Publication date: Oct 28, 2025  Mid-Long Term Market to Adopt Continuous Trading for One-Year Delivery

Mid-Long Term Market to Adopt Continuous Trading for One-Year Delivery

The Working Group (WG) on System Design based on the Review of Power System Reforms has been discussing the institutional design of Japan’s Mid-Long Term Market. The following are the main discussion points and decisions made in the latest WG:

– Since the new market requires retailers to secure 50% of their expected demand three years in advance and 70% one year ahead, whether the delivery period for products traded in the market should be multi-year (e.g., three years) or single-year has been one of the key discussion points. The WG decided that the new market will adopt a continuous trading market (called ‘zaraba’ in Japanese) that allows transactions for one-year delivery periods, for three years, and one year ahead. As in bilateral contracts, the price per kilowatt-hour will include both fixed and variable costs.

– Products will be standardized, while operators should meet specific procurement through bilateral contracts. For the initial period after market launch, power generators above a certain scale must submit sell bids. The specific supply obligation volume will be further discussed, taking into account the need to preserve flexibility for generators to maintain existing bilateral contracts.

– Products traded three years ahead of actual delivery will primarily consist of base products that ensure a constant supply of electricity, and mid-load products will provide weekday-only or time-specific supply to help secure minimum load demand. For products traded one year ahead, the focus will be on mid-load products, while base and peak products will also be considered to meet demand fluctuation needs as delivery time approaches.

In the upcoming meetings, the WG will also discuss delivery and settlement methods, market monitoring and operation frameworks, and the relationship between this market and other markets, such as the capacity market.