Japan's Power Market News 2022/W31

Higher transmission charges expected in Japan.

On July 25th, ten Japanese T&D companies published their five-year business plans for 2023-2027. The common denominator across all ten regions is a forecast increase in transmission and distribution costs and charges. The average expected increase in the unit price (￥/kWh) is 10% for Super High Voltage, 15% for High Voltage, and 11% for Low Voltage, with Chugoku and Hokuriku likely to have the highest increases. The companies cite the maintenance of aging infrastructure and increasing penetration of renewable energy as the main reasons for the higher costs, which they say need to be passed on to users. The Asahi Shimbun quotes an average loss of ￥428billion per year if wheeling (transmission) charges are not increased.?

The operators are asking METI to review and increase transmission charges accordingly. The numbers will have to be reviewed by an expert committee at METI before approval. The increases would likely come from an expected introduction of transmission charges for generators (transmission charges are currently only paid by retailers). This measure was first expected in the fiscal year 2023 but has been postponed to FY2024.?

With the increasing integration of renewable power and limited storage capacity, grid operation and maintenance costs are likely to continue upward, even after 2027.

Higher T&D charges will inevitably be passed on to end consumers. Asahi Shimbun estimates that the average household could see its monthly electricity bill increase by 480￥. Commercial and industrial customers will also be hit.

Sources: The 10 T&Ds request an increase in transmission charges; Asahi Simbun July 26th

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