Most Japan regions to have low Feb 2022 reserve power supply capacity: OCCTO

Tokyo — Japan's power utilities expect to have a reserve power supply capacity ratio at 5.8%, a level below an appropriate 8%, in seven out of nine regions in the country in February 2022 during the country's winter demand season, with the state power coordinator sounding alarms to be better prepared after the recent power shortages.

The lower-than-required reserve power supply ratio in Tokyo, Chubu, Hokuriku, Kansai, Chugoku, Shikoku and Kyushu areas came to light as the Organization for the Cross-regional Coordination of Transmission Operators, or OCCTO, released March 31 its compiled fiscal year 2021-22 (April-March) power supply plans.

The OCCTO attributed the low reserve power supply capacity ratio to about 13 GW of power plant capacity being scheduled to shut for maintenance in February 2022.

In its suggestion to Minister of Economy, Trade and Industry Hiroshi Kajiyama, the OCCTO said major power utilities should have more carefully considered their power supply and demand balance and planned their scheduled maintenance beyond the basis of their bilateral contracts, following the tightened supply and demand balance in winter.

The OCCTO also said it intends to maximize its efforts to improve the supply and demand balance in area with its tight outlook by taking various measures including requesting power utilities to make adjustments in their planned scheduled maintenance as well as retail utilities to be better planned for their electricity procurements during the high demand season.

Scenario analysis

The OCCTO, which also conducted its scenario analysis for the winter of fiscal 2021-22 based on demand from most severe cold in the last 10 years, said most areas will have below 3% reserve power supply capacity ratio in February 2022. Based on this analysis, the Tokyo area will have power supply below the demand level in January and February 2022.

In its July 2021 supply and demand analysis based on demand from the hottest heat wave in the last 10 years, Japan will have a 3.4% reserve power supply capacity, just above an appropriate ratio of 3%. The OCCTO expressed its hope to the METI minister for the country to consider measures including on how to request power savings to consumers.

The reserve power supply capacity ratio is calculated using reserve supply capacity and estimated power demand.

During fiscal 2021-22, Japan will mothball or decommission a combined 4.95 GW thermal power generation capacity, comprising 4.39 GW of LNG, 200 MW of oil and 360 MW of coal, according to the OCCTO.

Winter lessons

The OCCTO's caution for the February 2022 power supply and demand balance came after METI recently concluded in principle its two-month-long examination of the tightened power supply and demand balance in the last winter. It came up with short-term to mid-term to long-term policy actions to be implemented.

As part of its precautionary and emergency measures after facing severe power supply concerns in January, METI will set its fuels procurement guidelines and an LNG stock-monitoring system by next winter.

As part of its short-term measures, METI intends to present its LNG procurement guidelines to power utilities by around autumn to be implemented in winter, according to a METI source.

Other short-term measures include the introduction of a framework to monitor fuels information on a kWh basis, which would include a form of LNG stock information, said the source, adding that it has yet to be decided on disclosing the form of LNG stocks.

LNG stocks held by power utilities also dropped by around 40% over the course of a month from mid-December, which 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.

METI has attributed Japan's tightened supply and power balance due mainly to the robust power demand from severe cold spells, which led local power utilities to restrict their gas-fired power generation from a drop in LNG stocks.

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