Mid-Long Term Market Update: Resale Allowed with Purchase Limits

The Ministry of Economy, Trade and Industry’s (METI) working group advanced discussions on the design of the planned Mid-Long Term Market, which is intended to help electricity retailers meet their obligations to secure physical power one and three years ahead of delivery. The main points discussed in the meeting are outlined below.

The working group discussed allowing electricity retailers to resell purchased products. This would accommodate surplus procurement resulting from demand fluctuations or customer losses. However, retailers’ purchases will be capped at their demand for the delivery year, as purchases exceeding their own demand would be inconsistent with the market’s purpose of securing supply.
Generators may also need to purchase power to substitute for their own generation, but whether to allow them to submit buy bids remains under consideration.
Weekday daytime products will be added to the products generators are required to offer three years ahead of delivery, broadening retailers’ procurement options. Baseload products provide a constant level of power around the clock every day during the delivery period, while weekday daytime products provide a constant level of power from 8:00 to 20:00 on weekdays.
Market participation will be limited to generators and electricity retailers defined as electricity businesses under the Electricity Business Act. The intended participants are the same types of businesses as trading members of the Japan Electric Power Exchange (JEPX). Trading firms that do not fall into these categories will not be eligible.
The market’s geographic scope, including whether it will operate nationwide or by region, will be finalized based on conditions immediately before its launch.

🔍 Shulman Commentary:

The market’s design is taking shape ahead of its planned launch next year. Allowing resale would help retailers manage demand fluctuations, while the question of whether generators can buy replacement power in response to unforeseen circumstances is worth monitoring. The choice between a nationwide market and separate regional markets will have important implications for participants, as it could affect competition and price formation.

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