Energy / Climate Change

November 28, 2015


New Power Companies Soar in Japan in 2014, Increase of 1.8 times from 2013

Keywords: Energy Policy 

Figure: Newly established power companies in Japan

Tokyo Shoko Research Ltd. announced on August 27, 2015, the results of a survey on newly established power companies in Japan in 2014. A total of 3,283 power corporations were established in 2014, a significant increase of up to 1.8 times from the previous year, and about 50 times that of 2011 (66 companies).

The number of new power companies began to rise after the nuclear plant accident caused by the Great East Japan Earthquake in March 2011, and the introduction of the Feed-in Tariff Scheme of renewable energy in July 2012 accelerated the growth. The increase amount had remained about 30 companies per year until 2010, but expanded to 1,797 in 2013. The number of new companies then exploded in 2014 due to the last-minute applications for incorporation in response to the reduction in the buyback price of renewable energy from April 2015.

Meanwhile, the buyback price has been lowered in stages, as the fixation of prices in the Feed-in Tariff Scheme is thought to have led to an overall rise in electricity rates. In 2014, power companies suspended purchasing of renewable energy, and this resulted in great confusion in the electric utility industry.

The Feed-in Tariff Scheme needs to be reviewed. However, power companies are also facing new challenges to reach agreements on costs. Those who lack a future image for their business will be weeded out, and thus, the political backup of the government has become an important factor in the future development of this scheme.