Tokyo Avoids a Power Crunch; But System To Prevent Crises Falls Short

July 20, 2022|Electricity

In late June, Tokyo faced a severe power crunch, the second in four months. Foreseeing the problems that the hottest June record would create with electricity supply, the government made an impassioned plea to both businesses and households to conserve energy to avoid blackouts.

The response was heartening and the danger passed. But in fact, Japan already has a market-based mechanism to cope with times of power crises.

Rather than appealing to the social consciousness of citizens, the government should have been able to rely on the so-called Balancing Market set up to cope with exactly this kind of emergency. Worryingly, the Balancing Market failed to deliver. When the Tokyo area grid operator turned to the market for help, none was forthcoming.

The mechanism’s failure to resolve power crunches must be addressed. An initial assessment suggests that its modus operandi no longer fits with on-the-ground reality.

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