Japan Power Market - Growth, Trends, Covid-19 Impact, And Forecasts (2023 - 2028)

Japan Power Market - Growth, Trends, Covid-19 Impact, And Forecasts (2023 - 2028)

The Japan power market is expected to grow at a CAGR of around 3.5% during the forecast period. With the COVID-19 outbreak in Q1 of 2020, Japan’s power industry witnessed a negative impact. In 2020, the country’s electricity sector experience dropped in demand by nearly 7% compared to 2010. The drop in demand was majorly due to the restriction imposed, leading to lower electricity required in various commercial and industrial places. Factors such as the growing demand for electricity due to industries and population are expected to drive the market. However, lowering the cost of renewable power generation, which is exceptionally high compared with the global level, is expected to hinder the market growth during the forecast period. With a significant number of commercial spaces available and high consumption of electricity during 2019, it is expected that the commercial segment is likely to dominate the market during the forecast period.

• On account of dominating market share in 2020, the thermal power sector is expected to act as a significant segment during the forecast period.

• New and efficient technologies like supercritical and ultra-supercritical coal power plants, which reduce the amount of pollution (per KW), are expected to replace the aging power plants and will likely create several opportunities for the Japan power market in the future.

• The growth in renewable energy projects is expected to drive the Japan power market.

• Thermal power plants in Japan are mostly powered by natural gas. The country is the largest importer of liquefied natural gas (LNG) and uses a major portion of the LNG to produce electricity. In 2020, the country imported 102 billion cubic meters (bcm) of the total imported LNG in the world, which is approximately 20.9% of the LNG imported.

• After the 2011 tsunamis, Japan has to close down most of its nuclear power plants, which made Japan use natural gas as a significant source of energy generation to fill the void caused by the dismissal of nuclear power. In the past decade, natural gas emerged as a significant source of energy in the country.

• In 2020, the total electricity produced by burning fossil fuel in Japan was 693.9 terawatt-hours (TWh), contributing to 69% of the total energy generated in the country. Among all, natural gas produced electricity of around 353.3 TWh in 2020.

• Though the government of Japan in Jut 2020 announced that it would shut down about a hundred inefficient coal-fired power plants by 2030, growth in the natural gas power plants are likely to support the thermal sector to grow during the study period.

• The country has a few upcoming thermal power plants. Two gas-fired units at the Chita Thermal Power Station are two forthcoming thermal power plants in Japan.

• Hence, owing to the above points, the thermal power generation segment is likely to act as a significant sector during the forecast period.

• Japan is one of the leading countries developing its renewable energy sector to reduce its dependency upon imported fossil fuels.

• During the last ten years, renewable energy has grown by nearly 10%. Solar is one of the leading segments that contributed significantly to renewable energy growth in Japan. In 2020, solar energy had an installed capacity of around 67 GW.

• The solar energy market in Japan is poised for growth in the coming years, on account of the government’s policy to implement clean energy measures in the country, the declining cost of solar energy generation, and reduced energy storage prices.​

• The country has several renewable energy projects that are likely to replace old thermal power plants. Moreover, the adoption of renewable technologies is expected to reduce country expenses on imported fuel, thus saving its revenue for other developmental work.

• Yatsubo Solar Power Plant, Ikeda Solar Power Plant, and Miyagi Osato Solar Park are a few upcoming prominent projects that are likely to expand the country’s renewable sector, thus dring the country's power sector during the forecast period.

The Japan power market is moderately fragmented. The key players in the market include Hokkaido Electric Power Company, Tohoku Electric Power Company, Tokyo Electric Power Company, Chubu Electric Power Company, Hokuriku Electric Power Company, Kansai Electric Power Company, Chugoku Electric Power Company, Shikoku Electric Power Company, Kyushu Electric Power Company, and Okinawa Electric Power Company among others.

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