System Flexibility Is Key: Japan’s Path Towards Renewable Expansion

In new energy modelling released recently, our partner TransitionZero, a leading climate tech and analytics non-profit, finds that Japan could expand renewable energy to 50% of electricity by 2040 without wasting clean power.

In light of the updated targets from Japan’s 7^th Strategic Energy Plan (SEP7), this outcome from the latest scenario-building analysis provides important signals for renewable developers and decision makers. SEP7 aims to increase renewable energy sources to around 40-50% of the national energy mix by 2040. Based on this study, decision makers can find comfort that it is possible to prioritise renewable energy development, which would at the same time lower costs for consumers and reduce the carbon intensity of the grid.

TransitionZero finds that flexibility in energy system configuration is key to ensuring that curtailment risks do not overcome bankability and feasibility of renewable projects.

What are curtailment risks, and why do they matter?

In essence, renewable capacity is ‘curtailed’ when renewable sources, such as wind and solar, are intentionally shut down when aggregate energy supply exceeds demand or grid capacity.

Even if the share of renewables rose in Japan from 16% in 2024 to 50% in 2040, the curtailment rate for renewable electricity generators could stay at 1.5% — virtually the same as today. The perceived curtailment risks associated with renewable energy projects could critically influence policy decisions, i.e., these underlying assumptions can pivotally dictate the fate of renewable projects. Such assumptions are substantiated by official studies made by Organisation for Cross-regional Coordination of Transmission Operators (OCCTO) from all the way back in 2021. Hence, this renewed assessment, using three different scenario set-ups is intended as a timely contribution to tackle underlying assumptions.

Overall findings

●       If Japan reaches 50% renewables by 2040 as per target, a moderately ambitious target, low curtailment rate (~1.5%) – comparable to today’s levels – is realistic subject to sufficient system flexibility being added to the system. Optimising thermal capacity and interconnector flexibility are key to maintaining a low curtailment rate.

●       However, in a very optimistic scenario where renewables Japan’s energy mix reaches the 74% mark (therefore approaching a clean electricity grid), curtailment risks would indeed significantly rise. The most impactful flexibility mitigation measures would include adding flexibility to the operation of the nuclear fleet, expanded interconnector capacity and long-duration energy storage.

Explore in full the overarching methodologies, scenario set-ups and full data analysis at TransitionZero's website:

- Japan could triple its clean electricity without much waste

- A Japan powered by 90% clean energy is achievable only with a flexible system