Japan is leaning on higher nuclear output and ramping up use of coal in power generation as contingency measures in the face of the global energy crisis, but these measures are simultaneously smothering renewables, the Institute for Energy Economics and Financial Analysis said on Monday.
Temporary increased use of coal was decided upon to reduce the need for now-scarce LNG while the restart of some nuclear power plants is also providing additional resilience to supply shocks which have hit Asian nations hardest.
IEEFA said this risks displacing domestic renewable energy which can supply just as much energy security but lower cost and it could also increase curtailment and undermine investment in more renewables, up-ending progress on decarbonization.
Most of Japan's coal imports, about 71%, come from Australia, making it a safe option that reduces exposure to disrupted Middle Eastern logistics, the IEEFA report noted.
But a shortage of diesel for plant operations at J-Power's Matsuura 2 gigawatt coal-fired power station slashed its output by 50% while the JFE Steel Fukuyama facility was halted over a shortage of heavy oil, underscoring that coal is not fully detached from oil and gas's geopolitical risk.
Japan typically imports 4 million tons of LNG that pass through the Strait of Hormuz each year, representing about 6% of its total imports.
As of March, 15 of Japan's 36 nuclear reactors were operating, as that sector recovers from the multiple impacts of the Fukushima disaster.
They generate a combined 37 GW. Bringing the remainder online could cut Japan's LNG needs by 12.5 million tonnes, IEEFA said. Regulatory changes in early April were introduced, facilitating more restarts.
Backing up its argument that more coal and nuclear, both less flexible power sources, could increase curtailment of renewables, IEEFA said that each nuclear restart in Japan has been followed by a reduction in renewables generation.
Curtailments in Japan have risen to 1.9 terrawatt hours by 2023, up from 100 GWh in 2018. In the first half of 2025, curtailments were faster still at 1.7 terrawatt hours for a six-month period.
The fact that output from coal and nuclear can not rapidly be increased or slowed means it can be difficult to make room for renewable supply on the grid when its output rises.
IEEFA said that limitations in Japan's grid infrastructure is an additional constraint that limits absorption of renewable power and led to a situation in March where it curtailed renewables while importing power from abroad.
IEEFA suggests that the addition of battery storage to the grid could go some way to boosting its flexibility.
Curtailment of renewables output has another inherent problem in that it leads to a less favourable economic case for later additions of zero carbon generation capacity, the report said, all the more so because Japan does not compensate renewables suppliers for curtailments, a practice common in Europe.
Developers are adding battery storage as a work-around to that, securing contracts that remunerate battery-discharged electricity instead of directly generated then consumed electricity.
The addition of batteries adds to project costs however at a time when investor interest has yet to turn into large scale deployment, with erosion of revenue support measures a further deterrent, IEEFA said.