Overview and History of the Japanese Electricity Market
Japan is the largest energy market open to competition in the world with over 80 million customers. After having undergone many changes, the market finally got liberalized in 2016. Nevertheless, the price of electricity is still relatively high compared to other developed countries.
Let’s have a quick look at Japan’s energy market and its history.
Overview of the Electricity Retail Market in Japan
A Bit of History
After Japan opened its boarders to the West in the 19th century, the country rapidly became industrialized. In order to support the growth of the different industries, an urgent need for a tremendous amount of electricity arose. Many Japanese corporations started to invest in energy supply, and as a result, about 60 private electricity companies co-existed in the early 1920s.
As a result of the rapid rise in the energy market, the utility industry was already in a competitive and liberalized context in the early 20th century. After the infamous Kanto earthquake in 1923, smaller electric utility companies were integrated into larger and wealthier corporations, until there were 5 major electric utility companies left, including Tokyo Dento, the parent organization of today's TEPCO.
Aiming to reinforce the electric power supply for the war, the government later started to restrict and control the generation and distribution of electricity by private companies. In 1938, National Mobilization Law was legislated by the Diet and all strategic industries were under the control of the government. In other words, the electric utility industry became nationalized.
Our English-speaking advisers will help you compare, subscribe and save on your energy
- Free - Our services are free to customers!
- All in English - No more language barrier!
Our English-speaking advisers will help you compare, subscribe and save on your energy
- Free - Our services are free to customers!
- All in English - No more language barrier!
Our English-speaking advisers will help you compare, subscribe and save on your energy
Just leave your telephone number, we will call you!
Free callback service
Our English-speaking advisers will help you compare, subscribe and save on your energy
Just leave your telephone number, we will call you!
Free callback service
After the 2nd World War, the Allied Powers completely reconstructed the Japanese system on the basis of other nations' political and economic systems. It is at this time that the 10 regional electric companies that we will see bellow got re-privatized. Still, the competition was limited since these companies were only able to supply power in their respective areas.
The case of Okinawa is particularly unique because the region belonged to the U.S. until 1972. They implemented a separate entity which is not linked to the other 9 utility companies. Even nowadays, there are only a few retailers that can supply electricity in the remote islands of the Okinawa area.
In brief, the Japanese electricity market used to be liberalized before the 2nd World War, then became nationalized during the war period, and finally re-privatized after the war. However, this postwar privatization was far from a competitive, liberalized market because each of the 9 enterprises monopolized their local electricity market.
The 10 Major Electricity Retailers
Until the present reform of the market, which has stood in place since 2016, these 10 major electric companies held a monopoly in their local regions; said another way, these companies were not able to sell electricity in regions other than their own.
Our English-speaking advisers will help you compare, subscribe and save on your energy
- Free - Our services are free to customers!
- All in English - No more language barrier!
Our English-speaking advisers will help you compare, subscribe and save on your energy
- Free - Our services are free to customers!
- All in English - No more language barrier!
Our English-speaking advisers will help you compare, subscribe and save on your energy
Just leave your telephone number, we will call you!
Free callback service
Our English-speaking advisers will help you compare, subscribe and save on your energy
Just leave your telephone number, we will call you!
Free callback service
The list of the 10 utility companies is as follow;
|
Abbreviation |
Full Name |
Area of Operation |
|---|---|---|
| CEPCO | Chugoku Electric Power Company | Tottori, Shimane, Okayama, Hiroshima, Yamaguchi, Hyogo, Kagawa, Ehime |
| CHUDEN | Chubu Electric Power | Aichi, Mie, Gifu, Shizuoka, Nagano |
| HOKUDEN | Hokuriku Electric Power Company | Gifu, Toyama, Ishikawa, Fukui |
| HEPCO | Hokkaido Electric Power Company | Hokkaido |
| KYUDEN | Kyushu Electric Power | Fukuoka, Saga, Nagasaki, Oita, Kumamoto, Miyazaki, Kagoshima |
| KEPCO | Kansai Electric Power Company | Osaka, Kyoto, Hyogo, Nara, Shiga, Wakayama, Fukui, Gifu, Mie |
| OKIDEN | Okinawa Electric Power Company | Okinawa |
| TEPCO | Tokyo Electric Power Company | Tokyo, Kanagawa, Saitama, Chiba, Tochigi, Gunma, Ibaraki, Yamanashi, Shizuoka |
| TOHOKUDEN | Tohoku Electric Power | Aomori, Iwate, Akita, Miyagi, Yamagata, Fukushima, Nigata |
| YONDEN | Shikoku Electric Power Company | Kagawa, Kochi, Tokushima, Ehime |
The 2011 Fukushima Incident and its Consequences for the Electricity Market
The infamous Fukushima nuclear disaster of 2011 brought about many changes for the Japanese Electricity Market. Only a year after the catastrophe, all but two nuclear reactors had been shut down. The percentage of energy supply in Japan powered by nuclear energy dropped from 30% before 2011 to almost 0 in 2014, causing a national debate on the Japanese energy policy. The share of renewable energies, especially biomass, increased significantly and so did the use of liquified natural gas and coal. Still today, the Japanese population has a strong anti-nucear sentiment and only 5% of household are fully powered by electricity.
Our English-speaking advisers will help you compare, subscribe and save on your energy
- Free - Our services are free to customers!
- All in English - No more language barrier!
Our English-speaking advisers will help you compare, subscribe and save on your energy
- Free - Our services are free to customers!
- All in English - No more language barrier!
Our English-speaking advisers will help you compare, subscribe and save on your energy
Just leave your telephone number, we will call you!
Free callback service
Our English-speaking advisers will help you compare, subscribe and save on your energy
Just leave your telephone number, we will call you!
Free callback service
Two Separate Power Grids: An Inconvenient Peculiarity of the 19th century
The Eastern part of Japan was importing generators from Germany, which used a frequency of 50Hz, while the Osaka region were using American generators, which the frequency standard was 60Hz. As a result, the Japanese territory became divided into two power grids that operate on different frequencies of energy, making it impossible to share electricity across the grids in case of an emergency.
The Great East Japan Earthquake and the Fukushima Incident in 2011 revealed the weaknesses in the system of that time. The aftermath prompted a thorough market reform which eventually led to the market we know today in Japan.
Our English-speaking advisers will help you compare, subscribe and save on your energy
- Free - Our services are free to customers!
- All in English - No more language barrier!
Our English-speaking advisers will help you compare, subscribe and save on your energy
- Free - Our services are free to customers!
- All in English - No more language barrier!
Our English-speaking advisers will help you compare, subscribe and save on your energy
Just leave your telephone number, we will call you!
Free callback service
Our English-speaking advisers will help you compare, subscribe and save on your energy
Just leave your telephone number, we will call you!
Free callback service
The Liberalization of the Electricity Market in Japan
The Timeline of the Liberalization
Although the structure of the modern energy market in Japan was finalized in April 2016, the reform for liberalization started almost 20 years ago.
As early as March 2000, the first reform took place for entities that use a massive amount of electricity. Large structures such as hospitals and shopping centers were now able to buy electricity from retailers outside of the 10 aforementioned corporations.
A few years later, in 2004 and 2005, the deregulation of the market expanded to high voltage customers, such as small or medium-sized building and factories.
Finally in April 2016, households and small businesses could also benefit from the liberalized market, when the competition allowed retailers to sell low voltage electricity for homes and small shops.
The establishment of a fully deregulated market in April of 2016 enabled individual customers in Japan to choose their electricity utility provider according to their budget and desired method of power generation.
Our English-speaking advisers will help you compare, subscribe and save on your energy
- Free - Our services are free to customers!
- All in English - No more language barrier!
Our English-speaking advisers will help you compare, subscribe and save on your energy
- Free - Our services are free to customers!
- All in English - No more language barrier!
Our English-speaking advisers will help you compare, subscribe and save on your energy
Just leave your telephone number, we will call you!
Free callback service
Our English-speaking advisers will help you compare, subscribe and save on your energy
Just leave your telephone number, we will call you!
Free callback service
Is Energy Production also opened to Competition?
One has to understand that the electricity market includes four main steps:
- The Production or Generation
- The Transmission
- The Distribution
- The Retail
Since April 2016, the retail sector has been fully opened to competition, meaning that the customers can choose from who to buy their electricity from, among a long list of providers in Japan (for example, a person living in Tokyo can choose between around 200 companies offering denki plans).
On the other hand, the activities of transmission and distribution of electricity remains under a regional monopoly with regulated tariffs. The reason why these two sectors did not get deregulated is straightforward: it would not make sense to buy another network to distribute and transport the current products. The networks' operators are responsible for maintaining frequency and for providing last resort services in case of emergency.
Lastly, the generation of power is open to competition but those companies have to be registered according to a determined process.
