How Japanese Players Approach Pricing Strategy for New Climate Solutions

March 21, 2024|Energy Prices

Japan’s efforts to combat the impact of climate change have spurred the development of new, highly innovative products and services. But setting their market price is proving to be a tricky and sensitive challenge given the near impossibility of near-term commercial scale.

Climate business leaders say they are facing a number of vital questions: How many years of R&D costs should the initial clients cover in the starting price? Or should the price reflect the potential value customers hope to extract? Benchmarking against related products is a tried and tested approach, but even if this is agreed on, talks over the premium are far from simple.

In an uncertain world, the easiest option is to wait. And so dozens of talks related to new energy developments are currently on hold, none more so than in the hydrogen and ammonia offtakes space. Privately, those involved in the talks fear that many projects will never make it outside the conference room.

Some businesses, however, are willing to take on risks and forge ahead. Japan NRG has spoken with a number of representatives of firms across several sectors operating in Japan to hear about how they managed to bridge buyer-seller differences and agree on a value for innovation.

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