3 WHY JAPAN IS NO-LONGER A FRONT-RUNNER: DOMESTIC POLITICS …
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appear to exist regarding independent generators’ access to transmission
and distribution lines.
As of March 24, 2020, according to METI, 646 retailers, including
major municipal gas companies, have registered and are providing services
(ANRE/METI 2020). However, an NGO, Power Shift (powershift.org),
reports that there are only 28 entities (as of June 13, 2019) that can be
considered environmentally friendly (Powershift 2020). 11 It is fair to say
that the liberalization of the electricity market alone will not promote
enough renewable energy. That requires a more fundamental systemic
change with proper procedures. A general procedure of electricity deregulation starts with the separation of transmission and distribution from
a monopolistic EPCO, and at the same time, the deregulation of the
power generation sector itself. As the final step, the retail sector should
be deregulated (Ito 2016, p. 3).
In the case of Japan, there are three phases of electric deregulation,
and the order of the phases is not normal compared with other countries’ approaches. The first step in Japan was establishing a grid regulatory
organization: the Organization for Cross-regional Coordination Operation (OCCTO), which was established on April 1, 2015, to “enhance the
function of controlling the supply-demand balance of electricity in both
normal and emergencies on a nationwide basis” (OCCTO 2019). 12 The
second step was the deregulation of the retail sector, which started on
April 1, 2016. However, the final step, namely the separation of electricity
generation from power distribution and transmission, does not occur until
2020. It is desirable to establish a public or private entity to own and
operate electricity grids independent of 10 EPCO regional monopolies.
Alternatively, at least, as EU countries do, while leaving the ownership
rights of transmission lines to electric power companies, the operation of
transmission lines should be independently managed by a public entity
such as an independent system operator (ISO). However, the Japanese
governmental plan establishes “legally unbundling” of a transmission and
distribution company, which is still likely to maintain a financial relationship with the EPCO parent. As late as March 2019, ANRE continues to
promote a legal unbundling scheme by pointing out that it can maintain
the unity of a group, which is necessary to meet the needs of financing and
stability supply of electricity during disasters (ANRE/METI 2019, p. 6).
Thus, it may leave room for a transmission/distribution company not to
provide fair access to new entrants under the influence of the EPCO. For
a full-scale spread of renewable energy, it is imperative to establish a fair
67
appear to exist regarding independent generators’ access to transmission
and distribution lines.
As of March 24, 2020, according to METI, 646 retailers, including
major municipal gas companies, have registered and are providing services
(ANRE/METI 2020). However, an NGO, Power Shift (powershift.org),
reports that there are only 28 entities (as of June 13, 2019) that can be
considered environmentally friendly (Powershift 2020). 11 It is fair to say
that the liberalization of the electricity market alone will not promote
enough renewable energy. That requires a more fundamental systemic
change with proper procedures. A general procedure of electricity deregulation starts with the separation of transmission and distribution from
a monopolistic EPCO, and at the same time, the deregulation of the
power generation sector itself. As the final step, the retail sector should
be deregulated (Ito 2016, p. 3).
In the case of Japan, there are three phases of electric deregulation,
and the order of the phases is not normal compared with other countries’ approaches. The first step in Japan was establishing a grid regulatory
organization: the Organization for Cross-regional Coordination Operation (OCCTO), which was established on April 1, 2015, to “enhance the
function of controlling the supply-demand balance of electricity in both
normal and emergencies on a nationwide basis” (OCCTO 2019). 12 The
second step was the deregulation of the retail sector, which started on
April 1, 2016. However, the final step, namely the separation of electricity
generation from power distribution and transmission, does not occur until
2020. It is desirable to establish a public or private entity to own and
operate electricity grids independent of 10 EPCO regional monopolies.
Alternatively, at least, as EU countries do, while leaving the ownership
rights of transmission lines to electric power companies, the operation of
transmission lines should be independently managed by a public entity
such as an independent system operator (ISO). However, the Japanese
governmental plan establishes “legally unbundling” of a transmission and
distribution company, which is still likely to maintain a financial relationship with the EPCO parent. As late as March 2019, ANRE continues to
promote a legal unbundling scheme by pointing out that it can maintain
the unity of a group, which is necessary to meet the needs of financing and
stability supply of electricity during disasters (ANRE/METI 2019, p. 6).
Thus, it may leave room for a transmission/distribution company not to
provide fair access to new entrants under the influence of the EPCO. For
a full-scale spread of renewable energy, it is imperative to establish a fair