The global energy crisis is set to hit Japan particularly hard
World Economic Forum - November 
  • The global energy crisis is hitting Japan particularly hard because it relies on energy imports.
  • The Japanese government is asking people to conserve energy during times of peak winter demand.
  • Japan is now reviewing its energy strategy to lessen its reliance on imports.

The global energy crisis impacts everything from our daily lives to corporate activities. In Japan, there are growing fears that the supply and demand of electricity will be strained this winter. As a result, the Japanese government is asking households and companies across the country to conserve electricity from December 1 until March 31. Although no numerical targets have been set, it is the first time in seven years that people have been asked to conserve electricity during the peak winter demand season.

Reducing energy use

To ensure a stable supply of electricity, the 'electricity supply reserve ratio,' which indicates how much supply capacity is available during expected peaks in electricity demand, should be at least 3% and, ideally, 7-8%. This winter, the minimum level of 3% is said to have been secured nationwide. The government has made this power-saving request to prepare for a sudden increase in power demand due to a drop in temperature or a fall in supply capacity because of possible problems with generators. Another factor contributing to the power shortage is the tight supply and demand of liquefied natural gas (LNG), which is used as fuel for thermal power plants.

The global surge in energy prices triggered by the invasion of Ukraine has dealt a particularly serious blow to Japan, which relies on imports for the majority of its energy resources. According to the Agency for Natural Resources and Energy, Japan's energy self-sufficiency ratio for FY2019 was 12.1%. Among the 36 OECD countries, Japan ranks 35th, a low level.

With soaring electricity bills putting pressure on households and the economic activities of companies, the government has indicated the importance of Demand Response (DR) as one way to motivate people to conserve electricity. It has implemented a support programme that awards points to electricity users participating in power-saving efforts through the DR services of electric power companies. The points, which can be used to pay electricity bills and shopping, are worth JP¥2,000 (approximately $14.00) for individuals and JP¥200,000 (approximately $1,400) for companies.

In addition, the Agency for Natural Resources and Energy has launched a dedicated website on energy saving, introducing households and businesses to ways to save electricity. The Electricity Forecast, which uses electricity demand data provided by electricity companies, is also available on the website. People can check daily power usage and supply for each region of the country at any time.

Urgent need to restructure energy policy

In parallel with the promotion of electricity conservation, Prime Minister Kishida has announced that the nation will operate up to nine nuclear power plants this winter. This will ensure the supply of electricity equivalent to approximately 10% of domestic power consumption. The nine reactors scheduled to resume operation meet the government’s earthquake, tsunami and anti-terrorism safety standards.

While nuclear power generation is one of the most effective ways to ensure a stable supply of electricity, it also faces issues such as safety and nuclear waste. To establish energy security, while promoting carbon neutrality, it will be necessary to reconstruct the overall energy policy, with the main focus solely on accelerating the introduction of renewable energy. Revitalising domestic industries, such as solar panels and storage batteries, which are losing momentum, and increasing energy self-sufficiency may also be an important factor in turning this crisis into an opportunity.

In April 2023, the G7 Climate, Energy and Environment Minister’s Meeting will be held in Sapporo. One of the key issues will be the need to strengthen the supply chain for safe, secure and sustainable clean energy. As the chair, Japan now views this energy crisis as a long-term challenge, not a seasonal one.