BY JAPAN NRG
Japan may be approaching a turning point in electricity retailing. More than a decade after full liberalization, over 800 businesses hold retail electricity registrations, but about 250 have no confirmed electricity supply record. Some are genuinely dormant. Others entered the electricity business primarily to trade power, rather than compete for household or commercial customers.
The distinction is important. The government is tightening registration requirements, preparing to withdraw registrations from businesses that remain inactive without justification, and developing new rules intended to encourage electricity retailers to secure supply further in advance. At the same time, competition is shifting toward companies with the financial strength and trading capabilities to operate across increasingly complex electricity markets.
The likely result is a decline in the number of registered retailers. But that should not necessarily be interpreted as the collapse of retail competition. Rather, Japan may be entering a phase in which the gap between companies licensed to sell electricity and those actually competing for customers becomes harder to maintain.
We examine why Japan’s retail licensing system is under scrutiny and what will determine the winners and losers in the next shakeout.