February 7 (Wednesday): Power sources eligible for participation in the Capacity Market Main Auction
In this blog, I have been discussing the Capacity market in Japan's power system since two days ago, following the complete liberalization of the electricity market. Today, I would like to briefly summarize the power sources eligible for participation in the main auction of this Capacity market.
Looking at the results of the Capacity Market Main Auction conducted in the fiscal year 2023 (targeted actual demand-supply fiscal year: 2027), the total contracted capacity was 167.45 million kW, with a total contract amount (including transitional measures) of 1.314 trillion yen. Area prices were as follows: Hokkaido (13,287 yen/kW), Tohoku (9,044 yen/kW), Tokyo (9,555 yen/kW), Chubu (7,823 yen/kW), Hokuriku/Kansai/Chugoku/Shikoku (7,638 yen/kW), Kyushu (11,457 yen/kW), and Hokkaido and Kyushu showed relatively high results.
The Capacity Market Main Auction is conducted to secure a stable generation capacity, anticipating the actual demand-supply of the entire domestic power in Japan four years later. There are four types of power sources eligible for participation in this main auction: stable power sources, variable power sources (standalone), variable power sources (aggregate), and dispatchable instruction power sources.
Stable power sources include thermal, nuclear, hydro (limited to adjustable or reservoir types), hydro (limited to pumped-storage with a generation time of 3 hours or more), batteries (with a discharge time of 3 hours or more), geothermal, biomass, and waste. Among these, stable power sources are those that provide a stable supply of power with an expected capacity (the maximum value of the capacity that can be expected as the supply capacity in the supply area, subtracting factors such as on-site demand power and output reduction due to external temperature) of 1,000 kW or more.
Variable power sources (standalone) include hydro (excluding those that can provide a stable supply), wind, and solar. Among these, standalone variable power sources are those that individually provide an expected capacity of 1,000 kW or more. Here, hydro (excluding those that can provide a stable supply), wind, and solar are often decentralized power sources. Even if the individual expected capacity is less than 1,000 kW, by combining these natural variable power sources, a power source that can provide a supply capacity of 1,000 kW or more is referred to as a variable power source (aggregate) and is one of the power sources eligible for participation in the main auction. This creates business opportunities in Japan for aggregators combining natural variable power sources.
The last type, dispatchable instruction power sources, refers to demand response (DR), power sources with an expected capacity of 1,000 kW or more that cannot provide a stable supply, and sources that, when combined, provide a supply capacity of 1,000 kW or more, even if the individual expected capacity is less than 1,000 kW.
The bidding rates for the classification of national power sources in the fiscal year 2023 implementation were as follows: stable power sources had a bidding rate of 97.4%, and variable power sources (standalone), variable power sources (aggregate), and dispatchable instruction power sources all had a bidding rate of 100%, resulting in an overall bidding rate of 97.6%.