Over 1.3GW of assets were awarded a one-year pay-as-bid capacity payment in Japan’s first supplemental auction held as part of the country’s capacity market, the Organization for Cross-regional Coordination of Transmission Operators (OCCTO) announced on July 10, 2024.
The supplemental auction is a part of Japan’s capacity market designed to adjust secured capacity upward (procurement auction) or downward (“release” auction) as necessary based on the status of projects awarded capacity payment in the market’s Main Auction. While the Main Auction is held four years in advance of delivery, the supplemental auction is held one year before the capacity is to be supplied.
Japan held its first Main Auction in FY2020 for power plants to be available in FY2024. No supplemental auction to adjust this fiscal year’s was held in FY2023. The first supplemental auction was held to adjust capacity awarded in the FY2021 auction, which awarded contracts for FY2025 delivery.
The first supplemental auction was limited to the Hokkaido, Tokyo, and Kyushu TSO areas, where OCCTO determined more capacity needed to be secured due to outages exceeding target numbers. It awarded bids for capacity to be provided in FY2025 as follows:
- Hokkaido: 584,890kW at 13,761 yen/kW
- Tokyo: 295,081kW at 3,495 yen/kW
- Kyushu: 453,361kW at 5,029 yen/kW
The awarded capacity was split among 18 companies. The majority of the capacity awarded in Hokkaido and Kyushu went to the respective area’s incumbent utility with Hokkaido Electric Power winning 560MW and Kyushu Electric Power 365MW. Enel X Japan was, at 215MW, awarded the third highest capacity, presumably accounting for over two thirds of the capacity awarded in the Tokyo area. The other bidders were awarded less than 15MW on average.
Combined with the Main Auction held in FY2021, Japan secured 161.45GW across the country’s nine mainland TSO areas for FY2025 through the Capacity Market.
