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There has been a lot of interesting takes on Japan's wholesale power market price rally, including this wonderful thread by @SStapczynski I am looking forward to analysis by @miho_kurosaki team. In the mean time here is my personal take on the good, the bad and the ugly: https://twitter.com/SStapczynski/status/1346303814459039746
The good: after all the regulatory changes made over the last 8 years, and despite several unanticipated current physical challenges, the system is still operating fine. Congrats to all the unsung heroes at @METI_JPN 電力システム改革室 と @occto_jp 皆様、大変ご苦労様でした!
The bad: this price response is out of proportion relative to the scale of the unanticipated physical challenges. Japan is not experiencing anything close to the 2013-14 Polar Vortex that at its height knocked out 22% of @pjminterconnect supply, yet the price response is similar.
The ugly: EGC (電カ・ガス取引監視等委員会) will find out what happened. My hunch is two preventable issues are the cause: 1) many buyers on JEPX i.e., electricity retailers, seem to be using very rudimentary hedging strategies that can easily mess up.
The thin volume of Japan electricity futures trading on EEX and TOCOM supports this argument. This experience will likely help the retailers improve.
2) More importantly, Japan's power market in general and JEPX specifically, still lacks sufficient level of data transparency.
2) More importantly, Japan's power market in general and JEPX specifically, still lacks sufficient level of data transparency.
The type of power supply (e.g., coal, gas, solar,...) nor identity of the supplier is not disclosed on JEPX. Even more problematic is long-term PPA data is not disclosed. This is like a stock buyer not knowing how many shares are floating and who are the major shareholders.
@fsa_JAPAN would never allow any @JPX_official exchange to operate like that. Hopefully @METI_JPN and @occto_jp will go back to reviewing all the data disclosure requirements @FERC has and start adopting similar measures. 効率的市場仮説を忘れないでください！
