JAPAN COAL WILL DOWN

PLATTS - 09 Apr 2021 - Japan's coal-fired power generation will drop to 26% of its energy mix in fiscal year 2030-31 (April-March), down from 31% in fiscal 2019-20, as the country phases out its inefficient coal-fired power plants with regulatory measures and guidance, according to a policy draft approved April 9 by the Ministry of Economy, Trade and Industry.

The policy draft, which was approved by the coal thermal power working group under METI's advisory committee for natural resources and energy, comes as Japan intends to ensure the country phases out inefficient coal-fired power plants as part of its efforts towards decarbonization.

The move follows the launch of discussions by the working group in August, after a directive issued July 3 by Minister of Economy, Trade and Industry Hiroshi Kajiyama that the country should start drawing up a new, more effective framework to ensure the phasing out of inefficient coal-fired power plants by 2030 as part of its strategic energy plan.

The fifth strategic energy plan approved by the cabinet in July 2018 promotes conversion to high efficiency and next-generation coal-fired power generation in Japan in return for phasing out inefficient coal use.

METI on April 9 approved the policy draft, including setting a new regulatory target to raise Japan's efficiency in coal-fired power generation to 43% from 41% currently by amending the country's energy conservation act, which would effectively help phase out the country's inefficient coal-fired power plants.

METI has cited the need for Japan to move on reducing its power generation from inefficient coal-fired plants to close to zero to achieve its target of a 26% share for coal in its energy mix in fiscal 2030-31, as there are some new efficient plants under construction.

Phasing out

Japan had about 48 GW of coal-fired power capacity over 150 units in July 2020, when major power utilities owned roughly 39 GW of the capacity over 70 units, with the balance owned by other power generators as well as manufacturers using the generated power at their plants, according to METI.

As part of its latest policy measures, METI has decided to request major power utilities and other generators, which have similar power generation capacities, accounting for roughly 80% of the coal-fired power generation, to report their latest plans to phase out their inefficient coal-fired power plants to the METI minister every fiscal year.

Japan's coal-fired power generation is now slated to be about 260 billion kWh, or 26% of the total power generation in fiscal 2030-31, down from 306.7 billion kWh, or 31% of the total electricity supply in fiscal 2019-20, according to METI calculations based on certain fiscal 2030-31 inefficient coal-fired power phase-out plans.

Based on this outlook, Japan's subcritical and supercritical coal-fired power generation capacities held by major power utilities will drop to 9 GW over 20 units in fiscal 2030-31, down from 16.1 GW over 39 units in fiscal 2019-20, according to METI.

The major Japanese power utilities' ultra-super critical and integrated gasification combined cycle (IGCC) power generation capacities, however, will rise to 27 GW over 35 units in fiscal 2030-31 from 22.67 GW over 30 units in fiscal 2019-20, according to the METI calculations.

The remaining coal-fired power generation capacity held by other power generators and manufacturer will be 12 GW over 90 units in fiscal 2030-31, up from 9.14 GW over 80 units in fiscal 2019-20, according to the METI outlook.

Fuels impact

The latest fiscal 2030-31 METI outlook for phasing out Japan's inefficient coal-fired power plants was made for the country's fifth strategic energy plan, which is currently in the midst of review, with a new plan targeted in the summer.

The inefficient coal-fired power phase out outlook, however, would have an impact on LNG use, as it is seen as an adjustable source of energy as the country looks to boost its share of renewable energy in the new 2030-31 energy mix.

Renewable energy is set to account for 22-24% of the current 2030-31 energy mix, with natural gas accounting for 27%, nuclear at 20-22% and oil accounting for 3%.

In the next five years to fiscal 2025-26, Japan will add 7.58 GW of LNG power capacity, ad 6.86 GW of coal-fired capacity, while decommissioning 2.56 GW of coal-fired capacity, 4.89 GW of gas-fired capacity and 11.4 GW of oil-fired capacity, according to METI calculations based on power utilities' supply plans.

In the following five years to fiscal 2030-31, there is no addition of new thermal power generation capacity but a total of 8.81 GW of the capacity to be decommissioned. Coal accounts for 2.43 GW of the decommissioning capacity, with 400 MW of LNG and 5.98 GW of oil, according to the METI calculations.

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