Blog June 11, 2019

On 28 March 2019, a new 300 megawatts (MW) interconnection started operation between the Hokkaido and Tohoku service areas in Japan. Although there is a 600MW connection between Hokkaido and Tohoku since the 1970s, this line was primarily built to handle emergency situations and not for regular power transmission use. 

Map of Japan and Hokkaido-Tohoku interconnection capacity expansion
Figure 1: Map of Japan and Hokkaido-Tohoku interconnection capacity expansion.
Figure 2
Figure 2: OCCTO-published transmission data on Hokkaido/Honshu interconnector collected by Genscape and visualized on PowerRT platform, from June 2018 to June 2019. 

This new 300MW capacity expansion allows greater power transmission usage from Hokkaido to Tohoku. The Hokkaido region has large areas of land and resources for renewable energy expansion, but low electricity demand. With greater interconnection capacity between Hokkaido and Tohoku, more solar and wind plants on Hokkaido can send their power to larger demand centres in Tohoku and Tokyo.

In Figure 2, the Genscape PowerRT platform shows the availability and usage of the line. Our data shows power flow from Hokkaido to Tohoku consistently increased since the line started use in late March. As Hokkaido enters lower power demand season in May, we can clearly see growth in electricity sent to Tohoku as major plants lower production.

Figure 3 shows the Naie coal plant located in Hokkaido reduced production almost directly in line to the opening of the new transmission capacity on 28 March.

Figure 3
Figure 3: Genscape PowerRT panel showing monitored generation of Naie Caol Plant in Hokkaido. Plant availability (orange line) and actual plant production (blue line).

Much of the focus on this new transmission capacity was on reducing curtailment of renewables and unifying the 50 hertz (hz) eastern Japan power markets. More recently, the government hopes it will assist with security of supply in case of blackouts like the one that hit Hokkaido on 6 September 2018, which was covered in our blog: “Hokkaido Earthquake Grid Blackout Visualised with Genscape’s PowerRT.

How were prices impacted during the short time since the capacity expansion? 

Hokkaido service area price in JPY/kWh from Oct 2017 - June 2019
Figure 4: Hokkaido service area price in JPY/kWh from Oct 2017-June 2019 as reported by JPEX and downloaded from Genscape database.

Figure 4 shows prices for an 18-month period to June 2019. Prices after 28 March fell compared to the same period the previous year. There were price spikes in October 2018 compared to the previous year with the start of indirect auctions for capacity on this line, as well as with the recent heatwave in Japan during the last week of May. 

The government is considering further expansion plans for the Hokkaido interconnection. Figure 5 shows that Option 1 has the best cost and benefit ratio. This option is lower cost than other options because it uses the existing undersea tunnel for the interconnection line.

Figure 5
Figure 5: Different options for Hokkaido-Tohoku interconnection expansion as presented by the Ministry of Economy Trade and Industry on 16 May 2019.

In addition to reducing expected renewable energy curtailment in the Hokkaido region down to 3.5 percent, it will also further the integration of the 50hz eastern Japan greater power market and contribute to reduced power prices in the long term.

Genscape data and solutions such as Japan PowerRT and EPSI for fundamental modelling offer insights into events like these to provide understanding and trading opportunities to market players.