Japan's Power Market News 2024/W35

JEPX Introduces Tracking Information for All Non-Fossil Certificates

The full tracking of all Non–Fossil Certificates (NFCs) began earlier this month at the first NFC auction of the fiscal year. Traded via the Japan Electric Power Exchange (JEPX), all NFCs will now include information such as the type of #power generation, the name of the power plant, its location, and if the plant has been operational for less than 15 years. This meets the requirements stipulated by #RE100, a global corporate renewable energy initiative comprising large businesses that have committed to transitioning to 100% #renewable energy.?

NFCs can be divided into three main categories currently depending on their qualities.

1. FIT NFCs have FIT certified renewable energy attributes.
2. Non-FIT NFCs have renewable energy attributes without FIT certification (such as #hydroelectric power generation).
3. Non-FIT NFCs have no renewable energy attributes or are not covered by the FIT scheme, such as #nuclear power generation.

Previously, only FIT NFCs offered tracking information.

New Trading System and Market Implications for NFCs

The trading system will shift to one where buyers can submit their preferences at the time of bidding and allocations will be made according to the agreed price for FIT NFCs and the highest bid price for non-FIT NFCs. If the agreed price is the same, it will be allocated proportionally to the demand quantity. If the preferences cannot be met, the information will be assigned randomly. JEPX also increased its membership fees to JPY600,000 per year from JPY120,000. Transaction fees will be reduced to 0.001JPY/kWh, a 90% reduction on the previous rate, which should encourage trading and raise liquidity.

The demand for NFCs and tracking information is still not high in Japan, but it is likely to become increasingly popular as more companies align with the RE100 initiative. It is likely that there will be a price disparity in certain attributes, as some renewable or decarbonized energy sources may be preferred over others.

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