Publication date: Oct 2, 2026
Mid-Long-Term Market Update: Trading Areas and Mandatory Generator Offers
The planned Mid-Long-Term Market will allow electricity retailers to procure power one and three years ahead to meet their supply capacity obligations. The Mid-Long-Term Market Design Working Group (WG) recently advanced discussions on two key elements of the planned market: how trading areas should be defined and how mandatory offer requirements should apply to generators.
Trading areas and price formation
The WG discussed dividing the market into multiple trading areas, such as eastern and western Japan, with separate buy and sell bids in each. METI considers that a multiple-market structure could reduce price-spread risk if market-splitting patterns are properly reflected in the design of the trading areas. Each market would use the regional area with the largest total demand as its reference area. The structure aims to form a reliable electricity price benchmark as retailers fulfill their obligations to secure supply capacity.
Generator offer obligations
The WG also discussed which generators would be subject to mandatory offer requirements. Nine incumbent utilities plus JERA and J-Power (all with at least 5 GW of generation capacity) must offer 10% of their electricity sales into the market. The proposal would extend this requirement to generators in which a covered utility or its parent holds more than 50% of the shares or ownership interests.
Generators would offer five-sevenths through the three-year-ahead product and two-sevenths through the one-year-ahead product. The one-year-ahead volume will remain unchanged from the volume calculated three years ahead, although plant retirements and unplanned outages would be considered. Mandatory offering periods would last one month and be held four times a year.
🔍 Shulman Commentary:
The fixed one-year-ahead offer volume is intended to give generators greater certainty and facilitate planning for bilateral sales, while improving the predictability of supply available through the Mid-Long Term Market. The final grouping of regional areas will influence the number and composition of market participants within each trading area, as well as the extent to which market prices reflect regional supply-demand conditions and market-splitting risk. Retailers and generators will need to assess how the eventual market boundaries affect their procurement and sales strategies, particularly where their portfolios span multiple regional areas.
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