Japan's METI to compile 'emergency response' for summer, winter power outlook: minister

Tokyo — Japan's Minister of Economy, Trade and Industry Hiroshi Kajiyama on May 14 said he issued a directive for the ministry to prepare an "emergency response" for the country's severe summer and winter supply outlook, by the end of May.

"This summer we expect to have a needed [power] supply capacity to ensure stable supply, but we expect to have the most severe outlook [compared to] the last few years," Kajiyama told a press conference.

"We also expect Tokyo Electric's area [not to have] sufficient supply capacity to ensure stable supply this winter."

In response to the severe power supply outlook, Kajiyama had issued the directive to prepare the emergency response, including requests to power utilities to ensure supply capacity as well as to end-users to cooperate and provide timely information on supply and demand situations.

OCCTO outlook

The rare directive from the METI minister came as the ministry is concerned about the latest summer and winter power supply and demand outlook compiled by the Organization for the Cross-regional Coordination of Transmission Operators, or OCCTO.

The latest outlook, which was approved by the OCCTO board in recent days, showed Japan's reserve power supply capacity ratio at the time of maximum demand to average 3.7% for July and 3.8% for August nationwide, excluding Hokkaido and Okinawa, Masashi Morimoto, Director of METI's office for electricity supply policy told a press briefing.

The reserve power supply capacity ratio, which is calculated using reserve supply capacity and estimated power demand, for the peak summer demand month of August 's maximum power needs is at the lowest level since 2017, according to METI.

While noting a required ratio level of 3% for maximum demand to ensure stable supply, the Tokyo area is to have minus 0.2% for January and minus 0.3% for February next year, with the central and western Japan regions having the ratio of 4.9% for January and 3% for February, Morimoto said.

Weighing actions

"This is an extremely severe outlook at this moment," said Morimoto, adding that the outlook for winter was the most severe in recent years.

"As we still have about a half year we will consider our specific response and take necessary actions," Morimoto said, adding that these could involve changing the maintenance schedules of power plants and restarting mothballed plants.

Among possible measures for the summer, METI intends to request Japanese utilities report their LNG and other fuel procurement plans in June to scrutinize them, a METI source told S&P Global Platts.

Asked about power demand impact from the Tokyo Olympics in the summer, Morimoto said: "This is a very difficult factor but we will make sure we have a carefully thought-out measure to ensure power for the Olympics."

Power demand from the Olympics would be influenced by such factors as whether any spectators would be allowed at sport events and whether there would be any requests to curb movement, he said.

Robust demand

METI's ministerial directive was the latest in its efforts to ensure the country's power supply and demand balance, after facing a severe shortage of power supply last winter.

METI aims to formulate power fuel guidelines around August, under plans released April 20, as part of precautionary measures for the next winter after grappling with severe power supply concerns in January.

METI has attributed the tightened supply-power balance from last winter mainly to robust power demand during severe cold spells when local power utilities had to restrict gas-fired power generation due to a fall in LNG stocks.

Japanese power utilities had boosted their LNG procurement from December, peaking in January at 5.54 million mt, from around 5 million mt in the same month over the last two years, according to METI's calculations based on its hearings with major power utilities.

LNG stocks held by power utilities also dropped by around 40% over the course of a month from mid-December. This led to utilities restricting LNG thermal power generation amid difficulties in building LNG inventories in the face of strong demand in East Asia, coupled with shipping constraints in the Panama Canal, according to METI.

The power supply-and-demand balance was exacerbated further by glitches at coal-fired power plants, low hydropower generation output due to droughts, and fluctuating solar power output from bad weather, amid reduced oil-fired power generation capacity and low nuclear power output, according to METI.