【Report】ACCR requests revision of J-Power’s decarbonization strategy

In December 2024, the Australasian Centre for Corporate Responsibility (ACCR), an Australian non-governmental organisation that researches corporate responses to climate change and human rights issues and conducts advocacy toward institutional investors, released the report “Investing in coal plant flexibility: a strategic approach for J-POWER’s transition.” In this report, ACCR requests that J-POWER revises its efforts to improve the flexibility in coal-fired power plants, which are currently heavily weighted toward unproven, high-cost technologies such as ammonia co-firing, coal gasification, and CCUS.

Following are six key findings of this report:

Solar power is expected to be the dominant source of renewable energy in Japan’s energy mix during midday periods as Japan scales up renewables over the next decade.
Rising solar penetration drives down midday prices and increases intraday volatility of the electricity grid, exposing J-POWER’s domestic inflexible baseload coal plants to the risk of being forced to generate power during low-pricing periods.
J-POWER is particularly vulnerable to low-pricing periods due to its heavy reliance on coal as an inflexible generation source.
Global coal capacity factors are on a downward trajectory, and Japan and J-POWER are unlikely to be immune from this long-term global trend.
Repurposing coal plants for flexibility has been a widespread and successful strategy amongst coal-powered nations since the earliest days of the energy transition.
While J-POWER says it aims to reduce the financial impact of lower load factors by enhancing coal plant flexibility, it has not disclosed any plans on how it intends to achieve this.

Utilization rates of J-POWER’s coal-fired power plants have been declining by reflecting efficiency challenges. As seen in the figure below, this downward trend is consistent with that in utilization rates of coal-fired power plants both in Japan and the world.

Source: ACCR Report – Company disclosures, BNEF (forecast for Japan coal capacity factor), IEA

Based on its analysis, ACCR recommends the following to J-POWER:

J-POWER should prioritise investments in initiatives that lower minimum load levels and increase the flexibility of domestic coal plants.
J-POWER should incorporate these initiatives into its decarbonisation strategy.

ACCR points out that while J-POWER acknowledges the growing importance of flexibility, it still promotes “unproven and costly technologies, including converting higher-efficiency thermal power plants5 using ammonia co-firing, coal gasification, and carbon capture, utilisation and storage (CCUS).” The report also notes that “there are numerous real-world case studies where companies – and governments in other countries – have invested in flexibility and emphasised established, lower cost methods of decarbonisation.”

The report states that “investors should ask the company to clarify how it will decarbonise its domestic thermal plants, and whether it will prioritise proven, lower cost emissions reduction methods that are used globally”, and ACCR recommends investors ask the following questions:

How is J-POWER addressing the risk to long-term profitability as Japan’s renewable energy share grows and demand for coal declines? Has the company evaluated the potential impacts if these assets remain inflexible? If no adjustments are made, the risk of the company’s domestic business deteriorating in profitability may impact J-POWER’s competitive position.
Hydrogen, ammonia co-firing and CCUS retrofits for coal plants are high-cost and unproven emerging technologies. How will J-POWER manage the financial risks of these investments in these technologies, given the global trend towards the adoption of flexible coal operations over emerging technologies?
How are J-POWER’s domestic coal plants adapting to an electricity grid that features more solar and increasing price volatility?

＊The ACCR’s report download page provides a list of references and their sources used in making this report.

【Report】ACCR requests revision of J-Power’s decarbonization strategy

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