Power Market Deregulation and Japan’s Nuclear Industry

2014 ended as it began, with all of Japan’s nuclear reactors switched off. The first nuclear restarts are expected later this year, however Japan’s energy market is reforming; it is in the process towards full market liberalisation. Japanese utilities, which have held positions as regional monopolies are starting to look at partnerships to develop their business in the liberalised market; several new entrants are also joining the market. Liberalisation of the retail market will take place between 2016 and 2018 and unbundling will happen between 2018 and 2020.

There are already examples of changes taking place amongst some of the top players in the Japanese energy market:

Kansai Electric and Tokyo Gas

In light of the changing market, two of Japan’s primary utility companies, Kansai Electric and Tokyo Gas entered into negotiations in December 2014. Discussions ensued towards cooperation over two areas of mutual-interest; fuel for thermal power generation and the building of a power plant in Tokyo. As each company aims to maintain their current monopolies in order to establish their positions in the new market, both sides have an area of mutual interest; expansion. Whilst operations of nuclear reactors remain suspended, this partnership and continued cooperation will impact efforts towards cutting costs and increasing company presence.

Hitachi and ABB

Also in December 2014, Japan’s Hitachi and Swiss firm ABB announced plans for a joint venture to market power transmission equipment. With each firm recognised as a global leader in electrical equipment using advanced technologies, this venture will integrate respective specialities in order to penetrate the Japanese market. Benefiting from electricity reforms across Japan in the wake of the Fukushima incident, this venture aims to create and sell high voltage systems within the Japanese market that will transmit electricity across regions.


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Article by British Embassy Tokyo Climate Change and Energy Team, February 2015.