Minister of Economy, Trade and Industry, Mr Kajiyama announced on July 3rd the fade-out of inefficient coal-fired power plants. The Ministry of Economy, Trade and Industry (METI) intends to determine concrete policies by the Subcommittee of the Advisory Committee for Energy Studies after July.
First, let’s look at the concrete policy contents.
Strengthening regulations on the energy conservation law
Inefficient coal-fired thermal power refers to two, Super Critical Pressure (thermal efficiency of around 40%) and Sub-Critical Pressure (thermal efficiency of 40% or less). The Ministry of Economy, Trade and Industry intends to abolish these in 2030 by strengthening regulations on the Energy Conservation Law.
The current Energy Conservation Law requires that the power generation efficiency of new coal-fired thermal power be equivalent to Ultra-Supercritical Pressure (thermal efficiency of more than 40%). By setting new indicators such as “inefficient coal ratio,” it is expected that the inefficient coal-fired power ratio will be zero in 2030. Furthermore, they will set quantitative targets from the 2020s, and are trying to gradually suppress the operation of inefficient coal-fired.
Regarding Hokkaido/Okinawa Electric Power, it is considered that a certain amount of inefficient coal-fired power will remain even after 2030 from the viewpoint of reserve capacity.
Schedule for 2021 (COP26, Basic Energy Plan Revision)
In terms of policy, the announcement made by the Minister of Economy, Trade and Industry can be said to be a movement that looks at the COP26 Glasgow Conference in November 2021 and the Basic Energy Plan Revision. The government has already submitted a national target (NDC=Nationally Determined Contribution) based on the Paris Agreement on March 30, 2020. This content has remained unchanged from the conventional target (reduction target for FY 2030 = -26% compared to FY 2013), and resubmission in 2021 is certainly expected.
This fade-out of inefficient coal-fired thermal power is considered to be one of the means for realizing the deepening of the reduction target to be resubmitted in 2021, together with the revision of the Basic Energy Plan.
Green recovery movement
There are politically different speculations. On June 30, the Liberal Democratic Party Renewable Energy Promotion Council has submitted a request to the Minister of Economy, Trade and Industry Kajiyama for a careful system design for the basic charge on the power generation side. The power generation side basic charge is a system that demands the construction cost burden of the system equipment for the power generation equipment that is newly connected to the power system, and has been discussed for the introduction in 2023.
Since this system is directly linked to an increase in the cost of building renewable energy, local elected lawmakers are opposing to the system to use the construction of renewable energy sources as a catalyst for regional development.
This fade-out of inefficient coal-fired power will further promote the construction of renewable energy power sources including offshore wind power. It is considered that politicians and bureaucrats turned to the post-Corona to promote investment and promote regional development through green recovery.
JERA vs J power/local power/joint thermal power
What can not be overlooked is the internal conflict in power industry. Inefficient coal-fired thermal power is unevenly distributed in J-power, local power, etc., and JERA and Kansai Electric Power have only Hekinan coal-fired thermal power units 1 and 2 (total 1.4 million kW). In particular, JERA has a large amount of gas-fired power, so it is a well-known fact that JERA has systematically aimed to reduce coal-fired power.
In 2020, while the power demand has been weak due to corona damage, new construction of coal-fired thermal power is being made everywhere. Noshiro No. 3 (Tohoku Electric Power: 600,000 kW), Shin Takehara No. 1 (J Power: 600,000 kW), Kashima No. 2 (J Power, Nippon Steel: 640,000 kW), Nakoso IGCC (540,000 kW)… Due to the effects of these new coal-fired power plants, the amount of power generated by gas-fired power plants has been forced to shrink.
This time, Mr. Kajiyama, Minister of Economy, Trade and Industry, has made a big move due to such various thoughts of politics, bureaucracy, and industry. J power and local power have already shown strong resistance, but many will not change.
The big swell toward decarbonization has begun without waiting for the US presidential election in November. The power system reform has begun to move again with the decarbonization.