Insight by Volue Releases Extended Version of its Japan Forward Product

In a developing power market like Japan, future contracts are gaining traction as the need to hedge price volatility risk rises. Insight by Volue’s forecasts aim to serve as impartial reference of the future delivery price, providing evidence of fundamental shifts in energy supply and demand dynamics, regulatory policies, and the appearance of new technologies. Therefore, two months after launching the Forward market product in Japan, Insight by Volue has extended its forecast to 5 year-ahead and additional features to account for critical market dynamics.

Key changes in Japan's power futures market

The future power market in Japan is experiencing remarkable growth, particularly evident in the surge in trading volumes on the European Energy Exchange (EEX), which accounts for 92% market share in Japan’s futures market. Between 2022 and 2023, trading volumes in GWh have surged 2.7 times, and the volume in MW of open interests have doubled. By the end of 2023, EEX reported that seasonal contracts accounted for 43% of the total volume, representing a doubling from the previous year. This development was driven by the increased adoption of EEX power futures to hedge Fiscal Year 2024 (FY24) physical exposures.

Monthly contracts have emerged as the most liquid trading contracts, consistently setting new volume trading records. In the first quarter of 2024 alone, monthly trading volume reached an impressive 16.3 TWh, equivalent to 89% of the total trading volume for the entire year of 2023 (18.3 TWh).

Approaching the greener 2030 supply mix deadline

Japan's energy landscape has seen a transformative shift, with the government's fiscal 2030 plan emphasising on sustainable practices. Electricity demand is projected to increase to 864 TWh. The Japanese government has set ambitious targets for its energy supply mix, aiming for renewables to rise to 36%-38% from the level of FY2019, while maintaining nuclear power at 20%-22%. Japan aims to minimise its reliance on LNG and coal, reducing its usage from 37% and 32% in 2019 to 20% and 19%.

The accelerating decarbonisation and increasing renewable penetration will reshape the Japanese future power market, introducing higher risks due to flexibility requirements.

Insight by Volue offers enhanced analysis tools for proactive risk management

Insight by Volue's forecasting product offers market analysis with API integration and a user-friendly app interface. The Japan Forward product was first launched in February. “In the extended release in April, we have prioritised customer feedback, enhancing our market dynamics pages like ‘Price and Product’ and ‘Historical Analysis’ to be more user-friendly and insightful based on their input. Additionally, we have introduced two new pages, ‘Model Inputs’ and ‘Spreads’", says product owner Phuong Minh Khuong Hud. These updates ensure that the Insight by Volue platform evolves in tandem with our customers' needs, providing unparalleled value and usability.