OCCTO releases Aggregation of Electricity Supply Plan 2022: Coal to account for 32% in FY2031
In March 2022, the Organization for Cross-regional Coordination of Transmission Operators (OCCTO) released its Aggregation of Electricity Supply Plans for FY2022. This is a compilation of electricity supply plans submitted by 1,738 power suppliers, and provides a forecast of demand through FY2031.
The Aggregation shows that Japan will continue to operate coal-fired power plants for the next 10 years at near its current rate, a direction that is completely inconsistent with the Paris Agreement’s 1.5°C target, the 2030 power supply composition (energy mix) set in Japan’s Strategic Energy Plan, and the Japanese government’s policy of “fading out inefficient coal-fired power generation”.
*Energy mix for FY2030 as defined in : 19% coal, 20% LNG, 2% oil, etc., 20-22% nuclear and 36-38% renewables.
Coal to account for 32% of the energy mix in FY2031
According to the Aggregation, the power supply composition of FY2031 is projected to be 32% coal, 30% LNG, 2% oil, etc., 6% nuclear, 29% renewables (general hydro + pumped hydro = 10%, wind + solar + geothermal + biomass + waste power generation = 19%). The percentage of coal in FY2030 in the previous FY’s plan, “the Aggregation of Electricity Supply Plans for FY2021“, was 34%, so while the percentage of coal-fired power will decrease in FY2031, it still represents the largest share.
In order to achieve zero greenhouse gas emissions by 2050 and keep the global temperature increase within 1.5°C above pre-industrial levels, it is essential to phase out coal-fired power plants by 2030 at the latest. Japan’s power suppliers’ plans run counter to that goal, and on the contrary, it shows a significantly higher dependence on coal compared to Japan’s Strategic Energy Plan.
Projected Transition of Electric Energy Generation (net) by Power Generation Source
(Figure developed by Kiko Network from OCCTO (2022) “Aggregation of Electricity Supply Plans for FY 2022”)
Installed capacity is increased for both coal and LNG, but decreased for oil
The overall installed capacity is expected to increase over the 10-years after FY2021. By power source, hydroelectric and nuclear power will remain constant, and renewables (other than hydroelectric) are expected to increase by about 39.59 GW. Although the overall installed capacity of thermal power will decrease by 1.2 GW, the breakdown shows that the capacity of oil is expected to decrease by 10.14 GW, while the capacity of coal and LNG is expected to increase by 3.97 GW and 4.97 GW, respectively. Compared to the previous FY’s plan (changes in installed capacity for FY2020-FY2030 were: coal +6.88 GW, LNG -0.63 GW, and oil -1.78 GW), it reveals an increasing downward trend in the installed capacity of oil, whereas that of LNG has begun to increase. While Japan will maintain an emphasis on coal, LNG capacity is also expected to increase.
Installed Capacity (National Total)
(Figure developed by Kiko Network from OCCTO (2022) “Aggregation of Electricity Supply Plans for FY 2022”)
Construction and retirement plans reveal no change in power suppliers’ coal dependency
Compared to the previous FY’s Aggregation of Electricity Supply Plans for FY2021, construction plans for one new coal-fired power plant have been added, and only two coal-fired plants are planned for retirement instead of three. The trend of new coal installations exceeding the output of retirements has increased since the previous FY’s Aggregation (4,413 MW of new installations and -518 MW of retirement). The same trend can be seen in LNG, where the output of new construction plans has remained constant compared to the previous FY, whereas the output of retirements has decreased. On the other hand, the output and the number of oil-fired power plants was on a declining trend in the previous FY’s Aggregation, but the retirement in this FY’s plan is even larger than previously. The government has announced the policy to “fade-out inefficient coal-fired power generation,” but if only two coal-fired power plants are to be closed by FY2031, it cannot be said that Japan is moving in a direction that follows the government’s policy.
Planned construction and retirement of power plants by the end of FY2031
(Figure developed by Kiko Network from OCCTO (2022) “Aggregation of Electricity Supply Plans for FY 2022”)
Coal-fired thermal power facility utilization rate remains at about 70%
As for the capacity factor by power source, the trend for thermal power is similar to the Aggregation announced last year, with coal remaining almost unchanged at approximately 65%, while LNG is expected to decrease from 47% to 37.6% between FY2021 and FY2031. It is apparent that the direction of prioritizing coal over LNG has not changed.
Projected trends of capacity factor by power generation source
(Figure developed by Kiko Network from OCCTO (2022) “Aggregation of Electricity Supply Plans for FY 2022”)
In the Aggregation announced in the previous FY, the capacity factor for nuclear power remained at somewhere between 11.2% and 13.1% during FY2020-FY2030, but the newly-announced capacity factor for FY2021 to FY2031 is planned to be as high as 19.0% to 23.3% in any given year. In addition, the previous FY’s plans showed more than 10% growth in the capacity factor of geothermal and biomass over a 10-year period, but neither of these have increased significantly over the 10-year period in this FY’s plan.
Reference: Facility utilization rate by power source (estimated at the time of compilation of the FY2021 supply plan)
(Figure developed by Kiko Network from OCCTO (2021) “Aggregation of Electricity Supply Plans for FY 2021”)
Conclusion
If the energy mix revealed in this FY’s Aggregation becomes a reality, the percentage of thermal power generation will greatly exceed that in the Strategic Energy Plan, and Japan’s greenhouse gas reduction targets will not be achieved. In last year’s Aggregation, OCCTO had cited the current issue of the ratio of coal, which had remained at a high level and deviated from the energy mix value indicated in the previous 5th Strategic Energy Plan. However, in this year’s Aggregation, it is not even listed as an issue. It is essential to closely examine and think about the contents of these supply plans and directly face the issue of coal-fired power in Japan.
Reference: Aggregation of Electricity Supply Plans for FY2022 (March, 2022) [only available in Japanese as of April 2022]