JAPAN Law and Practice Contributed by: Yutaro Fujimoto, Yurika Masakane, Hirokazu Tanaka and Yutaro Kato, Nagashima Ohno & Tsunematsu
Market for the Achievement of the Targets of the Pro- motion Act and the Market for the Trading of Renew- able Energy Values. The Market for the Achievement of the Targets of the Promotion Act deals with NFCs outside the FIT regime (“non-FIT NFCs”) and the purchasers are basi- cally limited to retail electricity suppliers. Against the background that retail electricity suppliers are obliged under the Promotion Act to ensure that 60% or more of their electricity supply comes from non-fossil fuel energy by 2040, the non-FIT NFCs and this market are expected to encourage retail electricity suppliers to achieve that target. The Market for Trading of Renewable Energy Values was established in November 2021 following the growing demand for renewable energy-sourced elec- tricity by consumers. This market deals with the NFCs under the FIT regime (“FIT NFCs”) and not only retail electricity suppliers but also consumers can purchase FIT NFCs in this market. Although FIT NFCs do not give benefits under the Promotion Act to retail elec- tricity suppliers, both retail electricity suppliers and consumers may deduct the amount of CO₂ represent- ed by the FIT NFCs from their CO₂ emissions for the purposes of the Act on Promotion of Global Warming Countermeasures. Point to note regarding supply to high-load consumers There are no special market regulations regarding sup- ply for high-load consumers. However, in response to the expansion of localised high-load electricity demand at data centres, semiconductor factories and other facilities, the following measures are being dis- cussed to efficiently and rationally develop and utilise transmission and distribution networks: • stricter rules regarding application for grid connec- tion (if the required information in the application is incomplete at the time of application, or if a more than minor change occurs, the application will be cancelled, and the applicant will lose its temporar- ily secured grid capacity); • setting payment deadlines for grid construction costs to be paid by consumers to the TSO (within
three months of the TSO’s approval of grid connec- tion); • shifting part of the cost for upgrading the upper- level grid network, which was previously borne by TSOs, to high-load electricity consumers; • releasing grid capacity exceeding actual electricity demand by high-load consumers; and • placing the additional burden of expense onto high-load consumers for delayed construction of high-load consumption facilities. 2.2 Electricity Imports and Exports At the time of writing, Japan has no international interconnection. There is no legal restriction against imports and exports of electricity, although in practice these do not occur. 2.3 Supply Mix of Electricity According to ANRE, the supply mix of electricity in
2024 was as follows: • natural gas 32.2%; • coal 28.1%; • oil 7.2%; • nuclear 9.4%;
• hydro 7.4%; • solar 9.9%; • wind 1.2%;
• biomass 4.2%; and • geothermal 0.4%. As of the time of writing, Japan’s outlook for the sup- ply mix in 2040 is: • thermal 30%–40%; • nuclear 20%;
• hydro 8%–10%; • solar 23%–29%; • wind 4%–8%;
• biomass 5%–6%; and • geothermal 1%–2%. 2.4 Market Concentration Limits There are no concentration limits in Japan.
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