Japan Electricity Trading Market Renewal Scheduled After 2028

May 17, 2023|Electricity Trading Market

Electricity always requires perfect balance. Maintaining this equilibrium between what power plants can deliver to the grid and what users require is, however, a tough task that’s only getting harder.

Two years ago, Japan’s energy officials thought that they had mostly fixed the issue by unveiling a new electricity trading platform specifically designed to keep disparate forces at bay. The aptly named Balancing Market was supposed to do just that: patch up short-term discrepancies in weather, generator performance, and consumer demand. But the result can be best described as imperfect.

What Japan’s policy specialists discovered is that while the end product – electricity – was always the same and priced equally, how and when this energy was produced, and the efforts to do so, had a huge impact on its availability. And, hence, on the overall balance of the system.

Now, officials are hoping that a new, more complex market platform will better mirror the realities of what it takes to provide electricity at competitive prices, while also ensuring that there is sufficient capacity to meet future demand. The platform is partly based on the PJM system in the U.S., and while it won’t launch for another five years, the main tenants are already known.

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