The global trend to reduce electricity costs for customers by introducing competition does not work in Japan. The reason is that the regional EPC monopolies control the grid and most of the power plants. Any potential competitor will see the risk in trying to compete with someone that controls the grid you need to reach your customers, and can shut you out when your production threatens the profitability of their old thermal power plants. In addition, decisions on investment in new electricity transmission capacity can be influenced by the economic consequences for power plants owned by the same owners as the grid.
In the electricity systems with the lowest costs, the grid is owned and operated by public entities that have no economic interests in power generation.”Legal unbundling” is not sufficient for trust. Only with separated ownership can they be trusted to act in a way that is neutral among all electricity generators. Only then can they work to ensure stable supply of electricity at minimal cost to the industrial and household consumers.
Another grave problem delaying the modernization of Japan’s electricity system is that Japan’s nuclear power plants and their owners cannot economically survive in competition. Not only are the costs for compensating Fukushima impossible to pay by TEPCO if they face competition. The costs of dismantling reactors and manage radioactive waste for centuries will be significantly higher than any funds currently available within the companies.
Experience in other parts of the world is that new solar and wind electricity is not only cheaper than producing new nuclear electricity, but it is outcompeting the cost of continuing to operate existing nuclear plants. Several reactors have been closed in Europe and the USA in recent years for that reason. Unless significant funds are set aside in the companies for waste management companies will go bankrupt as these liabilities appear. Even Germany, the tax payers had to assume responsibility for the long term nuclear waste management a couple of years ago to avoid power companies going bankrupt.
In Japan, the financial situation of the Electric Power Companies with nuclear reactors appear much worse. The expensive struggling to keep reactors operational and restarting some, is so costly that it could have been cheaper to build new renewable generators to get the same amount of electricity as reactors could produce if restarted.
Both these problems would be solved if the government offered the Electric Power Companies in Japan to take over all the nuclear reactors for decommissioning and thereby to take over all the long-term liabilities. In exchange the government should demand that the EPCs handed over ownership of the electricity transmission system. That transmission system could then immediately be operated by a national transmission system operator, and real, transparent and trustworthy competition be possible.
The benefits to the Japanese electricity consumers and to Japan as a country would be significant if the electricity supply could be modernized and real competition was made possible.