Power industry opposes coal phaseout; Tweaks to offshore wind auctions; INPEX eyes more oil & gas; Niigata still unhappy about nuclear restart; Japan-Indonesia hydropower agreement
Japan Energy Currents
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Every week, Japan Energy Currents will highlight recent news and analyses that give us a better understanding of the current moment in Japan’s energy landscape and its role in the global energy transition.
Some articles will be in Japanese and some will be paywalled. But I’ll aim to summarize each article with enough detail so you won’t miss out.
This week, I bring you five stories that caught my attention.
1. Japan’s power industry chief opposes blanket coal phaseout (Nikkei | in Japanese)
Shingo Hayashi, chairman of the Federation of Electric Power Companies of Japan (FEPC) and president of Chubu Electric, voiced opposition on March 14 to setting a fixed deadline for shutting down coal power plants. While supporting the government’s plan to phase out inefficient plants by 2030, he urged a flexible approach that considers business needs and supply stability.
Hayashi emphasized that reductions should not follow a rigid percentage-based timeline but rather be adjusted according to each operator’s supply situation. He also called for exceptions to the 2030 deadline and compensation measures if high-efficiency plants are forced to close.
The 7th Strategic Energy Plan, which the government approved on February 18, vows to “fade out inefficient coal-fired power plants” — i.e., those that are not integrated gasification combined cycles (IGCC) or whose emissions aren’t reduced via carbon capture, utilization and storage (CCUS) or hydrogen and ammonia co-firing. In other words, efficient coal plants will continue to play a role in Japan’s energy system in the future.
2. Mitsubishi’s offshore wind projects may get higher electricity rates (Nikkei | in Japanese)
METI plans to revise offshore wind auction guidelines this spring, allowing projects awarded before a 2022 pricing reform — such as Mitsubishi Corp’s — to switch to a new scheme with higher electricity sale prices. The change follows Mitsubishi’s ¥52.2 billion impairment loss announcement in February, caused by inflation and a weak yen.
Mitsubishi won all three offshore wind zones auctioned in 2021 off of Akita and Chiba Prefectures under the old FIT scheme, which guaranteed fixed prices but was less flexible. The 2022 reform introduced a new subsidy mechanism to encourage market-based pricing, but it wasn’t available when Mitsubishi bid. METI insists the change isn’t targeted at any specific company.
A public comment process will take place before METI finalizes the revision, possibly as early as May. If Mitsubishi applies and is approved, it could secure higher power sales revenue. Some competitors argue the move is a rescue plan for Mitsubishi, while Mitsubishi itself remains noncommittal about its next steps.
3. INPEX boss Ueda is planning to sell a lot of oil and gas (Nikkei | in Japanese)
INPEX, Japan’s largest oil and gas producer, will increase fossil fuel output by 30% over the next decade, surpassing 800,000 barrels per day (oil equivalent).
The company is focusing on gas, citing growing demand from AI-driven power demand and emerging markets. INPEX is planning a major expansion in Indonesia, where its Abadi LNG project, a $20 billion joint venture with the state oil firm, could produce 9.5 million tons of LNG annually.
This reflects a broader trend: Western energy giants, facing poor renewables profitability, are doubling down on fossil fuels. INPEX’s mid-term plan allocates nearly 90% of its JPY 1.8 trillion investment budget through 2027 to oil and gas. While renewables and hydrogen investments remain flat, the company is expanding LNG capacity in Australia and considering UAE oil production increases.
4. Niigata lawmakers aren’t happy with the government’s push for Kashiwazaki-Kariwa Restart (Niigata Nippo | in Japanese)
Japan’s government is urging Niigata Prefecture to approve restarting TEPCO’s Kashiwazaki-Kariwa nuclear plant, arguing that it’s vital for eastern Japan’s energy security. But in a March 14 hearing in Niigata, METI officials failed to give clear answers on safety measures, evacuation plans, or economic benefits for Niigata.
Kashiwazaki-Kariwa is the world’s largest-rated nuclear plant. All seven of its reactors have been offline since 2012, despite Unit 7 clearing regulatory hurdles in 2020.
The 7th Strategic Energy Plan, finalized in February, aims to more than double nuclear energy capacity by 2040. Local approval is critical for restarting reactors, but with local distrust in TEPCO still high post-Fukushima, reaching that target will be a steep uphill battle.
5. Indonesia, Japan Team Up on $17.8B Hydropower Project (The Investor)
Indonesia’s Coordinating Ministry for Economic Affairs and Japan’s METI signed a letter of intent on March 9 to develop the Kayan hydropower plant in North Kalimantan. With a USD 17.8 billion investment, this project will become Southeast Asia’s largest hydropower facility, generating 9,000 MW to power Indonesia’s largest green industrial park in Tanah Kuning and bolster its sustainable energy plans.
The deal is a strategic win for Indonesia, enhancing energy security and supporting its push for decarbonization by raising renewable energy’s share to 23% by 2025 and 31% by 2050. For Japan, it’s part of its prolific energy and infrastructure investments in Indonesia and the broader Southeast Asia region. While many of Japan’s investments under multilateral frameworks like the Asia Zero Emission Community have been criticized as bolstering or prolonging fossil fuels, this specific cooperation seems to genuinely advance Indonesia’s clean energy transition.
Next steps include securing investments and initiating detailed planning, setting a new benchmark for regional renewable cooperation and advancing sustainable energy infrastructure in Southeast Asia. Officials expect swift progress as high-level talks intensify and project teams convene immediately.
That’s it for the Japan Energy Currents this week. Questions or comments? Leave them in the comments section below or in the subscriber chat.
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