The power sector is staring down a winter of possible blackouts and strained resources at peak demand. That’s odd because the Capacity Market, which became effective this year, was conceived by the nationwide grid oversight body, OCCTO, specifically to ensure that adequate capacity was on hand.

Originally designed to ensure adequate power supply four years in advance, OCCTO’s main Capacity Market was launched in 2020. It even attracted higher-than-forecast prices to keep the major power utilities from mothballing expensive older power plants that OCCTO saw as vital for retaining stable market supply during peak periods.

Four years on, and OCCTO’s forecasts appear to have fallen short of today’s electricity needs. With utilities struggling to keep up with demands on days with extreme weather, the grid operators (TSOs) have been blindsided. This year, the TSOs have issued energy alerts at unprecedented rates. Based on current rules, the grids may run out of their alert allocations.

The weather has undoubtedly undermined OCCTO’s best-laid plans, while a resurgence in power demand from industry and a data center boom was clearly not on the grid oversight body’s bingo card for this year. 

Japan recorded its hottest summer this year since comparable data collection started in 1989. Average temperatures between June through August were 1.76 degrees Celsius higher in 2024 than during the same period between 1991 and 2020.