Japan's power utilities under pressure Report

Insight 16 November 2016

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Report summary

Japan's 10 former regional power monopolies have had a difficult few years with nuclear issues and commodity price volatility. The latest challenge came after the country's retail power market was fully liberalised in April 2016. Competition is hitting Japan's power utilities as their customers switch to new suppliers. But it's not just retail competition the power utilities need to worry about. New coal, gas and solar additions along with potential nuclear restarts mean a sharp increase in generation capacity. So Japan's power utilities face growing retail and wholesale competition in an electricity market that has recently shrunk.

Executive summary
- Competition is hitting power utilities as their customers switch to new suppliers
- Nuclear uncertainty hasn’t been resolved – and coal is the back up plan
- Subsidised renewable developments likely to add to Japan's overcapacity
- Japan's power generators will need less LNG overall with more flexibility in supply arrangements
- There are some positives
Competition is starting to bite in Japan's retail power market
- Over 2 million retail customers have switched away from the incumbent to a new supplier
- Power utility margins will be squeezed as customers look for the best deal
Weak power demand and growing capacity will hit generators
- Nuclear restarts could boost profitability, but worsen Japan's overcapacity issue
- Japanese utilities are looking to coal
- Japan's power utilities will need LNG flexibility to manage increased uncertainty
Japan power utility report card

Tables and charts

This report includes the following images and tables:

Japan Electricity Demand
Japan Generation Capacity Outlook
Japan's power utilities under pressure: Image 8

Japan's power utilities under pressure: Image 1
Incumbent power company zones
Switching rates by company
Japan's power utilities under pressure: Table 2
Japan's Nuclear Fleet
List of nuclear reactors that Wood Mackenzie expects to restart or begin operations
Contracted LNG by power company
Japan forecast gas for power generation