Japan's Power Market News 2023/W3

Japan is still counting on hydrogen to decarbonize the power sector.?

One pillar of Japan’s long-term power sector decarbonization plan is using low-carbon hydrogen/ammonia “clean fuel” in existing and newly built fossil fuel power plants. In its 6th basic energy plan, METI expects 1% of power generation to come from hydrogen and ammonia in 2030 and 10% in 2050. Former utilities are on board, with JERA and J-Power making clear their intentions to procure and co-fire hydrogen and ammonia in their power plants.?

JERA has a demonstration ammonia co-firing plant at its Hekinan power station and, in 2022, issued tenders to procure low-emission ammonia internationally. The Diamond online reported that JERA has short-listed ten companies for those long-term procurement contracts and is studying the proposals.?Elsewhere, Tohoku Electric, Iwatani, and Toshiba have built a research facility to produce hydrogen from solar power. And J-Power is exploring hydrogen production from coal gasification in Australia. Chugoku Electric has also made public its intention to rely on hydrogen and ammonia to decarbonize its generation mix but has yet to take any concrete action.?

Finance is being made available. The Green Investment Fund has been subsidizing research projects to produce hydrogen and the development of supply chains to import it from abroad. More recently, the government’s planned 20-year subsidy for low-carbon generation assets has been updated to include co-firing plants of at least 100MW and projects related to hydrogen supply in Japan. In December, a senior delegation from METI and leading Japanese power companies visited Oman and Saudi Arabia. While the primary purpose of the visit was to sign long-term LNG supply deals (with JERA and other Japanese companies), a memorandum of cooperation on hydrogen and ammonia was also signed.?

?The long-term goal of importing substantial volumes of hydrogen and ammonia to Japan is still very much on METI’s radar, even though questions remain over the feasibility of such a strategy. It would be wise for the major power generators and METI to have a sound “plan B” if the low-carbon hydrogen approach proves unsound.?

Sources: Interview of JERA CEO by the Diamond Online, January 7th, METI’s commission plan on 20 years support mechanisms, December 21st, METI’s visit to Oman, December 27th, METI’s visit to Saudi Arabia, December 27th

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