The energy supply crisis triggered by the conflict involving Iran is by no means a temporary phenomenon. In 2022, Russia’s invasion of Ukraine led to a sharp rise in natural gas prices, which had a major impact on Japan as well. Electricity tariffs increased significantly, rising by more than 7 yen per kWh, approximately 45 dollars per MWh, over the course of the year, placing a heavy burden on both businesses and households due to higher costs.
Although the government introduced emergency subsidies to curb tariffs, they have still not returned to previous levels (Chart 1). With the current conflict in the Middle East, not only oil but also natural gas prices are expected to rise, making another increase in electricity tariffs inevitable. Since fuel costs are reflected in electricity tariffs with a lag of three to five months, higher rates are expected to appear starting with the June billing cycle.
Excluding Renewable Energy Surcharges and tax. Including discounts under the government support program for High Voltage and Low Voltage (FY2022 – 2025).
Source: Renewable Energy Institute based on the Electricity and Gas Market Surveillance Commission “Electricity Transaction Reports”
Nearly 70% of Japan’s electricity is generated by thermal power using fossil fuels. Until this situation changes fundamentally, electricity consumers themselves need to take measures. The most effective approach is to make a corporate PPA (Power Purchase Agreement) to purchase electricity generated from domestic renewable energy under a long-term contract.
The cost of renewable energy, particularly solar power, has been declining in Japan. With an “On-site PPA,” in which building owners provide rooftops or other spaces to install solar power systems, electricity can be purchased at a unit price lower than standard electricity tariffs (Chart 2). These contracts are typically for 20 years, and since the unit price is fixed, they offer the advantage of stabilizing electricity procurement costs over the long term. Moreover, they generate no CO₂ (carbon dioxide) emissions, thereby contributing to climate change mitigation. On-site PPA projects are expanding beyond large corporations to include small and medium-sized enterprises, as well as municipalities and universities.
Electricity tariffs for FY 2025 are the average from April 2025 to January 2026. Including discounts under the government support program for High Voltage and Low Voltage electricity rates (FY2022 – 2025).
On-site and off-site PPA costs are estimates by Renewable Energy Institute (as of February 2026) and may vary depending on factors such as the scale of the generation facilities and site conditions.
On-site PPA costs assume cases where mounting structures are not required. Off-site PPA costs include wheeling fees and retail service fees.
Source: Renewable Energy Institute based on the Electricity and Gas Market Surveillance Commission “Electricity Transaction Reports”
If solar power systems cannot be installed on-site, there is the option of “Off-site PPA,” in which a developer builds generation facilities at a remote location and the electricity generated is purchased under a long-term contract. Off-site PPAs are also typically 20-year agreements with fixed pricing.
When compared with high-voltage electricity used in office buildings, the unit price of off-site PPAs is roughly on par with the national average electricity tariffs. They are not affected by fluctuations in fossil fuel prices and do not emit CO₂. In addition to helping companies meet their CO₂ emissions reduction requirements, off-site PPAs offer the advantage of stabilizing electricity costs, which has led to an increase in the number of such contracts (Chart 3). Companies that have already signed these agreements will be able to curb rising electricity costs over the long term. If a large share of electricity demand can be covered by both on-site and off-site PPAs, it will create a system that is less vulnerable to the impacts of energy crises.
Counted by Renewable Energy Institute based on news releases with consumer names disclosed.
Categorized by the year the contract was announced, not necessarily corresponding to the year the contract commenced.
Source: Renewable Energy Institute
However, corporate PPAs have several challenges. For off-site PPAs, it is necessary to secure suitable sites that do not face local opposition and to proceed with planning early, given the time required for grid connection (especially for high-voltage and special-high-voltage). For special-high-voltage electricity used in large-scale factories, electricity tariffs are relatively low, which often makes off-site PPA costs comparatively higher. In regional areas, companies typically need to rely on local developers to implement on-site or off-site PPAs, but for smaller developers, securing the operating capital required over a 20-year period can be difficult. Support from national and local governments is therefore essential.
＜Related Links＞
Corporate PPA: Latest Trends in Japan (10 March 2026)
Middle East Crisis Highlights Japan’s Energy Risk: Now Is the Time to Accelerate the Transition from Fossil Fuels
Strengthening Energy Self-sufficiency Through Renewables, Efficiency, and Electrification (17 April 2026)
