Electricity Market Reform in Japan: Fair Competition and Renewable Energy

Abstract

In Japan, the Great East Japan Earthquake prompted a major transformation in Japan’s power industry. Electricity market reforms have rapidly progressed to introduce fair and free competition. The reforms also had to respond to the shutdown of nuclear power plants and the need for expanding renewable energy. This chapter discusses reforming Japan’s electric power system to suppress carbon dioxide emissions amid fair and free market competition by introducing renewable energy while avoiding putting supply stability at risk. I first summarize the history of electricity market reform in Japan briefly. I then discuss current issues of the wholesale power market (power generation market) and the retail market from the perspective of fair and free competition. Finally, we discuss the issues of new measures designed to achieve 3E+S, focusing on a non-fossil fuel energy value trading market, a market for baseload power, and a capacity mechanism.