Danish energy trading company InCommodities has executed its first power futures trade in Japan, marking its entry into the Asian energy market.

The trade, completed on 22 February 2024, is part of the company’s strategy of establishing a foothold in the country.

The Goldman Sachs-backed business will capitalise on its expertise in European and US markets and access Japan’s substantial energy consumption potential.

The Danish energy trader has been positioning itself within the Japanese market following the establishment of a subsidiary in the country in 2022.

The company plans to open an office in Tokyo as part of its long-term commitment to the region.

Japan is one of the largest power markets in the world, with an annual energy production of 1,000 terawatt-hours, exceeding the combined output of the UK, Spain, Italy and the Netherlands.

The power market has been gradually opening to competition since the mid-1990s, achieving full liberalisation of its power retail market by 2016.

InCommodities’ decision to enter this market aligns with the strategies of energy majors such as BP, RWE and Shell.

The rise of renewable energy production in Japan has led to regulatory changes that introduce new risks for market participants.

Owners of renewable assets face challenges such as price volatility and the intermittent nature of solar and wind energy.

The company plans to offer balancing services to renewable asset owners, particularly for feed-in-premium projects, to help mitigate these market risks.

Since its founding in 2017 in Aarhus, Denmark, InCommodities has concentrated on the European and US energy markets.

Bloomberg recently reported that Vitol Group, a European energy and commodity trading company, is exploring opportunities to enter the Japanese electricity trading market.

It is considering the establishment of a Tokyo office to engage in physical electricity trading.