Key Findings
The consequences of the transformation will be felt most strongly in the thermal power sector, which faces declining market share for coal power generation and an almost inevitable drop in thermal coal imports.
A new government policy direction was signalled in February 2016 when the Japanese Environment Minster Tamayo Marukawa was reported to be looking to allow new thermal power plant approvals in return for voluntary thermal efficiency targets.
Japan today has a record 47 coal-fired power plants in the pipeline, aiming to bring 22.5 GW of new capacity online during the next decade.
Executive Summary
Key Points
- As Japan’s electricity sector evolves, coal dependency will decline
- Japanese overall energy demand is declining
- Proposed new coal power plants risk becoming stranded assets
- Japan was one of the three largest solar installation markets in 2014 and 2015
- 2015 will mostly likely stand as a peak year for Japanese thermal coal imports and coal-fired power generation
Japan’s power sector is transforming
Latest figures show Japan’s power-sector is transforming, with energy-efficiency advances and weak economic growth resulting in a 2.7% decline in electricity demand over 2015. Total electricity demand declined 8.7% year on year (yoy) for the month of January 2016. Even allowing for monthly variability and the negative economic growth in Japan in the fourth quarter of 2015, this is triple the rate of decline evident over 2015. On the back of this, January 2016 coal imports declined 13% yoy.
Japanese electricity demand for the 10 major utilities was 806 terawatt hours (TWh) in 2015, down from a peak of 906 TWh in FY2010/11 having declined at a compound rate of 2.3%—despite annual GDP growth of 0.6% annually over this period (translating to a 3% annual improvement in electricity productivity).
Press release: Japan’s ‘Rising Sun’ Drives Energy Sector Transformation
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