Success Strategies in New Japanese Electric Power Market

Deck: 

Part 3 in a Series on Electric Power in Japan

Fortnightly Magazine - November 2016
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Japan has embarked on a remarkable transformation of its energy markets, as described in the first two articles in this series, which appeared in the August and October issues of Public Utilities Fortnightly.

Some of the greatest changes to date have been those to the regulatory regime surrounding its electric power sector. Competition is being introduced at both wholesale and retail levels through functional unbundling of generation from transmission, distribution, and retail elements in the electric power value chain.

These market changes will create a cascade of effects throughout the electric power sector. Functional unbundling will expose the standalone profitability of the generation and retail arms of incumbent vertically-integrated electric power companies.

Such unbundling should prevent cross-subsidization from the regulated transmission business. This will help local electric power companies steer new investments into the most productive and profitable areas, and will quite naturally help them position themselves in the liberalized market.

Market changes and the post-Fukushima retirement of nuclear plants will create market entry opportunities in the wholesale power generation sector, particularly for fossil and renewable generation. In the retail sector, a wide variety of new business models and non-traditional service providers will begin to compete with the incumbent power companies.

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