Publication date: July 14, 2025 METI to Mandate Retailers to Secure Part of Supply Volume (kWh) From Three Years Ahead

METI to Mandate Retailers to Secure Part of Supply Volume (kWh) From Three Years Ahead

METI’s Working Group (WG) on System Design Based on the Review of the Electricity System Reform has proposed a new system that would require electricity retailers to secure a certain proportion of their future electricity supply volume (kWh) in advance, with the aim to curb sharp fluctuations in electricity market prices and to stabilize electricity rates. The WG proposed the following:

• Retailers must secure 50% of projected demand (kWh) three years ahead
• Retailers must secure 70% of projected demand (kWh) one year ahead

Under the current Electricity Business Law, retailers are obligated to secure the necessary supply capacity (kW) to meet the electricity demand of their customers (Article 2, Section 12). Upon their registration, retailers are required to show that they are likely able to secure the necessary supply capacity to meet demand.

On the other hand, the current issue is that even if supply capacity (kW) is secured, an increasing portion of retailers’ procurement is done through spot markets, resulting in sharp price fluctuations. To address this, an integrated approach to securing both installed (kW) and volume-based (kWh) supply is considered necessary. Such an approach would also improve the predictability of electricity sales (i.e., revenues) for power generators, enabling them to maintain long-term fuel procurement contracts and facilitating investment in generation capacity.

Additionally, the WG will discuss possibly establishing a Mid to Long Term Market, including futures, forwards, OTC, brokered trades, corporate PPAs, etc. There is no specific timeline for the implementation or the decision-making regarding this proposal yet, but the WG will continue to meet and discuss the details of the new requirement for retailers and a Mid to long-term market.