Japanese companies can meet their electricity demand with 90% clean sources on an hourly basis, while lowering system costs, reducing emissions and driving investment in renewables

• In 2030, if 90% of consumption is matched with carbon-free electricity each hour (24/7 CFE), Japan USD can save 1.84 billion annually and 11.5 MtCO2e per year – edging out projections for conventional annual matching
• Under this 90% CFE scenario, offtakers’ emissions intensity is nearly 74%lower than under annual matching 
• Hourly matching CFE at 90% can be delivered at a unit cost of USD 87/MWh, which is cheaper than the average of the national wholesale market prices recorded from 2019 to 2024

London, 08 September, 2025:

New analysis by climate analytics nonprofit TransitionZero finds that 24/7 carbon-free electricity (CFE) procurement can be delivered cost-effectively in Japan, helping industrial consumers meet climate targets and providing net benefits to the power system.

Currently many corporates choose to match their consumption of electricity with renewable energy generation on an aggregate yearly basis, but the analysis shows that the environmental impact is much greater when matching moves to an hourly basis. 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.

According to the modelling, adopting 90% hourly matching makes economic sense. Unit costs for securing PPAs with the ideal mixture of solar PV, onshore wind and batteries do rise when moving from annual matching (USD 56/MWh) to 90% hourly matching (USD 87/MWh). However, 90% hourly CFE is still 23% cheaper than the USD 113/MWh that national wholesale market prices recorded on average from 2019 to 2024*

Japan as a whole would benefit from transitioning to hourly matching. 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. 

The analysis confirms that a final push from 90% to 100% CFE becomes more expensive. 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 innovative thermal technologies are in heavy competition. The analysis shows that 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.

The analysis also reveals the importance of interconnectors. 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, but interconnector capacity must be used efficiently to funnel CFE into heavy load centres.

Matt Gray, Co-founder and CEO at TransitionZero, said:
“Our analysis for Japan shows that if 90% of hourly electricity consumption is matched with carbon-free electricity through PPAs, corporates could cut their emissions intensity by around three quarters compared to annual matching, while still paying cheaper unit costs for their PPA electricity than witnessed on average in annual wholesale price as far back as the pre-COVID year of 2019. Under the same scenario, when corporates amounting to 3% of Japanese adopt 90% hourly CFE, the country as whole could save up to US$1.84 billion annually in fuel costs and reduce emissions by up to 11.5 MtCO₂e, exceeding the gains from annual matching on both fronts.”

Alex Luta, Lead East Asia Analyst at TransitionZero, explained:
“Our findings show that if commercial and industrial players in Japan adopted 90% hourly matching of carbon free electricity against their power consumption, they could reduce their emissions intensity 74% more than under annual matching. We also note with interest that, despite a recent slowdown in renewable capacity expansion in Japan, corporates can nevertheless reduce their emissions by using emerging technologies. Liquid-air storage can cut the need to invest in renewables and batteries by 10 GW. Carbon capture and storage on gas turbines can have a similar impact – but only if70% or more of emissions are stored locally in Japan.”

TransitionZero modelled Japan’s electricity system on an hourly level, for each of the 9 mainland regional grids, accounting for interconnectors. Its model is calibrated to account for observed plant behaviour and incorporates historical trends in capacity additions to obtain a realistic composition of the 2030 capacity mix.

Ends

Download the full report [here].

About TransitionZero
TransitionZero is a climate analytics nonprofit established in 2021. We provide system modelling data, software, and analysis to support energy transition planning. Our tools are used by governments, developers, investors, and think tanks across the globe.

Contact:

Renee Karunungan 
Interim Head of Communications and Marketing, TransitionZero
renee.k@transitionzero.org

Analysis Methodology

TransitionZero's study on the system-level impacts of 24/7 CFE in Japan uses a sophisticated modelling approach to understand how different clean energy procurement strategies affect the grid and procurement costs. It involves running three main scenarios for 2030: a "brownfield" reference scenario (assuming no CFE or annual matching), a 100% CFE annual matching scenario, and various hourly matching scenarios (from 70% to 100% CFE hourly matching). It considers factors like demand growth, technology costs, fuel costs, and national policies to determine the optimal capacity expansion and operation of power plants, storage, and transmission, aiming for a system-wide cost-optimal solution. The study specifically looks at 3% of the national demand shifting to hourly matching. The model explores how different technology mixes (solar, wind, batteries, long-duration energy storage, and innovative thermal**) affect the system's ability to meet CFE targets, costs, and emissions. 

* All costs and prices are expressed as real 2023 USD.

** Includes gas power plants equipped with carbon capture and storage (70% final sequestration rate), coal-ammonia co-firing (20% co-firing ratio), and gas-hydrogen co-firing (10% co-firing ratio).