Gas sector woes may pressure Japan to pivot to other power sources

This could increase reliance on nuclear power.

Challenges in the gas sector could pressure natural gas-reliant Japan to pivot to other power sources, Fitch Solutions reported. 

In a report, Fitch noted it expects Japan to be amongst the Asian markets that will experience a strain in electricity supply due to the increasing gas prices. 

“As the market increased its dependence on gas, the vulnerability of its power supply to gas price fluctuations and disrupted gas supply has increased,” the report read in part. 

“As a result, the onset of rising gas prices from the Russia-Ukraine crisis has affected Japan’s power market significantly.”

In this light, Fitch projected current conditions to drive a muted growth in Japan’s gas power generation, at an annual average of 0.5% from 2022 to 2031.

Japan’s power mix has been dominated by gas since 2009, during which it accounted for 28.4% of the generation mix. 

The power sector grew rapidly in place of nuclear power following the Fukushima 2011 disaster, bringing the share of gas power to 36.4% in 2011. At the end of 2021, gas power accounted for 40.2% of Japan’s generation mix.