Japan NFC Auction Sells Out at ¥1.3/kWh Ceiling With Nuclear Certificate Bids Nearly Double Supply

Japan NFC Auction Sells Out at ¥1.3/kWh Ceiling With Nuclear Certificate Bids Nearly Double Supply JEPX's FY2025 fourth-round non-FIT auction cleared entirely, with purchase bids for nuclear-category certificates reaching 3.7 TWh against 2.0 TWh of available supply. Every non-FIT NFC that JEPX offered in its FY2025 fourth-round auction sold at the maximum price of ¥1.3/kWh, with purchase bids for certificates without renewable attributes reaching about 3.7 TWh against contracted supply of just 2.0 TWh.⁴ That mismatch matters for Japan's power procurement market. Contracted volume for non-FIT NFCs without renewable attributes, the category covering nuclear generation, roughly doubled from the previous round, yet bids still ran nearly twice as high as available supply. Non-FIT NFCs with renewable attributes also cleared entirely, with contracted volume rising about 28% to 1.05 TWh.⁴ The FIT NFC market told the opposite story. Contracted volume there fell 5% to about 18.0 TWh, with only around 22% of offered volumes contracted despite maximum prices holding unchanged. Japanese power buyers are not short of certified generation broadly; they are specifically short of non-FIT, non-subsidised attributes.⁴ The distinction carries weight for corporate sustainability programmes. Non-FIT certificates are treated by many large buyers as a more credible demonstration of clean procurement than FIT equivalents, which carry subsidy associations. Nuclear accounts for only around 9% of Japan's generation mix, according to OilPrice.com, while natural gas at roughly 32% and coal at 28% remain dominant fuels.¹ Reactor restarts are advancing, but slowly enough that certificated supply is not keeping pace with demand. Japan sources around 98% of domestic gas demand from LNG imports, and disruption to regional LNG supply has pushed utilities toward heavier coal burn. ICIS senior gas analyst Fei Xu said Japan's increased coal generation displaced roughly four LNG cargoes in April alone, according to market data cited by Kyodo.¹ Structural constraints on alternative low-carbon sources compound the scarcity. Land-use regulation limits solar deployment on abandoned farmland, and weak transmission lines make it difficult to move renewable generation to demand centres, according to The Economist. Those frictions narrow the pool of non-FIT certificates available from wind and solar, channelling corporate demand toward nuclear.² OCCTO, the national grid operator, has put forward two proposals reflecting how tight procurement has become. One would raise the share of capacity withheld from the main auction to 3% from the current 2%, following analysis showing around 3% of capacity procured in past auctions has exited before the delivery year. A second would increase the bidding cap for dispatchable resources to 5% of forecast peak demand from the current 4%, after strong recent participation from such resources. Neither change directly expands NFC supply.⁴ Data centre investment adds a longer-term dimension. Wood Mackenzie forecasts that Japanese data centres will consume as much electricity as 15 million to 18 million households by 2034, accounting for 60% of total power demand growth as hyperscalers deploy US$28 billion following the government's selection of Oracle, Google, and Microsoft as preferred cloud partners.³ Hyperscalers rank among the most aggressive buyers of verified low-carbon certificates globally. If that demand materialises at scale, the current certificate shortage will look modest. When the ¥1.3/kWh ceiling clears for a second consecutive auction with bids nearly double supply, the price signal has become a rationing device. Whether JEPX raises the ceiling, increases allocated volume, or adjusts auction design before the fifth round will determine whether the same outcome repeats.⁴