Japan’s power market is undergoing a structural shift, with major implications for coal power operators.

As battery storage growth accelerates and planned grid extensions come online, we project coal-fired generation to become structurally unprofitable by the early 2030s, with operating margins falling into negative double-digit territory.

This new analysis examines the market forces reshaping Japan’s electricity pricing and shows that ammonia co-firing cannot alter coal’s declining financial trajectory.

The report maps pricing trends in eastern and western Japan, evaluates the economics of co-firing versus no co-firing, and examines utilities’ rationale for pursuing an economically unviable strategy.

The evidence points to a coal-to-ammonia pathway driven primarily by transition-risk management, not long-term commercial advantage.

This raises urgent questions about future investment decisions and the need for more economically resilient decarbonisation strategies.