JEPX Trading System Complete Guide: Market Participants, Bidding Mechanisms, Block & Stripe Bids

1. Overview of the JEPX Trading System

The Japan Electric Power Exchange (JEPX), established in 2003, is Japan's sole wholesale electricity exchange. Its trading system encompasses multiple market types, bidding methods, and compliance obligations, forming the core infrastructure of Japan's liberalized electricity market.

2. Types of Market Participants

JEPX market participants are classified into two categories: Trading Members and Special Trading Members. Both must pass JEPX's screening and complete registration before trading.

2.1 Trading Members

Participant Type	Primary Role	Typical Bidding Behavior
Power Generators	Supply side	Sell bids
Retail Electricity Suppliers (including new entrants)	Demand side	Buy bids
Former Regional Utilities	Both supply and demand	Both sell and buy bids
Large Industrial Consumers	Demand side	Buy bids
Aggregators	Demand response supply	Sell bids (DR resources)

2.2 Special Trading Members

Special trading members are primarily entities regulated under Article 17(1) of the FIT Act. Different provisions of the trading rules apply to special trading members compared to regular members.

2.3 Membership Registration Requirements

Requirement	Details
Business License	Registered as a power generation business or retail electricity supplier
Security Deposit	Pre-deposit of the amount specified by JEPX (trading suspended if insufficient)
Delivery Contract Registration	Register grid connection contracts or generation adjustment supply contracts for each area
OCCTO Registration	Completion of registration with OCCTO
Trading System Setup	Establish connectivity to JEPX's trading system (API or GUI)

3. Supply-Demand Curve Intersection and Price Clearing Mechanism

The core of JEPX spot market price determination lies in the intersection of the demand curve and supply curve. Understanding this mechanism is fundamental to developing effective bidding strategies.

3.1 Gate Closure and Bidding Timeline

The gate closure for the spot market is 10:00 AM on the day before delivery. All buyers and sellers must submit their bids for each time slot through the JEPX trading system before this deadline. Up to 50 price-quantity combinations can be submitted per time slot.

3.2 Formation of Supply and Demand Curves

• Supply curve (sell curve): All sell bids are arranged in ascending price order, forming a step-function curve rising to the right.
• Demand curve (buy curve): All buy bids are arranged in descending price order, forming a step-function curve declining to the right.

The intersection of these two curves determines the clearing price (system price) for that time slot. All sellers who bid below the clearing price and all buyers who bid above it transact at the uniform clearing price.

3.3 Area Price Differentials

When inter-regional transmission lines become congested, clearing prices may differ between areas, creating area price differentials (エリアプライス). For example, when the Hokkaido-Tohoku interconnector reaches capacity, surplus power in Hokkaido cannot flow to Tohoku, resulting in lower prices in Hokkaido and higher prices in Tohoku.

4. Types of Bidding Methods

4.1 Standard Bid

The most basic bidding method, specifying price and quantity for a single time slot. Up to 50 price-quantity combinations can be submitted per slot. The minimum trading unit is 50 kWh (0.1 MW) per slot, with prices specified to the nearest ¥0.01/kWh.

4.2 Block Bid

Block bids allow participants to bundle multiple consecutive time slots into a single bid, suitable for scenarios requiring continuous supply or procurement over a specific period (e.g., minimum output constraints of thermal generators).

Parameter	Details
Minimum slots	2 or more consecutive slots (1 hour minimum)
Clearing condition (sell)	Volume-weighted average of clearing prices across slots ≥ bid price
Clearing condition (buy)	Volume-weighted average of clearing prices across slots ≤ bid price
Pre-registration	Prior application to JEPX required
Clearing method	All slots clear simultaneously or none clear (All-or-Nothing)

Block bid clearing logic differs from standard bids: even if some slots have clearing prices below the bid price, the entire block clears if the volume-weighted average across all slots meets the bid price threshold. Conversely, if the weighted average falls short, the entire block fails to clear even if individual slots would be profitable.

4.3 Link Block Bid

Added to JEPX on April 20, 2023. Consists of a parent block and a child block. The parent block may clear alone, or both may clear together. The child block cannot clear independently. Suited for master-slave generator combinations.

4.4 Loop Block Bid

Also added on April 20, 2023. Consists of two blocks where both must clear together or neither clears. Suitable for generator combinations that must start and stop simultaneously.

4.5 Stripe Bid

The stripe bid submits bids for all 48 time slots at the same price, while allowing different quantities for each slot.

Feature	Details
Slot coverage	All 48 slots (mandatory)
Price setting	Single uniform price for all slots
Quantity setting	Different quantities can be set for each slot
Clearing method	Each slot clears independently
Primary use	Fulfillment of same-value obligation by retail electricity suppliers

The most important application of stripe bids is as a tool for retail electricity suppliers to fulfill the same-value obligation. By covering all 48 slots with a single uniform price, it dramatically simplifies the compliance process.

5. Same-Value Obligation

The same-value obligation mandates retail electricity suppliers to submit buy bids for all time slots (all 48 slots) in the JEPX spot market, ensuring market liquidity throughout the day.

5.1 Background and Purpose

In the early stages of electricity liberalization, some retail suppliers tended to bid only in low-price slots and rely on bilateral contracts or imbalance settlement in high-price slots. This reduced market liquidity in high-price periods and impaired price discovery. To address this, regulators mandated that retail suppliers submit buy bids for all time slots.

5.2 Specific Requirements

Obligation Item	Details
Bid coverage	All 48 time slots
Bid direction	Buy bids only
Bid quantity	A specified proportion of forecast demand
Exemption	New entrants within 1 year of retail registration may apply for exemption
Non-compliance	JEPX may impose trading restrictions

5.3 Relationship with Stripe Bids

Stripe bids are the most widely used tool for fulfilling the same-value obligation. Retail suppliers typically set the market minimum price (¥0.01/kWh) as the uniform price and submit a stripe bid covering all 48 slots. While this guarantees execution in high-price slots, it achieves the market design objective of providing liquidity across all time periods.

6. Comparison of Bidding Methods

Bidding Method	Slot Coverage	Clearing Method	Primary Use
Standard Bid	Single slot	Independent per slot	General power trading
Block Bid	Multiple consecutive slots	All-or-Nothing	Generator minimum output guarantee
Link Block Bid	Multiple consecutive slots (parent-child)	Parent only, or both together	Master-slave generator operation
Loop Block Bid	Multiple consecutive slots (2 groups)	Both together or neither	Linked generator combinations
Stripe Bid	All 48 slots	Independent per slot	Same-value obligation fulfillment

7. 2026 Trading System Renewal

JEPX plans a major overhaul of its trading system in 2026. Key changes include:

• Spot market: From February 2026, transition from block bidding to single bidding. Each bid will be assigned a delivery code.
• Intraday market: Full migration to the new system from April 2026, with no parallel operation period.
• Fee revisions: Annual membership fee rises from ¥360,000 to ¥2,000,000. Spot market transaction fee falls from ¥30/MWh to ¥1/MWh. Intraday market fee falls from ¥100/MWh to ¥5/MWh.
• GUI discontinuation: Full transition to server-to-server (S2S) data transmission. Participants must develop their own systems or contract third-party providers.

8. Practical Operational Guidance

Strict gate closure management: The spot market gate closes at 10:00 AM the day before delivery. Missed bids directly increase imbalance risk, making automated bidding systems essential for operational reliability.

Block bid weighted average calculation: When using block bids, pre-calculate the volume-weighted average of expected clearing prices across all slots to assess whether the bid price threshold will be met. During periods of high price volatility, entire block bids may fail to clear, creating supply gaps.

Same-value obligation compliance: Retail suppliers should establish automated workflows using stripe bids to ensure daily compliance with the all-slot bidding requirement. Liquidity management must account for the certainty of execution in high-price slots.

Area price monitoring: Real-time monitoring of interconnector congestion is essential for anticipating area price differentials and adjusting bidding strategies accordingly. Areas with limited interconnector capacity — particularly Hokkaido, Shikoku, and Kyushu — require special attention.