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2 Big Electricity Reforms In Japan

Reposted from Lenz Blog with permission:

Electric wires in Japan.  Image Credit: Shutterstock

Electric wires in Japan.
Image Credit: Shutterstock

The Japanese Cabinet just adopted a decision on energy policy (in Japanese) reflecting the fact that a consequence of the elections last year the former opposition party LDP is now governing. Thanks to this tweet by Hiro Matsubara for the link.

It doesn’t say much about renewable energy, or nuclear energy. Instead, the central points addressed are about organization of the electricity market.

There it calls mainly for two reforms.

For one, Japan will finally get red of the remaining district monopolies for selling electricity to household consumers. Everybody will be free to sell electricity to everyone. This means that a Japanese company could start to sell only renewable energy, as Lichtblick has in Germany after that market was liberalized fifteen years ago.

The policy paper says that necessary legislation to do this should be done in 2014, with a view of starting the new system in 2016.

However, even after liberalizing the market, price control mechanisms are supposed to stay in place for a certain period of time, until there is enough competition to leave pricing to the market.

The other reform is unbundling. As most other countries have already done, Japan will also go ahead and unbundle the functions of generating and delivering electricity. Operation of the grid will be done by a district monopoly company that may not generate electricity, so as to make sure that there are no conflicts of interest and the grid operator is neutral.

Necessary legislation for doing this is supposed to be enacted in 2015, with a view on taking effect between 2018 and 2020.

This all takes a lot of time for something relatively simple to do. There has been ample experience in Europe with this kind of market reform. So I don’t understand why they want to take so much time.

Anyway, the direction of these reforms is to be applauded, though the speed seems to be rather lacking.

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is a professor of German and European Law at Aoyama Gakuin University in Tokyo, blogging since 2003 at Lenz Blog. A free PDF file of his global warming science fiction novel "Great News" is available here.


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