Modelling 24/7 Carbon Free Electricity in Japan

Detailed modelling shows Japan can meet demand with 90% clean power while cutting costs and driving renewables growth

System Modelling

24/7 CFE

Summary

Despite new targets in Japan's Seventh Strategic Energy Plan to raise renewables to 40-50% of all electricity generation by 2040, the expansion of renewable capacity has actually slowed down in recent years. At the same time, global supply chains are putting pressure on Japanese companies to fundamentally shift in how they procure clean energy: from annual matching to hourly-matched 24/7 carbon-free energy (CFE) — ensuring that electricity demand is met with clean sources every hour of the day.

Using a detailed, open-source model of Japan’s power system, we examined how 24/7 CFE could affect grid planners and corporate buyers. We focused on one scenario: if 3% of Japan’s electricity demand were met with 24/7 CFE by 2030, what would this mean for costs, investment, and emissions?

The results show that Japan can achieve 90% 24/7 CFE at competitive costs, saving up to USD 1.84 billion annually in avoided fossil fuel expenses and cutting emission intensity by 74% for participating companies compared to annual matching.

Japan's clean energy ambitions

In February 2025, the Japanese government formalised its Seventh Strategic Energy Plan, setting a goal to raise the share of renewables to 40–50% of total electricity generation by 2040. Alongside this near doubling of renewables relative to today, the government also plans to restart parts of its nuclear fleet and decarbonise thermal generation.

Japan is the world’s fourth-largest economy, driven by high-tech industrial sectors whose exports are recognised globally. This presents both opportunities and challenges as the country transitions to an electricity grid increasingly powered by low-cost variable renewable energy (VRE).

At the heart of this transition is Japan’s ability to produce 24/7 carbon-free energy (CFE) — electricity that matches demand with clean generation hour by hour — to meet the expectations of international consumers purchasing Japan’s high-value exports. As energy planners and grid operators work to integrate more VRE, and as companies prepare for upcoming updates to the Greenhouse Gas Protocol (GHGP) favouring hourly emissions accounting, the central question is: what exactly is 24/7 CFE, and what does it cost?

What is 24/7 carbon free energy?

Wind and solar, the cheapest sources of clean energy today, are variable by nature. Electricity consumers seeking to decarbonise their electricity use with VRE face a persistent mismatch between when clean power is generated and when it is needed. The dominant approach to procuring and accounting for emissions reductions is based on ‘annual matching’. This involves corporations matching their consumption of electricity with the supply of clean electricity over a year – which results in cycles of surplus and deficit, and fossil-based generators must be relied upon to pick up the slack, introducing emissions. If rather than matching electricity use with electricity from carbon free sources on an annual basis, we instead move to hourly matching, we can move closer to a decarbonised grid.

This approach is a central focus of the GHGP, which governs how companies account for emissions from purchased electricity, and is in the process of a multi-year revision of its standards. While hourly emissions accounting is emerging as the preferred accounting method, the GHGP does not set targets or grade performance.

How well a consumer is meeting their 24/7 CFE goal can be summarised by their CFE score for any given hour. This is calculated by looking at what percentage of their generation comes from carbon free sources, and considers both the generation from CFE power purchase agreements (PPAs), as well as the CFE score of imported electricity from the grid. In the case of Japan, this considers each of the nine mainland grid zones as having distinct hourly CFE scores. To calculate the scores, we follow the methodology set out by Google.

What are the cost, investment and emission implications of a 24/7 CFE for Japan?

We built a detailed, open-source model of Japan’s electricity grid to explore the implications of 24/7 CFE for corporate buyers and grid planners. Specifically:

What does switching from annual to hourly matched procurement mean for corporate buyers from a cost and supply perspective?
What are the costs and benefits of this change in procurement strategy for the grid i.e. does it increase or decrease costs, investments and emissions?

Model setup

To answer these questions, we developed an open source grid dispatch or production cost model in the Python for Power System Analysis (PyPSA) modelling package. We modelled Japan’s electricity system 8760-hour temporal resolution and with 9-node spatial resolution, accounting for interconnectors. With this model, we were able to test different levels of 24/7 CFE with different generation technology configurations, or palettes, to understand the cost, investment and emissions implications. Our methodology replicates the approach used by Brown and Riepin (2022). For more information on the methodology, please refer to our modelling methodology documentation.

Our 2030 demand projections reflect multiple sources of change from today, either through our in-house modelling or by incorporating forecasts from local authorities. On the supply side, present-day capacity has been supplemented with expected additions, drawing on historical trends, reported project developments, restarts of nuclear reactors, and anticipated capacity from upcoming auctions. Under these assumptions, solar capacity increases by 23%, onshore wind by 66%, and offshore wind expands significantly from less than 1 GW today to 3.4 GW by 2030. We also allowed PyPSA to build new capacity endogenously, though the assumed 2030 capacity is already sufficient to meet projected demand in our Reference Scenario.

Within this model, we assigned 3% of the total grid zone demand to commercial and industrial consumers participating in clean electricity matching, then combined the grid-zone level results to see the big picture across the whole Japanese power sector, including generation, storage, transmission and distribution.

What we found

High levels of 24/7 CFE deliver major savings

Under the 90% hourly matching scenario, the renewable build-out saves annually USD 1.84 billion dollars’ worth of fossil fuel consumption – more than the USD 1.8 billion under annual matching. If corporates were to aim for higher shares of hourly matching, system-wide benefits would also increase, reaching nearly USD 3 billion annually under 100% matching.

Hourly matching CFE at 90% can be delivered at a unit cost which sits below the average national wholesale market prices recorded since 2019. Hourly matching CFE at 90% can be delivered at a unit cost which sits below the national wholesale market prices recorded since 2019. The abovementioned fuel savings are a key enabling factor: when PPA assets generate CFE in excess of their offtakers’ load, this excess can be sold on the wholesale market. This revenue lowers the PPA unit costs that offtakers must pay by offsetting any potential procurement costs from the wholesale market when PPA generation falls below the offtakers’ load.

Emissions reductions at CFE 90

If on average 90% of consumption is matched with CFE each hour, offtakers’ emissions intensity falls to nearly 74% lower than under annual matching – 72 gCO2/kWh compared to 273 gCO2/kWh. Notably, total nationwide emission cuts are slightly higher than under annual matching, mirroring previously mentioned savings on fuel costs.

Moving from 90% to 100% CFE comes with higher costs — but new tech could help

The analysis confirms that the final push from 90% to 100% CFE requires more substantial investment, as the model must add not just renewable capacity to meet peak CFE demand, but also battery capacity to ensure that demand is met every hour of the year - even when renewable generation is down.

That step requires annualised system-wide capital expenditure on renewables and storage to rise from USD 3 billion to USD 5.7 billion. However, these costs fall considerably if dispatchable technologies like liquid air energy storage (LAES) and gas with carbon capture and storage (CCS) are included – as much as USD 1.7 billion under 100% CFE.

Long-duration energy storage and CCS are in heavy competition

The analysis shows that carbon capture and storage (CCS) can contribute to lowering costs, but only if as much as 70% of combustion CO2 is sequestered in Japan. Lower performance or storage abroad, for instance in Malaysia, where the Japanese government has signed Memoranda of Understanding, severely dent the attractiveness of CCS and favour LAES. Ammonia or hydrogen co-firing are not yet attractive in 2030.

Interconnectors are critical for clean energy delivery

In big demand centres, such as the Tokyo, Kansai and Chubu regions, the required uptake of renewables exceeds recent historical trends. Fortunately, peripheral regions hold sufficient renewable resources to meet the assumed demand nationwide Even before considering the potential impact of batteries, on their own there are sufficient solar and onshore wind projects that have already been licensed by the authorities but have not yet been commercially commissioned to help meet CFE demand in heavy load centres during 95% of all hours of the year. Importantly though, interconnector capacity must be used efficiently to funnel CFE into these heavy load centres. Further work is required to explore this aspect of the system in greater depth.

New tech can help in overcoming zonal-level renewable constraints

In certain regions, the potential renewable buildout towards 2030 for CFE purposes is highly constrained as the commissioning of new plants has historically outpaced the licensing rate for new projects. To assess the realistic renewable uptake in each zone, we examined a set of sensitivities in which we set an upper limit on solar and onshore wind deployment. Here, we assumed a doubling of the licensing rate for these technologies to simulate a more supportive policy environment that would enable 24/7 tracking of CFE. We have left storage and innovative thermal technologies completely unconstrained.

Under this configuration, our modelling shows that CCS becomes necessary to address zonal constraints on renewable new-build. This happens even under annual matching conditions and when sites for the final sequestration of CO2 are located abroad in Malaysia. As the system progresses toward CFE 100, energy storage emerges, but the volumes are significantly lower compared to the original TP1 scenario, where renewable capacity was more restricted.

24/7 CFE supports emissions reductions at lower cost

Our modelling shows that hourly matching froma CFE score of 90% onwards starts outperforming annual matching on almost every metric — from cost efficiency to emissions reduction. Even with just 3% of nationwide demand participating in 24/7 CFE, Japan can unlock significant system-wide fuel savings, emissions reductions, and renewable investments.

By adopting hourly-based clean energy procurement today, Japanese policymakers, grid operators, and corporates can reduce costs, drive investment, and enhance energy security — while staying competitive in global low-carbon markets.

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