAY: Nichirei notes that many of its cold-storage and processing sites require continuous power, making it useful to diversify renewable procurement beyond solar. Wind PPAs remain much less common than solar PPAs, but they can complement daytime solar generation and are gaining traction.

NEDO selects projects for floating offshore wind generation cost-reduction

(Organization statement, August 17)

• NEDO selected five projects for its next-gen technology program for floating offshore wind power generation in FY2026 and FY2027.
• The five cover floating structure manufacturing and construction, anchorage design and construction, and turbine construction and maintenance.
• The initiative aims to reduce wind power generation costs.
• Firms include Obayashi, Kobelco Wire, Taisei, TEPCO RP, and JFE Engineering.
• CONTEXT: NEDO’s next-gen technology program for floating offshore wind power generation sits within the framework of the 7th Basic Energy Plan, which targets more than 15 GW of floating offshore wind by 2040.
• SIDE DEVELOPMENT:
• NEDO selects Obayashi hybrid floating offshore wind project
• (Company statement, August 17)
  • NEDO selected a project by Obayashi and Eurus Energy to verify use of a TLP (Tension Leg Platform) hybrid floating offshore wind turbine support structure.
  • The project aims to address challenges for commercial-scale production by improving mooring design methods, conducting field tests of unmanned deep-sea area construction technologies, and verifying fatigue durability.
  • The field test, to start in FY2028, is centered around floating structures equipped with a 1 MW-class wind turbine in actual sea conditions.
  • CONTEXT: With its TLP type hybrid floating structure, Obayashi has shown it can reduce construction costs by 25% compared to semi-submersible structures. Also, it can be produced on land-based quays without dry docks, improve power generation efficiency by 8%, and reduce the amount of sea area occupied.
• SIDE DEVELOPMENT:
• NEDO selects Kobelco offshore wind mooring systems tech
• (Company statement, August 17)
  • NEDO selected a project proposed by Kobelco Wire, Osaka University, and Neubrex to develop technology for long-term anchorage monitoring and evaluation using highly corrosion-resistant steel cables and fiber-optic sensing.
• SIDE DEVELOPMENT:
• NEDO selects Taisei concrete floating offshore wind structure
• (Company statement, August 17)
  • NEDO selected a project by Taisei, TEPCO, and Hokkaido Electric for floating offshore wind cost reduction through the design, manufacturing, and management of concrete floating structures.
  • The companies aim to address the challenges facing the spread of concrete floating structures and commercialization, including establishing mass production technology, improving local receptivity, and streamlining inspections and maintenance.
• SIDE DEVELOPMENT:
• NEDO selects JFE floating offshore wind tech project
• (Company statement, August 17)
  • NEDO selected a project by JFE Engineering, Shimizu, TEPCO Renewable Power, Eurus Energy, and the Japan Maritime Association for developing grout and pin joint technologies to install in modular floating structures for offshore wind.
  • The project will utilize a highly stable, semi-submersible floating structure that can be built with preexisting coastal facilities.

NEDO selects TEPCO wind turbine construction and repair project

(Company statement, August 17)

• NEDO selected a project by TEPCO Renewable Power, Japan Maritime Association, and Tokyo University to develop technologies for wind turbine construction and large-scale repairs in the offshore area.
• The project will combine small-scale cranes with construction barges for offshore construction of wind turbines and develop large-scale repair technology to install and exchange turbines on-site.

Biomass power plant built on site of former ski resort

(Nikkei, August 17)

• Nippon Parking Development and Smart Green Energy completed Japan’s first woody biomass power plant on a former ski resort in Katashina, Gunma Pref.
• The facility will supply electricity generated from local wood waste primarily to municipal public facilities, working within the local generation for local consumption model while also supporting rural regeneration.
• NPD Group is considering expanding this concept to other facilities.

NEWS: NUCLEAR ENERGY

Power generation resumes at Shimane NPP Unit 2, commercial operation in Sept

(Company statement, August 19)

• Chugoku Electric restarted power generation at Shimane NPP Unit 2, reconnecting the generator to the transmission grid.
• The utility is verifying the equipment’s soundness under operating conditions, checking reactor water levels, pressure, and generator output.
• If successful, the reactor will resume full commercial operation on Sept 16.
• CONTEXT: Unit 2 is BWR, 820 MW capacity. In January 2025 the reactor resumed commercial operation for the first time in 13 years. In February 2026, generation stopped so the reactor could undergo a periodic inspection.

KEPCO reveals details on reasons for Ohi NPP Unit 3 shutdown

(Company statement, August 19)

• CONTEXT: KEPCO’s Ohi NPP Unit 3 shut down by itself on August 8 after an alarm signalled an issue in the device that generates magnetic fields in the generator. There was no radioactive impact, and KEPCO said electricity supply and demand are not under any strain.
• KEPCO released details of its inspection – significant physical damage to electrical components inside the generator’s exciter.
• One diode module suffered melted heat sink components, and a tipped-over diode, as well as a broken insulating bolt, and a broken connection wire.
• These specific diode modules haven’t been replaced since Ohi Unit 3 began operation in 1991. No abnormalities were detected when examined by visual check during the last regular inspection in 2025.
• The exciter will be disconnected and sent to the manufacturer for detailed analysis.
• CONTEXT: The exciter handles generation of the magnetic field needed to produce electricity. Inside its rotary rectifier, there are diode modules and 72 protective fuses.
• TAKEAWAY: Due to the required detailed investigation, it is unclear when Ohi Unit 3 will resume operations. This event follows a separate incident in May, when a steam leak caused by a corroded metal cap led to a manual shutdown of Mihama NPP Unit 3, also operated by KEPCO. While neither incident appears serious, KEPCO must handle each issue carefully to maintain trust in the safety of its reactors.

Govt expands subsidy areas around Shika NPP

(Nikkei, August 13)

• The government added Himi City in Toyama Pref. and five municipalities in Ishikawa Pref. to the list of areas eligible for financial support as nuclear plant host communities.
• The newly designated areas are linked to Hokuriku Electric’s Shika NPP in Ishikawa Pref. Most are within 30 km of the plant, while Suzu City and Noto Town were included to support wider development of the Noto Peninsula.
• Under the scheme, the central government subsidy rate for infrastructure projects such as roads and fishing ports will rise from the usual 50% to 55%.
• The government will also cover part of the revenue loss if municipalities provide tax breaks to attract companies.
• To receive support, municipalities must prepare local promotion plans. Toyama Pref. and Himi City aim to draft their plan during FY2026.
• CONTEXT: Japan’s special law for supporting nuclear plant host areas previously focused on municipalities within 10 km of a plant. The coverage was expanded in Dec 2025 to include areas within 30 km, reflecting the broader regional impact of nuclear facilities and evacuation planning. In the case of Shika NPP, the government also included Suzu City and Noto Town even though they are outside the 30 km zone, because the measure is being used partly to support reconstruction and regional development across the Noto Peninsula in the aftermath of a 2024 quake in the area.

NEWS: TRADITIONAL FUELS

ANRE reviews Gas System Reform, sets next steps for FY2026

(Government statement, August 10)

• CONTEXT: ANRE published the results of its review of Japan’s Gas System Reform and the next policy steps to be implemented during FY2026. The review looks back at reforms launched with full retail liberalization in Apr 2017 and legal unbundling of the pipeline divisions of the three major gas utilities in Apr 2022. ANRE had committed to review the post-unbundling system by Mar 2027.
• ANRE said the reforms have produced some results. Gas retailers have maintained stable procurement, with long-term LNG contracts accounting for about 90% of LNG supply, while infrastructure resilience has improved, including a pipeline seismic-resistance rate of 93.1% as of Mar 2025.
• Retail competition has expanded since liberalization, especially in major urban areas. New entrants now account for about 19% of total gas sales volume, and transitional regulated tariffs remain for only three of the 12 original operators as of Oct 2026.
• ANRE also identified new challenges. Overall city-gas consumption has been broadly flat, but natural gas is becoming more important as a transition fuel for GX, including fuel switching from oil and coal, cogeneration for data centers and semiconductor plants, and future use of e-methane and biogas.
• Securing an adequate workforce amidst a declining population is also a challenge.
• Planned reforms include extending gas supply and production plans from three to five years, adding e-methane, biogas and hydrogen outlooks to reporting formats, and surveying LNG procurement, receiving, delivery and inventory plans every two weeks from major city-gas companies that own LNG terminals.
• ANRE will also revise wheeling tariff rules to reflect inflation and wage growth, review the allowed rate-of-return calculation for pipeline operators, shorten the standard processing period for tariff variation revisions, and ease business regulations for on-site methanation.
• TAKEAWAY: This is ANRE’s second major review of Gas System Reform. The first, published in 2021, focused mainly on the impact of full retail liberalization. This review comes after the full reform package has taken effect, including the 2022 legal unbundling of pipeline divisions. ANRE’s conclusion is that the original reform goals – stable supply, lower prices, more customer choice and expanded gas use – have seen some progress, but the policy environment has changed. Gas policy is now being pulled toward three priorities: energy security after the Ukraine war and Middle East tensions, GX through fuel switching and future low-carbon gases, and the sustainability of regional gas operators facing population decline, labor shortages and rising costs.

First Canadian oil tanker arrives in Japan

(Kagoshima Yomiuri Television, August 12)

• A tanker carrying Canadian crude oil arrived at ENEOS’s facility in Kagoshima.
• It is the first Canadian crude to reach Japan since the start of the U.S.-Iran war.
• CONTEXT: Such supplies provide an alternative that avoids the Strait of Hormuz. METI says crude from Canada can reach Japan in about 10 days, compared with roughly 20 days from the Middle East.
• TAKEAWAY: Before the crisis, 94% of Japan’s total crude oil came from the Middle East, almost entirely via the Strait of Hormuz. With the onset of the war in the Persian Gulf, Japan’s crude imports in April fell 63.7% YoY; and now the region accounts for 65.7% of Japan’s total crude oil imports. METI and Japanese refiners have been seeking alternatives, and Canada’s West coast is an ideal source because supply can reach Japan much quicker than from the Middle East or U.S. Gulf coast.

Investigations continue after LP gas explosion in late July

(Nikkei, August 15)

• CONTEXT: Following the July 28 earthquake, an explosion occurred at the Aeon mall in Kumamoto.
• METI and fire authorities point to an LP gas explosion as the likely cause; the earthquake damaged internal piping.
• Following the explosion, Aeon began emergency safety inspections nationwide.
• TAKEAWAY: The incident shows both sides of LP gas in Japan’s energy-security strategy. It is valued because mobile tanks can support power generation, hot water and emergency supply after disasters, but earthquakes can also damage local piping and create safety risks that require rapid post-quake inspection.

LNG stocks up from previous week, up YoY

(Government data, August 12 & 19)

• As of August 9, the LNG stocks of 10 power utilities were 2.03 Mt; up 0.5% from the previous week (2.02 Mt); up 1% from end Aug 2025 (2.01 Mt), and down 4.2% from the 5-year average of 2.12 Mt.
• As of August 16, the LNG stocks were 2.26 Mt; up 11.3% from the previous week (2.03 Mt); up 12.4% YoY; and up 6.6% from the 5-year average.

NEWS: CARBON CAPTURE & SYNTHETIC FUELS

Govt to assess liquid-fuel outlook to expand next-gen low-carbon fuels

(Government statement, August 17)

• The govt will develop multiple scenarios for future liquid-fuel demand and next-gen fuel supply potential toward 2050, and use the results to consider support measures, deployment targets, and regulatory frameworks.
• Key challenges include securing feedstocks, stimulating initial demand, managing higher costs, and improving social acceptance.
• The analysis will also consider carbon intensity reductions, costs, international competitiveness, and impacts on refineries and supply chains.
• The govt is also considering targets for bioethanol use from FY2028 onward, including expanded gasoline blending and the use of next-gen bioethanol and SAF.
• CONTEXT: The Act on Sophisticated Methods of Energy Supply Structures promotes the use of non-fossil energy to ensure a stable energy supply. Under the Act, METI requires five major oil refiners / suppliers to supply 500,000 kL of crude oil equivalent via bioethanol annually as automotive fuel. As the current period ends in FY2027, METI needs to discuss targets and timelines for FY2028 onward.
• TAKEAWAY: Japan’s biofuel deployment has remained limited over the past two decades due to high costs and a lack of competitive domestic feedstock and production capacity. The country has relied heavily on imported bioethanol, while the ETBE (ethyl tert-butyl ether) -based approach has allowed use of existing fuel infrastructure but provided limited incentives for higher blending rates. Also, expanding direct ethanol blending requires investment in fuel infrastructure and vehicle compatibility. The govt’s biofuel targets have also remained modest, with the 500,000 kL/year target largely unchanged since 2017. Recently, Japan shifted focus toward E10/E20, SAF, and next-gen biofuels, with greater emphasis on securing stable supply, reducing costs, and developing the necessary infrastructure. Stronger policies are expected to accelerate the adoption of lowcarbon liquid fuels.

JAPEX starts drilling second exploratory well for Tomakomai CCS

(Company statement, August 17)

• JAPEX began drilling its second exploratory well in Tomakomai, aiming to confirm geological formations suitable for sub-seabed CO2 storage.
• The drilling for the first exploratory well started in late 2025.
• CONTEXT: When operational, this project will capture CO2 from Idemitsu Kosan’s refinery and Hokkaido Electric’s power station.
• TAKEAWAY: The second well moves the project deeper into geological verification ahead of FID. Data from the exploratory wells will help JAPEX assess whether the Tomakomai offshore formation can support commercial-scale CO2 storage, with the consortium targeting storage from FY2030 if the project proceeds.

CCS project by Kyushu Electric and J-Power enters FEED

(Company statement, August 10)

• Kyushu Electric and J-Power’s CCS commercialization project entered the FEED phase. The initiative will capture CO2 from two sources – Kyushu Electric’s Matsuura Power Station Unit 2 and J-Power’s Matsuura Coal Power Station Unit 2.
• The captured CO2 will be liquefied, temporarily stored, and then shipped via vessel to geological storage sites. The project aims to transport 2 Mtpa of CO2 starting in the early 2030s, with FID targeted in late FY2026.
• CONTEXT: In 2024, the project was chosen by JOGMEC’s Advanced CCS initiative. MHI is designing the CO2 separation and capture equipment. Chiyoda Corp is handling liquefaction systems. Nippon Steel is in charge of temporary storage and shipping equipment. Mitsubishi Electric is designing the electrical receiving systems.

ASIA ENERGY REVIEW

BY JOHN VAROLI

A brief overview of the region’s main energy events from the past week

Australia / Shale gas

Next month, gas starts flowing from the Beetaloo basin to Darwin in what developers hope launches a U.S.-style shale revolution. Beetaloo holds 7 trillion cubic feet of gas.

Australia / Wind power

Construction began on the 108 MW Waddi Wind Farm in West Australia, to begin operations in 2028. The project is one of 10 renewable energy projects to be built with support from the govt’s Capacity Investment Scheme.

China / LNG

China relies on imports to supply 40% of gas consumption but reduces risks by diversifying both routes and supply sources. In 2025, seaborne LNG accounted for 54% of imports while overland pipelines supplied 46%. Both modes of supply have been well diversified.

China / Iranian Oil

China will receive just 340,000 bpd from Iran this month, one-third of the 1.14 million bpd it imported from Iran in March.

China / Russian Oil

China’s seaborne imports of Russian crude are estimated at 1.25 mbpd in August, according to Kpler, down from 1.423 mbpd in July.

India / LPG

The govt approved laying 1,800 km of LPG pipeline in a $732 million investment. The pipelines will pass through six states: Telangana, Maharashtra, Uttar Pradesh, Uttarakhand, Karnataka ⁠ and Goa.

India / Solar

Solar power developers began to add battery storage to PV projects to reduce the large share of curtailments for power supply the grids can’t absorb. As much as 42 GW of solar projects struggle to find offtakers, with 18 GW of solar-only projects without batteries most at risk.

Singapore / Electricity imports

The Energy Market Authority approved two projects to import 900 MW of electricity from Malaysia. Sembcorp Utilities won approval for 300 MW in imports. Southern Solar Alliance, a subsidiary of Ditrolic Energy Holdings (Malaysia), was approved for 600 MW.

South Korea / Power demand

South Korea’s forecasted peak electricity demand in 2040 has risen by 26.8 GW over an estimate made four months ago — equivalent to about 19 large nuclear reactors with a capacity of 1.4 GW each. Increased power demand is expected to come from new data centers.

Taiwan / Wind power

Northland Power’s Hai Long offshore wind project secured about $1.7 billion in new Taiwan dollar-denominated debt with a 20-year tenor.

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NEWS
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