BY YURIY HUMBER
Japan’s power-price swings are increasingly arriving at a very specific time of day: just as solar output fades. In one recent day-ahead curve, the Tokyo area saw prices spike to around ¥60/ kWh in the late afternoon, while Hokkaido and Tohoku fell to around ¥3 near midday before climbing sharply into the evening.
This familiar pattern is starting to worry policymakers. Sun-soaked volatility creates technical and economic strain. While the national strategy calls for renewables to supply 40–50% of electricity by FY2040, up from 23% in FY2024, there is no rush to phase out thermal generation.
Variable renewables must therefore be integrated with plants that can take hours – or even days – to ramp up. That creates a growing balancing problem. Meanwhile, thermal assets, particularly nuclear, risk running at near-zero prices during peak solar hours, undermining utility economics.
That helps explain why METI launched a new working group ostensibly to promote “distributed energy.” Formally, the group spans everything from grid batteries to cybersecurity. In practice, its early meetings point to a more specific task: turning demand response, or DR, into a usable flexibility tool for the power system.
Leaning into demand-side “carbon-free flexibility,” as the group describes, is less about environmental positioning than system necessity. With major grid reinforcement projects not due until the 2030s, policymakers seek ways to manage imbalances within the existing system. DR is emerging as one of the main interim tools.
There is one problem. After several months of analysis, METI’s experts concluded that DR remains hard to see, count, and scale. To make DR work, they first need to make it visible.