OCCTO Electricity Supply Plan: Energy Mix to Include Over 30% Coal in 10 Years’?

In June 2016, the Organization for Cross-regional Coordination of Transmission Operators (OCCTO) in Japan released a document called “Summary of Electricity Supply Plans for FY2016”. The electricity supply plan has been integrated by the Agency for Natural Resources and Energy (under the Minister of Economy, Trade and Industry) based on submission from general electricity utilities. Undergoing the electric system is ongoing reform, the OCCTO who received registrations from electric retailers and power producers has taken on the role of compiling information based on the Electric Utility Industry Law. This is the first report following both the revision and the release of the “Energy Mix plan for 2030”.

This summary report put together supply plans submitted by 314 utilities have just acquired licenses and following suppliers that the OCCTO was able to grasp their plans. This report includes predictions for FY2016 and for the coming 10 years.

One very interesting piece of data is the ratio of coal usage in the energy mix. First of all, it’s predicted that ever-increasing energy demands will appreciate at 0.5% a year within the next 10 years. In addition, the energy mix (electric capacity) of coal-fired generation will increase from 41.78GW in FY2016 to 50.6GW in FY2025 (an increase of about 20%) and the proportion of coal will increase from 30% to 31.9% in the next 10 years. Therefore, the end output of coal generation will increase from 280,500GWh in FY2016 to 313,500GWh in FY2025. On the other hand, the generation capacity of LNG will remain unchanged while its generation end output will dramatically decrease from 401,300GWh to 280,900GWh. Its capacity factor will also drop from 58.6% to 41.6%. This seems to indicate that Japan is shifting from LNG to coal. It also suggests that the country’s introduction of renewable energy will remain low.

The OCCTO’s compilation shows a totally different view from the governmental energy mix for 2030 – the energy mix that the government fixed last year allocated 20-22% for nuclear, 22-24% for renewable energy, 26% for coal, and 27% for LNG. On the other hand, the collective energy suppliers’ prospects for FY2025 are allocating only 0.4% for nuclear, 18.3% for renewable, 31.9% for coal, and 28.6% for LNG. It’s obvious that they will heavily rely on coal even in the future.

Although electricity suppliers have made realistic plans for the future of nuclear, they plan to use a greater amount of coal under governmental policies to encourage coal generation. This plan obviously goes against the accelerating push to put the Paris Agreement into effect. If this goes on, Japan cannot accomplish the energy mix in 2030 and not even meet its weak greenhouse gas reduction target (a 26% reduction compared to 2013 levels), which has been criticized by the world.

Under the assumption that there will be an increase in energy demands, suppliers are planning to provide more energy though mainly coal. It is time to shift energy policies to move towards energy efficiency and renewable energy.