Japan's METI to set power fuels guidelines in Aug after winter power shortage

Tokyo — Japan's Ministry of Economy, Trade and Industry aims to formulate power fuels guidelines around August under plans released April 20, as part of its precautionary measures for next winter after grappling with severe power supply concerns in January.

Under the plans, which were presented to its electricity and gas policy subcommittee, METI will conduct hearings with power utilities in May-June with an eye to submitting proposed fuel guidelines to the subcommittee in July in order to set the finalized guidelines around August.

METI's latest move comes as part of short-term policy actions following the recent conclusion in principle of a two-month investigation into the tightened power supply-demand balance last winter.

The proposed guidelines will cover areas including power utilities' fuels procurements under normal conditions and inventory standards as well as their emergency response, according to the plans.

METI will also consider ways to disclose as much LNG fuels information as possible at the earliest possible date while carefully considering the potential impact on LNG procurement and electricity prices in times of tightened electricity supply-demand balances.

Currently, METI is looking at the idea of disclosing major power utilities' end-month LNG stocks, as well as the utilities' monthly LNG procurement and consumption volumes, according to the plan.

Last winter

METI has attributed the tightened supply-power balance that arose last winter mainly to robust power demand during severe cold spells, during which local power utilities restricted gas-fired power generation due to a fall in LNG stocks.

Japanese power utilities had boosted their LNG procurements from December and peaked in January at 5.54 million mt, up from around 5 million mt in the same month during 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 round 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.

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

The power utilities ramped up their LNG procurements to 5.54 million mt in January from 5.1 million mt in December and cut back from February to 5.32 million mt and March to 4.8 million mt, according to the METI calculations.

The power utilities' LNG consumption rose from 5.26 million mt in December to peak at 5.43 million mt in January, and it fell to 4.49 million mt in February and 4.01 million mt, according to the METI calculations.

The LNG stocks held by the utilities increased from 1.35 million mt in December to 1.48 million mt in January, 2.31 million mt in February and 2.37 million mt in March, according to the METI calculations.