Japan’s retail electricity market: frequently asked questions from foreign entrants
In April 2016, the Japanese electricity market was fully opened to retail-level competition. This brought significant change to a power market — one of the largest in the world — which had previously been dominated by 10 power utilities, each of which held a regional monopoly over retail electricity sales. Since the market opening, over 400 new Japanese companies have registered to become electricity retailers, introducing significant new competition into the market.
With the reform program gaining pace, a number of foreign electricity retailers have also now obtained licenses to commence retail electricity sales in the Japanese market. As such companies introduce their home market experiences and practices into Japan, this is also bringing additional change in the Japanese retail sector. Given the size of the Japanese electricity market and the relatively high electricity prices in Japan, further interest in the market from foreign electricity retailers is expected.
In this alert, we look at some of the common questions asked by foreign companies wishing to enter the Japanese retail electricity market and outline a number of key issues for such companies.
- Can foreign companies become electricity retailers in Japan?
- Who are the licensing authorities and what are the key laws?
- What is the procedure to obtain an electricity retailer license?
- Are existing utilities obliged to allow new retailers to use their networks?
- Does a wholesale electricity market exist, and if so, how well developed is it?
- Future outlook
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