This month a key new structure of Japan’s electricity market was rolled out. The balancing market seeks to address the emerging disparities and inefficiencies in Japan’s power since the industry’s liberalization.

To date, the role of balancing the electricity network was fulfilled by power transmission companies. This has become more difficult and expensive of late with an increase in the volume of solar and wind power plants, which are non-dispatchable assets. In other words, operators of solar PV and wind farms cannot control the volume of power they will deliver on a given day, complicating the work of balancing power demand with supply.

The advent of the balancing market is supposed to address this issue, as well as create more competition in supplying the resources used to keep the grid stable.

We take a look at how this new market segment works.