Fuel market and nuclear power drawing attention

In 2025, supply/demand of power is expected to change depending on movements of the fuel market and nuclear power generation. The Organization for Cross-regional Coordination of Transmission Operators, Japan (OCCTO) estimates that supply reliance would become low in the Tokyo area in October and November, when maintenance for power plants including thermal power plants would concentrate, and supply/demand might tighten if demand rises due to troubles at power stations and a change in temperatures. Under such circumstances, the stable structure to supply power based on steady procurement of fuels and operations of nuclear power plants is needed. Further, as prices for power greatly fluctuates depending on supply/demand, hedge by using the futures market for power might become more active.

The energy mix in Japan is changing with the ratio of renewable energy rising and LNG is playing a great role to adjust power generation. Therefore, the power market is forecast to significantly influenced by supply/demand of LNG. Since a scorching heat, a cold wave, a change in procurement situation caused by production troubles at facilities are predicted, Strategic Buffer LNG (SBL) would be important. In the crude oil market, concerns about geopolitical risks arising from the Middle East and Ukraine situation would likely continue. However, players should also pay attention to production cuts by OPEC Plus consisting of OPEC and non-OPEC members. Regarding coal as a fuel for power generation, supply is anticipated to continue decreasing as more coal mines would be closed and prices are forecast to hover high. In the US, President-elect Donald Trump might fundamentally overturn the energy policy established by the Joe Biden administration and the energy market situation might completely change.

In 2025, the 820 megawatt (MW) No.2 unit (BWR) at the Shimane nuclear power station of Chugoku Electric Power would start commercial operations in January. The unit loaded fuels in October 2024. After the restart, Chugoku Electric Power would be the fourth power company that is operating nuclear power stations in West Japan, following Kansai Electric Power, Shikoku Electric Power and Kyushu Electric Power. In addition, Tokyo Electric Power is expected to load nuclear fuels into a nuclear reactor at its 1,356MW No.6 unit (BWR) at the Kashiwazaki Kariwa power station in Niigata prefecture in June 2025. However, as the Niigata prefecture does not agree with the restart, the specific restart schedule is still undecided. For the No.6 unit, the detailed restart plan was approved in September 2024 and inspections for safety regulations are ongoing. Meanwhile, for the 1,356MW No.7 unit (BWR) at the power station, fuels were loaded in April 2024 and the Post-fuel loading soundness verification was completed by June 2024.

As for power futures trading in Japan, the Intercontinental Exchange (ICE) entered the market in December 2024 and trading volumes are forecast to increase further in 2025. At the European Energy Exchange (EEX), which holds a dominant share in the futures market, trading volumes in 2024 until end-November almost quadrupled from the previous year at 18,299GWh. In February 2025, the fiscal-year trading starting in April and ending in the next March is going to be listed and the EEX futures market would likely be even more liquid. At the Tokyo Commodity Exchange (TOCOM), hedge accounting is anticipated to be accepted more with the JJ-Link, integrated service of physical and futures markets introduced in 2024. This is expected to encourage players to enter into the futures market.