Publication date: March 14, 2025
JEPX Sees Higher Demand for NFCs
The results of the third round of the Non-Fossil Value Trading Market for FY2024 became available in February this year. Contracted volume for Feed-in-Tariff (FIT) Non-Fossil Certificates (NFCs) increased 31.7% to 15,342.98 GWh in the Environmental Value Trading Market, a new record high.
In the ‘Market for Achieving Energy Supply Act Obligations’, the contract price for non-FIT NFCs reached the upper limit of JPY 1.3 for both types (‘no renewable energy designation (mainly nuclear-derived)’ and ‘with renewable energy designation’) due to limited supply, and all the bid volume for sale was contracted. The high price of non-FIT NFCs came as a surprise to those involved, highlighting the need for policy measures, such as using surplus FIT NFCs to offset insufficient non-FIT NFCs.
JEPX Sees Higher Demand for NFCs
Background on Japan’s Non-Fossil Value Trading Market
The Agency for Natural Resources and Energy (ANRE) opened the Non-Fossil Value Trading Market on the Japan Electric Power eXchange (JEPX) in 2018 with the aim of increasing the non-fossil power generation ratio in the total power generation. The NFCs that are traded certify the environmental value of electricity from non-fossil sources, including renewable energy and nuclear power. Purchasing NFCs allows companies to be recognized for indirectly lowering their CO2 emissions related to electricity use.
Currently, there are two markets for NFCs in Japan:
- Environmental Value Trading Market: Allows participation from power consumers, retailers, and brokers to buy FIT NFCs.
- Market for Achieving Energy Supply Act Obligations: Primarily for retailers to purchase non-FIT NFCs to fulfill obligations under the Act on Sophisticated Methods of Energy Supply Structures.
Auctions are held four times each fiscal year (August, November, February, May).
Shulman Advisory has also released the latest Non-Fossil Certificate Auction Results, providing further insights into market trends and pricing. Feel free to check out the report here.
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