Tokyo Gas Co Ltd, for example, Japan’s biggest city gas supplier, aims to grab a 10 percent share of the retail power market in the Tokyo metropolitan area by 2020, doubling its power generation capacity to 3,000 megawatts. They plan to either build their own generation plants or buy off others and act solely as retailers. The lure of selling directly to the retail market spurred more than 300 companies including Panasonic Corp and Nissan Motor Corp to register with the government to sell power independently since the Fukushima disaster.
Independent power sellers, which often offer lower rates and consumer friendly plans, have been limited to 4 percent of the market by what they say are onerous operational restrictions.
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The shortcomings in setting up a national grid will make it harder to open up the power market to full competition, say officials at companies looking to enter the industry, while grid limitations could restrict the ability of independent power sellers to help drive down prices. “The organization does not have the full power to make and implement plans,” said Kanemoto, currently a professor at the National Graduate Institute for Policy Studies.Īn official at the Ministry of Economy, Trade and Industry, which is implementing the reforms, says it has included people from outside the power monopolies in the new grid organization to loosen the utilities grip on the market. The grid company’s incoming president Yoshitsugu Kanemoto does not pull his punches about the challenges he faces. Only 1.2 gigawatt can be transferred, about the capacity of one large nuclear reactor, and current plans are to increase this only by an extra 0.9 GW at a cost of 190 billion yen ($1.7 billion), according to a trade ministry official. Japan is the only country in the world with two electricity frequencies and needs transformers to switch power between east and west. The body’s lack of power means the new company will be unable to force the country’s 10 regional monopolies, which control generation and distribution within their regions, to boost interconnections to establish a true national grid.
The main remit of the grid company, which is scheduled to start operations next April, has been restricted to ensuring reliability of supply in emergencies. The original government aim was to set up a company that could guarantee equal access to all participants.īut plans to give the nationwide grid management body more control over the system of distribution and transmission lines were scaled back, amid lobbying from Japan’s power utilities. TOKYO, Oct 22 (Reuters) - After the Fukushima disaster crippled Japan’s nuclear energy sector three years ago, the government pledged the biggest shake up in the history of the fragmented electricity industry to boost competition and contain a surge in power prices.īut a first crucial phase of Prime Minister Shinzo Abe’s plan - to set up a national grid company to allow new suppliers to sell electricity to the residential sector - has been watered down so much that even people directly involved in creating or running the body say it will not have enough power to succeed.
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