A revisiting of 2021 Japanese electricity spot market dysfunction event: How it happened and what can we learn from it?

Hong-Zhou Li, Lin-Lan Bu, Maria Kopsakangas-Savolainen and Mika Goto

Energy Policy, 2025, vol. 206, issue C

Abstract: In January 2021, despite the absence of natural disasters, Japan's electricity spot market experienced a significant dysfunction lasting more than 40 days. During this period, prices surged from 10 JPY/kWh to 251 JPY/kWh, an unprecedented event in Japan's electricity market's history. Research indicates that this incident is causally linked to the design of relevant institutions, which not only failed to provide effective hedging mechanisms but also exacerbated the negative impact of exogenous factors on the electricity spot market. Specifically, the primary causes include an imperfect pricing mechanism for unbalanced power, inadequate systems for information collection and disclosure, potential cross-subsidies within incumbent power companies, and impractical market risk diversification mechanisms.

Keywords: Japanese electricity spot market; Unbalance power price; Dysfunction event (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S030142152500309X
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:206:y:2025:i:c:s030142152500309x

DOI: 10.1016/j.enpol.2025.114802

Access Statistics for this article

Energy Policy is currently edited by N. France

More articles in Energy Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().