BMI View: Japan's power generation mix will undergo a profound transformation over our 10-year forecast period, as a gradual revival in nuclear power edges diesel-fired power generation out of the mix and reduces LNG demand in the country. Coal will maintain its crucial role in the country's power mix, with over 25% contribution - supported by a strengthening pipeline of coal-fired power projects planned and under construction. Our view that reactors will start to go online in 2015 is still very much in play. We expect roughly 20 reactors to come online by the end of our forecast period in 202 5 , accounting for around 10% of the generation mix. The risks to this view lie largely in the continued strong public opposition to nuclear energy. Additionally, growing renewable fleet will add an upside to Japanese power output.
|e/f = BMI estimate/forecast. Source: National sources, BMI|
|Generation, Total, TWh||929.980||932.210||935.690||948.410||950.200||956.850||972.730|
|Consumption, Net Consumption, TWh||887.0||889.7||892.8||905.5||907.3||913.6||928.8|
|Capacity, Net, MW||330,978.6||335,803.2||340,592.2||346,964.4||351,321.1||355,104.4||359,733.3|
Critical developments in Japan's power sector include:
Draft proposal by the Ministry of Economy, Trade and Industry in April 2015, outlined plans for Japan's power mix targets for 2030 and reiterates the government's commitment towards nuclear energy. According to the proposal, nuclear will account for over 20% of the total electricity mix by 2030, with non-hydro renewables rising to nearly 15%, with a planned reduction across all thermal power sources, notably gas and oil.
Ongoing public opposition and safety concerns surrounding Japan's nuclear sector is the largest barrier facing government efforts to restart nuclear reactors. We have downwardly revised our nuclear generation forecasts this quarter, as we believe the restart process will take longer than initially anticipated. We maintain our view that nuclear restarts will continue over the next 10-years - with nuclear generation accounting for roughly 8% of the total electricity mix by 2025.
We have downgraded our 2016 LNG imports forecast for Japan amid structural headwinds for natural gas use domestically, sluggish economic performance, the availability of cheap coal imports and the gradual return of nuclear energy. Our longer-term outlook also remains bearish, as the increasing focus on renewable energy further erodes the share of natural gas in Japan's total power mix.
Japan will remain one of the three largest renewables market in the Asia region over our 10-year forecast period, despite our projection that growth rates will slow over the coming years. Difficulties integrating solar projects into the electricity system and the government's focus on nuclear power underpin our view that the market will undergo a slowdown.
The Basic Energy Plan did not give any specific details with regard to the composition of the future energy mix, but the government placed a greater emphasis on coal-fired generation and hydropower as an important source of baseload capacity. This is likely due to superior cost competitiveness and ease of access to coal relative to LNG. We acknowledge that these are important factors, especially in light of the deleterious effects that higher LNG imports and the weakening yen have had on Japan's trade balance and the economy as a whole. To meet its coal generation targets, the Japanese government is banking on integrated gasification combined-cycle plants (IGCC) that utilise coal gasification technology.
The Japan Power Report features BMI Research's market assessment and independent forecasts covering electricity generation (coal, gas, oil, nuclear, hydro and non-hydro renewables), electricity consumption, trade, transmission and distribution losses and electricity generating capacity.
The Japan Power Report also analyses the impact of regulatory changes, recent developments and the background macroeconomic outlook and features competitive landscapes comparing national and multinational operators by sales, market share, investments, projects, partners and expansion strategies.
- Use BMI's independent industry forecasts for Japan to test other views - a key input for successful budgeting and strategic planning in the power market.
- Target business opportunities and risks Japan's power sector through our reviews of latest power industry trends, regulatory changes, and major deals, projects and investments in Japan.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Competitive Landscape analysis.
BMI Industry View
Summary of BMI’s key industry forecasts, views and trend analysis, covering power markets, regulatory changes, major investments, projects and company developments.
Industry SWOT Analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the power sector and within the broader political, economic and business environment.
BMI’s Power Forecast Scenario
Forecasts to end-2024 for all key indicators, supported by explicit assumptions, plus analysis of key downside risks to the main forecasts:
- Generation: Electricity generation total, thermal, coal, natural gas, oil, nuclear, hydropower, hydro-electric pumped storage and non-hydropower renewables.
- Transmission and Distribution Losses: Electric power transmission and distribution losses.
- Trade: Total imports and exports.
- Electricity Consumption: Net consumption.
- Electricity Capacity: Capacity net, conventional thermal, nuclear, hydropower and non-hydroelectric renewables.
BMI’s Power Risk Reward Index
BMI’s Risk Reward Indices provide investors (power companies, service companies and equity investors) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors,
Structure, size and value of the industry sector; overview of the industry landscape and key players; an assessment of the business operating environment, sustainable energy policies, pricing and the latest regulatory developments.
Key Projects Database
Details and analysis of all current and planned developments (new ventures, capacity expansion and other investments) across the sector broken down by location, sector type, capacity, value, companies and operational status.
Illustration of the power industry that exploits our data-rich, in-depth analysis of the leading players in the sector and examination of operational results, strategic goals, market position and the potential for investment.
Power Outlook long-Term Forecasts
Regional long-term power forecasts covering electricity generation, consumption and capacity for thermal, hydroelectric and nuclear power. These are supported by a country specific overview, alongside an analysis of key downside risks to the main forecasts.
Providing BMI’s near-term economic outlook for the region as a whole, as well as taking a close look at countries of particular interest and the latest trends and developments.
The Power Market Reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports, including Energy Information Administration (EIA), World Bank (WB) and United Nations (UN).