Japan OCCTO orders TEPCO to get up to 2.54 GW extra electricity following cold snap

Japan's Organization for Cross-Regional Coordination of Transmission Operators, or OCCTO, on Jan. 6 issued orders for TEPCO Power Grid to receive up to 2.54 GW of electricity from other regional utilities to ensure sufficient supply in the face of higher-than-expected demand following a sharp drop in temperature.

The OCCTO directed TEPCO Power Grid to additionally get a maximum 1.32 GW of electricity supply on Jan. 6 in its second order in addition to receiving up to 1.22 GW electricity supply in its directive earlier in the day.

The orders were in response to TEPCO Power Grid's requests to OCCTO to coordinate electricity supply from other regions as it foresees the highest "extremely severe" supply and demand outlook on Jan. 6, up from the 96% "severe" outlook earlier in the day for both during its peak hour and utilization.

In its updated outlook, TEPCO Power Grid expects power demand to reach a maximum 54.09 GW, just under its 55.69 GW during the the peak hour at 4 pm-5 pm local time (0700-0800 GMT) on Jan. 6.

During this same period, its utilization is seen peaking at 54.09 GW over its available 55.69 GW supply.

In its first order, the OCCTO directed TEPCO Power Grid to receive up to 250 MW from Hokkaido Electric Power Network and a maximum 900 MW from Tohoku Electric Power Network at 1:30 pm-8 pm local time; 170 MW from Chubu Electric Power Grid over 5 pm-8 pm.

This latest directive came as Tokyo and its suburban areas were hit by snow on Jan. 6, with the Japan Meteorological Agency forecasting heavy snowfalls of around 10 cm depth in Tokyo's 23 wards and 8 cm depth in the Tama area during the day in its statement issued at 4:56 pm. The JMA however lifted its heavy snow outlook in its latest update at 7:28 pm but reported 10 cm depth snow at Tokyo's Chiyoda ward as of 7pm.

In its second order, the OCCTO directed TEPCO Power Grid to get up to 200 MW from Hokkaido Electric Power Network over 3:30 pm-7:30 pm; a maximum 600 MW from Tohoku Electric Power Network over 3:30 pm-6pm; 300 MW from Chubu Electric Power Grid over 3:30 pm-8 pm and up to 220 MW from Kansai Transmission and Distribution over 3pm-5pm.

TEPCO Power Grid said it was expecting to get up to 1.92 GW of electricity after some adjustments in the supply from the four utilities from the two directives over 1:30 pm-8 pm

Spot electricity price

Japan's spot electricity price shot up in the last few days when Japan's Electric Power Exchange's 24 hours, day-ahead price stood at Yen 22.61/kWh, while the daytime (8 am to 10 pm local time) day-ahead at Yen 24.57/kWh.

"JEPX [prices] for today and tomorrow have spiked due to [an] imbalance [lasting] for hours without solar power generation. I think we will continue seeing spikes for mornings and evenings on cold days in the coming weeks," a power trader said. "I don't think the hike in prices is due to an outage at a power generation unit, it is more demand driven."

The sudden drop in temperatures and surge in power demand comes amid signs of softening gas market fundamentals -- December loadings for LNG cargoes hit a record high signaling ample supply, spot LNG prices in Asia eased from recent highs of over $40/MMBtu and Europe's gas prices have also fallen from peak levels.

However, gas markets can tighten very quickly in the event of unexpected cold waves, and if temperatures continue to fall across the rest of Northeast Asia, it could eat into healthy inventory levels faster than they can be replenished. The S&P Global Platts JKM for February was assessed at $31.265/MMBtu on Jan. 6.

Asian gas and power utilities have also been cautious about a reversal in weather conditions, and chosen to hold onto surplus cargoes instead of reselling term volumes. A sharp upturn in gas and LNG demand could also flip arbitrage economics, and push traders to divert cargoes from the Atlantic back into the Pacific basin.

Japan's largest power generation company JERA on Jan. 4 restarted its mothballed 600 MW No. 5 gas-fired unit at the Anegasaki thermal power plant for January-February.

JERA restarted the unit so as to have ready capacity over Jan. 4-Feb. 28 after winning a tender issued by TEPCO Power Grid seeking 550 MW of additional supply, as part of its response to the Tokyo area's tight winter supply outlook, as detailed by the Ministry of Economy, Trade and Industry back in May. The unit was mothballed in April.

A JERA spokesperson told Platts on Oct. 28 that the company expected it required less than 60,000 mt of LNG to restart the mothballed Anegasaki unit.

Japan's LNG stocks in the hands of major power utilities rebounded 6.6% from Dec. 19, 2021 to 2.42 million mt on Dec. 23, 2021, according to the latest METI data.

As of Dec. 23, LNG stocks were well above the end-December 2020 stockpile of 1.42 million mt, as well as the four-year average of 1.71 million mt at the end of that month, the METI data showed.