Last Updated July 22, 2019

Law and Practice

Authors



Nagashima Ohno & Tsunematsu is one of the foremost providers of international and commercial legal services based in Tokyo. The firm has over 450 lawyers, including over 30 experienced foreign attorneys from various jurisdictions, and its overseas network includes offices in New York, Singapore, Bangkok, Ho Chi Minh City, Hanoi and Shanghai, and collaborative relationships with prominent local law firms throughout Asia and other regions. The firm regularly advises leading power utilities, trading companies and investors on their energy projects as well as regulatory matters, and financial institutions on financing on those projects. The firm has dealt with a number of renewable power projects since the introduction of the feed-in tariff in Japan. The firm represented Tokyo Electric Power Company Group on establishing an alliance platform with Chubu Electric Power Co, Ltd in the fuel and power business (including the establishment of a joint venture company, JERA).

In Japan, an electricity retailer procures electricity by way of entering into a power purchase agreement with an electricity generator or through an electricity wholesale market, and JEPX is the electricity wholesale market in Japan. Trades available in JEPX as wholesale of electricity are (i) spot market trading, (ii) forward market trading, (iii) intraday market trading and (iv) OTC trading. At the date of writing, there is no futures market in Japan.

Spot market trading is trading of electricity supplied on the next day after a trade date, where the minimum trading unit is 30 minutes and 0.5 MW, and the trading price is determined through a 'blind and single-price auction'. Under a blind and single-price auction, wholesale market participants submit a bid for purchasing or selling electricity by 10am on the trade date and the trading price is fixed at the highest price at which all demanded electricity will be cleared.

Forward market trading is trading of electricity supplied for a certain period starting on a day that is two or more days from a trade date, where traded time periods are one week, one month and one year, and orders are continuously executed in strict price and time priority (an order entered into the system at an earlier time must be executed in full before an order at the same price entered at a later time is executed).

Intraday market trading is trading of electricity supplied on a day for which the spot trading is closed, where the minimum trading unit is 30 minutes and 0.5 MW, and orders are continuously executed in strict price and time priority.

OTC trading is usually employed for trading a small amount of electricity that does not satisfy the thresholds for spot or intraday trading.

In addition to the above, the base-load market began in July 2019, which is a wholesale market of electricity generated by a nuclear power plant, a traditional large-scale hydro power plant, a coal-fired power plant or a geothermal power plant (also known as 'base-load electricity') to electricity retailers. Major Utilities (except for The Okinawa Electric Power Company) and J-Power are required to offer base-load electricity to the base-load market by no less than a certain amount calculated by a prescribed formula to secure retailers’ access to base-load electricity.

In principle, there are no price regulations on electricity wholesale. However, in order to secure competition on an equal footing between Major Utility retailers and other retailers, wholesale trading of electricity generated by Major Utilities is monitored and scrutinised so that their price will not be unduly expensive.

Nagashima Ohno & Tsunematsu

JP Tower
2-7-2 Marunouchi
Chiyoda-ku
Tokyo
Japan
100-7036

+81 3 6889 7000

+81 3 6889 8000

info@noandt.com www.noandt.com
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Authors



Nagashima Ohno & Tsunematsu is one of the foremost providers of international and commercial legal services based in Tokyo. The firm has over 450 lawyers, including over 30 experienced foreign attorneys from various jurisdictions, and its overseas network includes offices in New York, Singapore, Bangkok, Ho Chi Minh City, Hanoi and Shanghai, and collaborative relationships with prominent local law firms throughout Asia and other regions. The firm regularly advises leading power utilities, trading companies and investors on their energy projects as well as regulatory matters, and financial institutions on financing on those projects. The firm has dealt with a number of renewable power projects since the introduction of the feed-in tariff in Japan. The firm represented Tokyo Electric Power Company Group on establishing an alliance platform with Chubu Electric Power Co, Ltd in the fuel and power business (including the establishment of a joint venture company, JERA).

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