Japan's energy landscape

(c) 2014 Eurotechnology Japan KK www.eurotechnology.com Japan’s energy landscape (21st edition) June 30, 2014
Primary energy, gas and electricity markets
June 30, 2014 (21st Edition)
by Gerhard Fasol, PhD, Eurotechnology Japan KK
http://www.eurotechnology.com/
fasol@eurotechnology.com
Preview version, download full version here: http://www.eurotechnology.com/store/j_energy/
1
JAPAN ENERGY MARKET

JAPAN ENERGY MARKET
2
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Version Date Content added, updates
1 September 7, 2012
2 September 18, 2012
5 October 1, 2012
6 October 9, 2012
7 November 20, 2012
8 November 22, 2012
9 December 19, 2012 Gas companies section added
10 December 23, 2012 revisions and additions
11 January 2, 2013 electricity coverage expanded
12 February 3, 2013 power industry liberalization

JAPAN ENERGY MARKET
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Version Date Content added, updates
13 February 10, 2013 Ocean power added + updates
14 March 15, 2013 primary energy imports updated
15 March 18, 2013 energy generation data updated
16 March 24, 2013 METI electr. monthly data added
17 March 26, 2013 updates and corrections
18 May 2, 2013 FY2012 ﬁnancial data included
19 July 23, 2013 LNG data updated, prices added
20 June 2, 2014 reformat, update
21 June 30, 2014 electricity company ﬁnancials

REPORTS ON JAPAN’S ENERGY SECTOR
4
•Japan’s energy landscape
•approx. 277 pages, 94 Figures, 55 tables, frequent updates
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EXECUTIVE SUMMARY:
JAPAN ENERGY MARKET
6
Japan’s primary energy supply is about 25 x 1018 Joule/year, and Japan produces about 3.5 x 1018
Joule of electricity per year, about 14% of the primary energy input. Before the Fukushima nuclear
disaster in 2011, about 30% of electricity was produced by nuclear power stations, and national policy
was to increase nuclear energy to 50% of electricity generation. Currently all but two nuclear power
stations are switched off.
Despite mild liberalization over the last few years, Japan’s electricity landscape is dominated by ten
regional electricity operating companies, which have exclusive regional monopolies each over most of
the three components of the electricity industry: generation, grid and distribution. New renewable
energy sources (solar, wind, geo-thermal etc) were kept below 1% of the electricity mix as a matter of
principle. New entrants are entering Japan’s electricity generation, among them the “big-four” city gas
companies which are described and analyzed in this report.
The Fukushima nuclear disaster led to a shut-down of almost all nuclear power stations (except two),
and nuclear power has for the time being been replaced by much more expensive fossil sources
(mainly natural gas), and by restarting retired aged conventional caloric power stations.
Legislation came in force on July 1, 2012 to promote renewable energy sources via feed-in-tariffs, and
Japan’s energy strategy plan is currently in intense political discussions. For the future, strong increases
in renewable energy can be expected.The long-term fate of nuclear power has not yet been decided.

AGENDA - LIST OF CONTENTS
7
•Executive summary: Japan’s electrical energy landscape
•The “innovative energy and environmental strategy” of Sept 14, 2012
•implementing a nuclear free society “one day earlier than possible”
•implementing the green energy revolution
•guaranteeing a stable energy supply
•carrying out the electrical power system reform
•realization of global warming counter measures
•Cabinet decision of Sept 19, 2012
•Japan’s primary energy supply and self-sufficiency,
•Primary energy statistics
•Japan’s oil, coal gas imports
•Electricity generation: generation capacity, electricity generated, and effect of the Fukushima disaster
•Japan’s present electrical architecture
•The legal framework for Japan’s energy architecture
•The reasons for the Fukushima nuclear disaster and the independent Parliamentary commission
•new nuclear safety framework
•The 10 regional electrical operators and J-Power
•Generation capacity by type (water, fossil, nuclear etc)
•combined industry financials
•description and financials for each of the 10 regional electric operators
•J-Power
•The grid
•The 50Hz/60Hz issue
•JEPX - Japan Electrical Power ExchangeTokyo
•Impact of the Fukushima disaster
•Prospects for electrical industry reform
•Asian grid proposals
•Japan’s gas companies
•Renewable energy
•see separate report: http://www.eurotechnology.com/store/j_renewable/
•Glossary
•Summary

PRIME MINISTER ABE’S NEW
ENERGY STRATEGY PLAN
8
In April 11, 2014 Prime Minister Abe and his Cabinet published their new energy strategy plan
for Japan.
The energy strategy plan is required by law, and in this case is an 80 page document (of course
in Japanese language).
The energy strategy plan essentially is a detailed exposition of the different possible sources of
energy, and the situation facing Japan, however the strategy plan lacks KPIs or speciﬁc targets,
unlike the energy strategy document of the previous Government of Prime Minister Noda.
Please view a short interview on the strategy plan forThe Economist by the lead-author of the
present report here:
http://www.eurotechnology.com/2014/05/12/japan-energy-policy-economist/

JAPAN’S NATIONAL ENERGY STRATEGY PLAN:
“INNOVATIVE ENERGY AND ENVIRONMENTAL STRATEGY” OF
SEPTEMBER 14, 2012
(CABINET OFFICE)
(THIS STRATEGY PLAN HAS BEEN SUPERSEDED BY PRIME MINSTER
ABE’S CABINET’S ENERGY STRATEGY PLAN PRONOUNCED ON APRIL
11, 2014.WE INCLUDETHE PREVIOUS PLAN, BECAUSE IT CONTAINS
MUCHVERY USEFUL QUANTITIVE ESTIMATES OF JAPAN’S ENERGY
OPTIONS,AND IN CASE OF A GOVERNMENT CHANGE INTHE
FUTURE,THIS PLAN MIGHT BECOME IMPORTANT AGAIN.)
9

JAPAN’S NATIONAL ENERGY STRATEGY PLAN
10
1.Realizing a nuclear free society “one day earlier than possible
1.1.three principles
1.2.ﬁve policies
2.Implementing the green energy revolution
2.1.Reduce electricity and energy consumption
2.2.Large scale introduction of renewable energy
3.Guaranteeing a stable energy supply
4.Electrical power system reform
5.Realization of global warming counter measures
6.Adjusted by Cabinet Decision (“Kakugikettei of Sept 19, 2012)

1.1. REALIZING A NUCLEAR FREE SOCIETY “ONE DAY
EARLIERTHAN POSSIBLE” -THREE PRINCIPLES
11
This section describes the nuclear energy part of a roadmap which over the next 30-40 years might
realize a nuclear free society - unless modiﬁcations occur during this time.
1.1 The roadmap aims to follow three principles:
1.strictly limit the operation of nuclear power plants to 40 years age.
2.restart those nuclear power plants, where the safety has been assured by the (newly formed)
Nuclear Safety Commission
3.no new construction or expansion of nuclear power stations

1.2 REALIZING A NUCLEAR FREE SOCIETY “ONE DAY EARLIER
THAN POSSIBLE” - FIVE POLICIES
12
1.2.Five policies will be followed:
1.nuclear fuel cycle
2.maintenance and strengthening of human resources and technology
3.cooperation with the international community
4.strengthen location, regional measures
5.nuclear industry system and system for compensation of damages

EARLIERTHAN POSSIBLE” - FIVE POLICIES (1)
13
1.nuclear fuel cycle: the three processes (uranium enrichment, nuclear fuel reprocessing and
intermediate storage of low radioactivity waste) will be continued at Rokkasho (Aomori-ken) for the
mid-long term, conform with international agreements and promises to Aomori-ken.The following
steps will be taken:
•research on direct disposal of nuclear waste will be continued
•regarding the fast breeder research reactor “Monju”, following international cooperation, the
results of fast-breeder experiments will be evaluated, results will be collected and analyzed, and
the research will be terminated.
•research and development in the reduction of harmful waste, and nuclear waste treatment will
continue.
•the backend will not be left to private industry, but the country Japan will take responsibility
•Japan as a country - in consultation with regional self-governing bodies (ie Prefectures and
towns), and regional electrical companies - will immediately start the work to arrange systems for
intermediate storage of spent nuclear fuel, and prepare locations for ﬁnal storage.

1.2 REALIZING A NUCLEAR FREE SOCIETY “ONE DAY
14
2.maintenance and strengthening of human resources and technology: Improved technologies and
human resources are necessary to improve nuclear safety, to decommission nuclear power plants, to
process and dispose safely of spent fuel to realize a nuclear power free society. In addition, in order to
enable evacuees in Fukushima-Prefecture, it is necessary to develop decontamination technologies
and resources including human resources. In addition, Japan needs human resources to ensure the
nuclear non-proliferation obligations, and also to assist developing countries in decommissioning
nuclear plants.
•The country Japan will take responsibility to strengthen technology development and
development of human resources, and decide until year-end on a policy.
•Specialists in the Japan Nuclear Fuel Limited, Japan Atomic Energy Agency (JAEA), and other
nuclear industry organizations will not be dispersed, but will work with companies and
Universities to support technology development, fundamental research, and training for new
specialists in the nuclear energy ﬁeld.

1.2 REALIZING A NUCLEAR FREE SOCIETY “ONE DAY
15
3.cooperation with the international community: Japan’s peaceful nuclear development proceeded in
agreement with the international nuclear non-proliferation treaty and its strict safeguard system.
Japan’s nuclear power policy including the nuclear fuel cycle proceeded in intimate cooperation with
foreign countries, starting with the USA.
•building a non-nuclear society will proceed in intimate international cooperation
•experience and information gained from the 2011 nuclear accident will be shared with other
countries to increase safety of nuclear operations, and depending on conditions, technology for
operating nuclear power under the highest possible safety standards will be shared with other
countries.

EARLIERTHAN POSSIBLE” - FIVE POLICIES (4, 5)
16
4.strengthen local, regional measures: Local and regional policies under the new situation will be
strengthened.
•In particular, introduction of green energy will be locally supported.
•Japan as a country will take responsibility of decommissioning the Fukushima No. 1 nuclear plant,
decontamination, and waste disposal.
5.nuclear industry system and system for compensation of damages: Under the current system of
operating the nuclear industry under private management and following national policy, the
responsibility of Government and private industry will continue to be investigated.The necessary
investigations into compensation for damage from nuclear power, and from the Fukushima Nuclear
accident will be continued.

EARLIERTHAN POSSIBLE” - PATHVERIFICATION
17
The path to nuclear free society is a long and winded one, and will require consultation and
cooperation with local self-governing authorities and international bodies and foreign countries.The
path will be constantly veriﬁed, and if necessary, policy changes will be made.

2. IMPLEMENTINGTHE GREEN ENERGY REVOLUTION
18
Because of cost and instability, and lack of necessary infrastructure, renewable energy has not been
introduced on a large scale yet in Japan.
Depending on each citizens situation, every citizen will need to move from a passive consumer of
electricity to a distributed producer of energy, and to a smart saver of power.
As solar plants, storage batteries and fuel cells spread as a matter of course, homes and regions will
move from regular payments for electricity bills to receiving money for electricity sold.
In a similar way as the IT revolution in the second half of the 1990s, the green energy revolution will
be driven by the whole population
two components:
1.reduce electricity/energy consumption
2.renewable energy

2.1. REDUCE ELECTRICITY/ENERGY CONSUMPTION
19
•reduce annual electricity consumption from 1100TeraWatt h in 2010, by 110TeraWatt h or more
in 2030.
•in addition, with smart-meters, home energy management systems (HEMS), business energy
management systems (BEMS), demand/response and via other methods strongly reduce peak
electricity (kWatt) demand
•reduce energy consumption from 390 kiloLiter Oil in 2010 by 72 million kiloLiter Oil in 2030.
these cases assume 1.1% economic growth during 2010-2020, and 0.8% growth in 2020-2030.
in the case of stronger growth (1.8% during 2010-2020, and 1.2% growth during 2020-2030, the
reduction of electricity consumption will be smaller (10TeraWatt h), and the energy consumption
reduction will be 46 million kiloLiter Oil in 2030.

CABINET DECISION
(“KAKUGIKETTEI”)
OF SEPT. 19, 2012
29

CABINET DECISION (“KAKUGIKETTEI”) OF SEPT. 19, 2012
30
Sept. 19, the Cabinet released a "Kakugikettei" (Cabinet Decision) which is 4 and 1/2 lines long, which
says:

We will carry out our energy and environmental policy based on the "Innovative Energy and Environmental
Strategy" as decided by the Energy and Environment Council on Sept 14, however we will hold responsible
discussions with concerned self-governing regional bodies of Japan and with concerned international
organizations, and we will continuously and flexibly verify and adjust our policy.
(Kakugikettei, Cabinet decision of Sept 19, 2012, our unofficial translation from bureaucratic official
complex Japanese into simplified English, attempting to keep the same meaning).

Note, that this "step back" is not uniquely Japanese.... Sweden decided in the 1980s to go zero-nuclear
with a Parliament approved schedule, and Sweden's parliament reversed the earlier zero-nuclear
decision, and went back to continue nuclear power in 2010 and renewing or building new nuclear
power stations.

PRIMARY ENERGY SUPPLY
AND SELF-SUFFICIENCY
31

PRIMARY ENERGY SELF-SUFFICIENCY RATIOS
TRADITIONALVIEW,TYPICALLY DOES NOT INCLUDE FULL POTENTIAL FOR
RENEWABLES AND NEW FORMS OF GAS
32
Note that this figure shows the traditional view of energy self-sufficiency, and typically does not include the full renewable energy
potential, nor new types of recently found gas sources.
Viewed in this traditional way, Japan has one of the lowest primary energy self-sufficiency ratios globally:
•Japan has to import about 82% of primary energy, if nuclear energy is included.
•however, at present with two exceptions, all nuclear power stations out of service, so that 96% of Japan’s primary energy needs to be
imported.
•however, with full development of renewable energy sources, especially off-shore wind energy, Japan could be self-sufficient in energy.
Countries with self-sufficiency ratios larger than 100% export primary energy including electricity, while countries with self-sufficiency
ratios lower than 100% need to import primary energy and electricity
Italy Japan S Korea Germany France US India UK China Canada Russia
0
20
40
60
80
100
120
140
160
180
200
Energyselfsufficiencyratio
Energy self sufficiency
ratio IEA, OECD, 2006 2007
15
15
18
4
19
2
41
30
51
8
71
62
76
75
83
76
92
91
153
144
183
incl. nuclear
177
excl. nuclear
c2012EurotechnologyJapanKK
www.eurotechnology.com

PRIMARY ENERGY SUPPLY
33
Japan’s primary energy supply is approximately 25 x 1018 Joule/year. Japan’s electricity production corresponds to about 14% of primary
energy supply. Some of the primary energy is used for other purposes, e.g. raw materials for the chemical industry, fuel for heating or
transportation, but an appreciable amount is lost during the electricity generation process.The nuclear energy supply (in red above) has
been eliminated by the shut-down of all 50 nuclear power stations (except for the Oi plant which has been restarted again), and needs
to be replaced by savings, natural gas, oil or renewable energies.
1970 1980 1990 2000 2010
0
5
10
15
20
25
30
energy1018
Jouleyear
Japan's domestic primary
energy supply 1018
Joule year
Oil
Coal
Natural Gas
Nuclear
Water
Renewable

JAPAN’S PRIMARY ENERGY
IMPORTS
34

JAPAN’S LNG PRICES
41
Natural gas prices vary widely between the point of purchase/sale, the timing, and the type of delivery (pipeline, liquid natural gas via
tanker by sea etc).
The figure above shows that Japan is currently paying quite elevated prices for LNG (liquified and delivered by tanker).
Consequently the Japanese Government (Ministry ofTrade Economy and Industry) is undertaking various actions to attempt to achieve
lower LNG import prices.These actions include: international conferences, and attempts to achieve higher price competition between
LNG sellers via establishment of new market mechanisms, and also exploration.
LNG import prices which Japan pays increased substantially after March 11, 2011.
On the right hand side, the LNG prices in US$/Million BTU are converted to UScent/kWh.
These are the LNG component of electricity produced from LNG in case it was possible to convert LNG to electricity with 100%
efficiency.
2008 2010 2012 2014
0
5
10
15
20
25
NaturalGaspricesUS$MillionBTU
3.4 cent kWh
6.8 cent kWh
March 11, 2011
Japan LNG
USA LNG
Export
USA pipeline
Import
EU
Natural Gas prices US$ Million BTU

JAPAN’S LNG PRICES
42
Most Japanese LNG prices are traditionally ﬁxed to the price of crude oil.Thus the price for 1 Million BTU of LNG gas for Japan is
currently on the order of US$ 17, while for certain types of LNG the US internal price is on the order of US$ 2, ie Japanese power
companies pay up to 8 times more for LNG than US power companies.
There is much effort on the Japanese side to reduce the costs of procuring LNG.
Recently Osaka Gas and Chubu Electric Power have entered into longterm procurement contracts where the LNG price is determined
according to the “Henry hub” price for LNG. (The “Henry hub” http://en.wikipedia.org/wiki/Henry_hub is a distribution hub on the US
natural gas pipeline system, and is used for the pricing of natural gas futures on the NewYork Mercantile Exchange and on the
IntercontinentalExchange ICE).

FUTURE LNG IMPORTS FROM USATO JAPAN
43
Currently preparations are under way to export US LNG from USA to Japan.
One issue is that USA in principle does not permit LNG exports to countries that do not have a free
trade agreement (FTA) with the USA, and Japan does not an FTA with the USA at this time.
Estimated costs/prices for FTA exports from USA to Japan would be:
Price/costs per million BTU
natural gas price $4
liquefaction $3
shipping $2
Total cost from USA $9
current costs $16.7

ELECTRICITY GENERATION
44

PHASING OUT NUCLEAR POWER AFTERTHE FUKUSHIMA DISASTER
49
Japan’s nuclear power stations are switched off routinely every 13 months for maintenance.After the Fukushima nuclear disaster it
became politically very difﬁcult, if not impossible to return reactors into service after completion of the routine maintenance.As a
consequence, 13 months after March 11, 2011, all Japanese nuclear reactors were out of service. Only two reactors have been switched
on again.This ﬁgure only shows nuclear power generated by reactors owned by the 10 regional electricity operators.
Jan 2007 Jan 2008 Jan 2009 Jan 2010 Jan 2011 Jan 2012 Jan 2013
0
10
20
30
powerpermonthTeraWatthmonth
Japan's nuclear power
generation per month TeraWatt h
March 11, 2011
disaster

RESTARTING JAPAN’S NUCLEAR POWER STATIONS
50
According to the Chairman of Japan’s new Nuclear Regulation Authority (Chairman ShunichiTanaka in an interview withYomiuri
Shinbun on September 24, 2012), the preparation of new nuclear safety guidelines required by the new nuclear safety law, will take until
summer 2013, so that it is extremely unlikely that nuclear power stations will be restarted in addition than the 2 reactors at Oi which
have been restarted a few weeks ago.

CALORIC POWER REPLACES NUCLEAR POWER
51
This figures shows how caloric power (mainly natural gas fired power stations), and the restart of already abandoned very old coal fired
power plants replaces the discontinued nuclear power production.
Caloric power production is increased by approx. 60% from approx. 35TWh/month to 55TWh/month at great cost, both financially
and in terms of CO2 generation.
Jan 2007 Jan 2008 Jan 2009 Jan 2010 Jan 2011 Jan 2012 Jan 2013
0
10
20
30
40
50
60
70
80
powerpermonthTeraWatthmonth
Japan's electricity
production from caloric sources
TeraWatt h source: METI
March
11
disaster

JAPAN’S PRESENT ELECTRICAL
ARCHITECTURE
53

STRUCTURE OF JAPAN’S ELECTRICITY LANDSCAPE
54
The Figure on the following page shows the structure of Japan’s electricity markets, which has been
liberalized to a very small degree, compared to the far more advanced liberalization in the US and
most European countries.
Japan’s electricity markets are dominated by 10 regional electricity operating monopoly companies,
which operate:
•generation,
•transmission/grid and
•distribution/retail.
There is no unbundling.
In addition there are different types of independent electricity producers, which are practically of two
types:
•internal electricity production, e.g. in large ofﬁce buildings, or in factories, for immediate local use.As
an example the famous Mori-Roppongi-HillsTower has its own electricity plant in the basement of
the building.
•independent commercial production of electricity. Such independent electricity producers have
essentially no other choice than to sell to the single local and extremely powerful monopoly operator.
Electricity sales can be direct under contract to the local monopoly operator, or via the JEPX
exchange. However, the JEPX exchange only handles about 0.5% of all electrical power.

STRUCTURE OF JAPAN’S ELECTRICITY LANDSCAPE
55
Structure of Japan’s electricity landscape.
10 regional monopoly operators, each combine generation, transmission and grid, and distribution in their local monopoly region and
dominate Japan’s electricity industry.
Currently only about 0.5% of Japan’s electricity is traded via the JEPX electricity exchange.
10 regional monopoly electricity operators
generation
distribution/retail
transmission/grid
households
SMEs
regional monopoly
large size customers
factories
JEPX (0.5% of electricity volume)
specified
power
producers
(1.7%)
PPS
(1.8%)
in-house
generation
(10.6%)
renewable
energy
producers
FITFIT

THE LEGAL FRAMEWORK OF
JAPAN’S ENERGY
ARCHITECTURE
56

ELECTRICITY BUSINESS ORDINANCES AND REGULATIONS
60
Under the Electricity Business Law, the Industry Ministry METI issues Ministry Ordinances, including
the “Ministry ordinance setting technical standards concerning electrical facilities” (METI Regulation
No. 52 of March 27, 1997), which must be complied with.

NEW FRAMEWORK FOR
NUCLEAR SAFETY AFTERTHE
FUKUSHIMA DISASTER
61

NUCLEAR DISASTER INVESTIGATION
INDEPENDENT PARLIAMENTARY COMMISSION:
THE FUKUSHIMA NUCLEAR DISASTER WAS CAUSED BY
REGULATORY CAPTURE
62
The Fukushima nuclear disaster has been investigated by several commissions, including:
•an internal commission withinTokyo Electric Power Corporation (TEPCO), the owner and operator of the Fukushima nuclear power
station.
•This commission was not independent ofTEPCO, but it can be assumed that this commission needed to followTEPCO’s interests.
•an independent commission incorporated by the Japanese Parliament.
•The Chairman of this commission was Professor Kiyoshi Kurokawa, a highly respected medical doctor, formerly Professor ofTokyo
University, then Chairman of the Faculty of Medicine ofTokai, and then President of the Science Council of Japan.
•Commissioners:
•KoichiTanaka, Nobel Prize Winner, Chemist at Shimadzu Corporation
•Katsuhiko Ishibashi, Seismologist
•Kenzo Oshima, Former Ambassador of Japan to the United Nations
•Hisako Sakiyama, Medical Doctor, Former Chief of the National Institute of Radiological Sciences
•Masafumi Sakurai, Lawyer, former Chief Prosecutor of the Nagoya High Public Prosecutors Ofﬁce, and former Inspector General
for Legal Compliance, Inspector General’s Ofﬁce, Defense Ministry
•MitsuhikoTanaka, Science Journalist
•Shuya Nomura, Lawyer, Professor, Chuo Law School, Chuo University
•Reiko Hachisuka, Chair, Society of Commerce and Industry, OkumaTown, Fukushima Prefecture
•YoshinoriYokoyama, Social System Designer, Director, University ofTokyo, Executive Management Program
•The primary results of this independent commission was that the Fukushima nuclear accident was caused by Regulatory Capture.A
well known phenomenon, which occurs when the industry regulated by this industry’s regulator, gains control (“captures”) of the
regulator.
•The theory of regulatory capture is due to George Stigler, Nobel Prize winner in Economics. For more on Regulatory Capture see:
http://en.wikipedia.org/wiki/Regulatory_capture

CAUSE OF FUKUSHIMA NUCLEAR
ACCIDENT
63
•Parliamentary Commission chaired by Kiyoshi
Kurokawa:
•Regulatory capture
•Kurokawa: “Group think can kill”
•not a Japanese phenomenon
•theory of regulatory capture:
•George Stigler (Nobel Prize 1982) “Economic
Theory of Regulation”

NEW NUCLEAR SAFETY AUTHORITY
64
The independent Parliamentary Commission determined that the Fukushima nuclear accident was caused by Regulatory Capture, ie by
the capture of the previous Nuclear and Industrial Safety Agency by the Japanese nuclear industry.The Nuclear and Industrial Safety
Agency was part of the Ministry of Economy,Trade and Industry (METI), which was promoting the development of Japan’s nuclear
industry.
Therefore it was necessary to establish an independent new regulator for Japan’s nuclear industry.
The new independent nuclear safety regulator is the “Nuclear Regulation Authority” (NRA) and was incorporated on September 19,
2012.
The Nuclear Regulation Authority (NRA) is part of the Environment Ministry, and its independence is guaranteed under Article 3 of the
National Government Organization Law.
Chairman is ShunichiTanaka, formerVice-Chairman of the Cabinet Office’s Atomic Energy Commission.
According to the Chairman of Japan’s new Nuclear Regulation Authority (Chairman ShunichiTanaka in an interview withYomiuri
Shinbun on September 24, 2012), the preparation of new nuclear safety guidelines required by the new nuclear safety law, will take until
summer 2013, so that it is extremely unlikely that nuclear power stations will be restarted in addition than the 2 reactors at Oi which
have been restarted a few weeks ago.
According to NRA Chairman ShunichiTanaka, the role of NRA is exclusively the creation and execution of new nuclear safety standards,
and response guidelines in the event of another disaster.
Chairman ShunichiTanaka, in an interview on September 24, 2012 withYomiuri Shinbun stated that NRA will exclusively focus on
objective safety screening and:
•will NOT consider issues such as future electricity supply and demand
•will NOT consider financial difficulties of electricity operators from switching of nuclear reactors
•will NOT take account of the “stress tests” imposed by the Government on electricity operators after the Fukushima nuclear disaster,
but will assess safety independently
•will NOT make efforts to obtain public’s acceptance of restarting nuclear power

HISTORY
65

HISTORY
66
Japan’s ﬁrst electricity company,Tokyo Dentou KK, received the Government license on February 15,
1883, and started business on July 5, 1886. Initially,Tokyo Dentou had 5 power stations producing
direct current, but later switched to alternating current with increasing power demand.
In 1893,Tokyo Dentou introduced alternating power generation equipment from the German
company AEG, which produced 50 Hertz alternating current.
Osaka Dentou KK on the other hand used 60 Hertz equipment from the US company General
Electric.
The division of Japan into an 50 Hertz area in the East of Japan, and 60 Hertz in the West of Japan
still persists today.
During the war period 1938 - 1939 a series of laws was introduced to reform and nationalize Japan’s
electricity industry, and the company Nihon Hassouden KK (Nippatsu) was created.
Tokyo Dentou was dissolved in March 1942.
The US Occupation Government order the dissolution of the electricity monopoly of Nippatsu,
which was dissolved on May 1, 1951, and today’s 9 regional electricity monopoly companies were
created (in addition, there is a 10th electricity operating company for Okinawa)

Nippatsu 日発
Nippon Hassoden K.K.
Japan Electric Generation andTransmission Company
Founded
April 1, 1939
dissolved 1951 under orders by the US GHQ Government of Japan
Founder
Headquarters Tokyo
Stock Exchange quasi national monopoly
Consolidated sales
Number of employees
Major share holders
Major business areas monopoly for electricity generation and distribution in Japan

THE 10 REGIONAL
ELECTRICITY COMPANIES
70

POWER GENERATION CAPACITY
73
Power generation capacity of Japan’s regional monopoly electricity operations.
Also shown is J-Power, although not a regional monopoly operator.
Other non-monopoly electricity generation plants exist and are not included here.
Hokkaido Tohoku Tepco Chubu Hokuriku Kansai Chugoku Shikoku Kyushu Okinawa J Power
0
10
20
30
40
50
60
70
capacityGigaWatt
generation capacity
of Japan's power companies
7.4
17.2
64.0 GigaWatt
32.8
8.1
34.9
12.0
7.0
20.3
1.9
16.4 GigaWatt

THE 10 REGIONAL ELECTRICAL POWER COMPANIES
79
Annual net income of Japan’s 10 regional electricity operators.The large negative effect of the Fukushima disaster and the switch-off of
nuclear power stations is clearly visible, and produced combined annual net losses of more than US$ 20 billion every year since FY
2011 (ending March 31, 2012)
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
2000
1500
1000
500
0
500
1000
netincomeYENbillion
Japan's regional electricity operators annual net income
US$ 20 billion
US$ 15 billion
US$ 10 billion
US$ 5 billion
US$ 5 billion
US$ 10 billion
OKIDEN
KYUDEN
YONDEN
CHUGOKU
KANDEN
RIKUDEN
CHUDEN
TEPCO
TOHOKU
HEPCO

COMBINED NET INCOME OFTHE ELECTRICITY OPERATORS
83
This figure shows the combined net income of Japan’s electrical power companies, and shows, that the combined net income is stable
until the FinancialYear FY2006, and then starts to fall. Since FY2006 the net income fall consistently, and is clearly headed deeper and
deeper into the red.
This figure shows that the financial instability of Japan’s electricity operators has started several years before the March 11, 2011
disaster, and also shows that reform of Japan’s electrical sector is long overdue.
1998 2000 2002 2004 2006 2008 2010 2012 2014
10000
9000
8000
7000
6000
5000
4000
3000
2000
1000
0
1000
2000
3000
YENBillion
0
US$ 20 Bill.
US$ 20 Bill.
US$ 40 Bill.
US$ 60 Bill.
US$ 80 Bill.
US$ 100 Bill.
net income of Japan's 10 electricity operators
Japan's natural gas import costs

HOKUDEN
HOKKAIDO ELECTRICAL POWER
COMPANY
84

TOHOKU ELECTRICAL
POWER COMPANY
88

TOKYO ELECTRICAL POWER
COMPANY -TEPCO
92

TOKYO
ELECTRICAL
POWER COMPANY
-TEPCO
93
TEPCO
headquarters inTokyo

TOKYO ELECTRICAL POWER
COMPANY -TEPCO
We found more than 30 different types of 2D bar codes mentioned currently.
Some have important applications today - but others are uncertain to survive
94main entrance toTEPCO headquarters inTokyo

TOKYO ELECTRIC POWER COMPANY
97
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
25
20
15
10
5
0
5
10
15
20
25
annualoperatingandnetmargin
operating margin
net margin
Annual margins TEPCO
TEPCO’s ﬁnancial situation is strongly dependent on the Japanese Government decisions regarding tax-payer assistance to cover costs
for the Fukushima disaster.

CHUBU ELECTRICAL POWER
COMPANY - CHUDEN
98

HOKURIKU ELECTRICAL
POWER COMPANY - RIKUDEN
102

HOKURIKU ELECTRIC POWER COMPANY- RIKUDEN
105
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
5
0
5
10
15
20
annualoperatingandnetmargin Annual margins RIKUDEN
operating margin
net margin
Hokuriku Electrical Power Company has stable revenues, however, as for most other Japanese electrical power companies clearly the
business model is ﬂawed, with income dropping off since a peak around 2004.Again the fall in income is clearly not related to the
Fukushima nuclear disaster and the switch-off of nuclear power.

KANSAI ELECTRICAL POWER
COMPANY - KANDEN
106

KANSAI ELECTRIC POWER COMPANY- KANDEN
109
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
20
15
10
5
0
5
10
15
20
operating margin
net margin
Annual margins KANDEN
Kansai Electric Power Company’s sales have been increasing recently due to increased power prices, however, as for most other
Japanese electrical power companies, income and margins have been dropping off consistently since peaking in 2006.

CHUGOKU ELECTRICAL
POWER COMPANY
110

CHUGOKU ELECTRIC POWER COMPANY
113
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
5
0
5
10
15annualoperatingandnetmargin
Annual margins CHUGOKU
operating margin
net margin
Chugoku Electric Power Company’s margins have been falling consistently since 2000.

SHIKOKU ELECTRICAL POWER
COMPANY -YONDEN
114

SHIKOKU ELECTRIC POWER COMPANY
115
Yonden number of power plants generation capacity
ratio of total generation
capacity
water power 58 1141 MegaWatt 11.8%
fossil 4 3797 MegaWatt 39.1%
nuclear 1 2022 MegaWatt 20.85%
renewables except
traditional water
power
2 2 MegaWatt 0.02%
Total 64 9698 MegaWatt 100%

SHIKOKU ELECTRIC POWER COMPANY-YONDEN
116
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
0
100
200
300
400
500
600
700
800
900
1000
annualrevenueYENBillion
US$ 2 Bill.
US$ 4 Bill.
US$ 6 Bill.
US$ 8 Bill.
Annual revenues of SHIKOKU Electric Power
YONDEN
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
150
100
50
0
50
100
150
annualoperatingnetincomeYENBillion
0
US$ .5 Bill.
US$ 1 Bill.
US$ .5 Bill.
US$ 1 Bill.
Annual income SHIKOKU El. Power
YONDEN
operating income
net income
Shikoku Electric Power Company (Yonden), had the highest ratio of nuclear power capacity of all Japanese electrical power companies.
For Shikoku Electric Power Company, clearly the drop in income arose in 2012 after the Fukushima disaster.

SHIKOKU ELECTRIC POWER COMPANY-YONDEN
117
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
15
10
5
0
5
10
15
Annual margin YONDEN
operating margin
net margin
Shikoku Electric Power Company (Yonden), had the highest ratio of nuclear power capacity of all Japanese electrical power companies.
For Shikoku Electric Power Company, clearly the drop in income arose in 2012 after the Fukushima disaster.

KYUSHU ELECTRICAL POWER
COMPANY - KYUDEN
118

KYUSHU ELECTRIC POWER COMPANY- KYUDEN
121
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
30
25
20
15
10
5
0
5
10
15
20
25
30
Annual margin KYUDEN
operating margin
net margin
Kyushu Electric Power Company has one of the highest ratio’s of nuclear capacity in Japan, and as a consequence income and margins
dropped dramatically after switching off the nuclear power stations, while revenues increase due to increased electricity sales prices.

OKINAWA ELECTRICAL
POWER COMPANY - OKIDEN
122

OKINAWA ELECTRIC POWER COMPANY
123
Okinawa number of power plants generation capacity
ratio of total generation
capacity
water power
the only global sea water
pump-storage power station

fossil 17 1918 MegaWatt 100%
nuclear
renewable energy
except traditional
water power
Total 17 1918MegaWatt 100%

OKINAWA ELECTRIC POWER COMPANY- OKIDEN
124
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
0
50
100
150
200
250
300
US$ 0.5 Bill.
US$ 1 Bill.
US$ 1.5 Bill.
US$ 2 Bill.
US$ 2.5 Bill.
Annual revenues of OKIDEN
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
5
10
15
20
25
30
annualoperatingnetincomeYENBillion
0
US$ 0.05 Bill.
US$ 0.1 Bill.
US$ 0.15 Bill.
US$ 0.2 Bill.
US$ 0.25 Bill.
Annual income OKIDEN
operating income
net income
Okinawa Electric Power Company is the only Japanese regional electricity operating company without nuclear power. Still rising LNG
prices do have impact, and Okiden’s revenues are increasing steadily due to increasing electricity costs, while operating income is steadily
decreasing

OKINAWA ELECTRIC POWER COMPANY- OKIDEN
125
Okiden’s operating margins are continuously falling because of increasing LNG prices.
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
2
4
6
8
10
12
14
16
18
20annualoperatingandnetmargin
Annual margin OKIDEN
operating margin
net margin

J-POWER
(ELECTRIC POWER DEVELOPMENT
CORPORATION EDPC)
126

J-Power headquarters inTokyo Ginza

J-POWER
129
J-Power (Electrical Power Development Company EDPC) was founded on September 16, 1952 with
66.69% capital from the Ministry of Finance, and the remaining capital from the then 9 regional
electricity operators.
Purpose of the company is mainly to develop new sources of electric power, and the operation of
transmission lines.
In April 1, 2004 J-Power was reorganized into the following divisions:
•JPHYTEC CO. Ltd: hydro-power and transmission system company
•JPec Co Ltd: thermal power company
•JP Business Service Corporation
•KEC Corporation

J-POWER MARGINS
135
JPower has been developing international business, business outside Japan over the last years to become less dependent on Japan’s
market alone.With one nuclear power station under construction but none in operation, J-Power is only weakly affected by the switch
off of nuclear power stations. J-Power is the only Japanese electric power company with steadily increasing incomes.
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
0
5
10
15
annualoperatingandnetmargin Annual margin JPOWER
operating margin
net margin

J-POWERVSTHE CHILDREN’S FUND (TCI)
136
In 2006 the investment fund “The Children’s Investment Fund” (TCI) makes an investment in J-Power
amounting to 9.4% of outstanding shares, which was later increased to 9.9%.
TCI later applied to METI for permission to increase this investment to 20% of J-Power’s shares, which
was rejected by METI on the grounds of national energy security.
TCI through a variety of actions (letters to management, proposals at share holder meetings) asked
for a series of management changes, for increases of dividends, and for seats on J-Power’s board of
directors.
All these requests and proposals were rejected and in November 2008,TCI sold all shares in J-Power.

J-POWERVCTHE CHILDREN’S INVESTMENT FUND (TCI)
137
2006 TCI makes a purely ﬁnancial investment in J-Power
Jan 2007 applied to Japanese Government to increase investment
March 2007 increases investment from 9.4% to 9.9%, asks for 3 times higher dividends
June 2007 TCI proposal defeated by 80% majority at Annual General Shareholder meeting
Dec 2007 TCI asks for seat on the Board of J-Power
Jan 2008 TCI applies to METI to allow increase of investment from 9.9% to 20%
Jan 2008 J-Power management rejectsTCI requests incl. for Board representation
March 2008 TCI asks EU and UK Governments for sanctions against Japan and J-Power
April 2008 METI rejectsTCI application for increased investment
June 2008 TCI loses proxy battle against J-Power, shareholders reject 5 TCI proposals
November 2008 TCI sells its entire 9.9% holding back to J-Power at a loss ofYEN 12.5 billion

JAPAN ATOMIC POWER
COMPANY (JAPC)
138

Japan Atomic Power
Company
Founded
November 1, 1957 (ﬁrst nuclear plant:Tokai Power Station, commercial
operation started July 25, 1966)
Founder
Headquarters Tokyo
Stock Exchange private company
Consolidated sales YEN 145.276 Billion (US$ 1.7 Billion) (FY2011)
Number of employees 1388
Major share holders
TEPCO (28.23%), KEPCO (18.54%), Chubu (15.12%), Hokuriku
(13.05%),Tohoku (6.12%), Chugoku, Shikoku, Kyushu, J-Power (5.37%)
Major business areas
Nuclear power generation 1.Tokai Nuclear Power Plant, 2.Tsuruga
Nuclear Power Plant

JAPAN ATOMIC POWER CORPORATION
140
JAPC number of power plants electrical capacity
water power - -
fossil - -
nuclear
1. Tokai
2. Tsuruga
1100 MegaWatt
357 + 1160 MW
new energy - -
Total 2 2600 MegaWatt

THE GRID
141

REGIONAL ELECTRICITY PRODUCTION AND
GRID CONNECTIONS BETWEEN OPERATORS
142
Japan’s electricity infrastructure consists of ten regional
monopolies
(installed electricity generation capacity is shown as the area of
circles, and written in GigaWatt (GW)).
The width of link lines between the power monopolies show
the capacity of lines connecting the regional monopolies. Japan
has no true national grid, but two essentially disconnected
regional grids, and relatively weak links between local power
monopolies.
Several proposals for national grids are under discussion,
potentially competing with each other.
(note that the generation capacities shown above are those of
the regional electrical monopolies.Actual regional generation
capacities are actually about 30%-40% higher, because of in-
house production of electricity of manufacturing companies and
building companies, and because of independent electricity
producers).
Hokkaido
generating capacity=
7 GigaWatt
Tohoku
17 GW
Hokuriku
8 GW
Chugoku
12 GW
Shikoku
7 GW
Kyushu
20 GW
Okinawa
2 GigaWatt
Tokyo 65 GW
Kansai
35 GW
Chubu
33 GW
Japan’s total electricy
generation capacity =
approx. 250 GW
600MW
DC line
6310MW
AC line
5570MW
5570MW
5570MW
AC line
2400
MW
16600MW
1000MW
DC line
1400MW
300MW
(c) 2012 Eurotechnology Japan KK

THE 50HZ/60HZ ISSUE
145

THE 50HZ/60HZ ISSUE
146
Electriﬁcation of Japan started on March 25, 1878 at the Institute ofTechnology inTokyo/Toranomon,
and in 1886 theTokyo Electric Light Company was founded.
Electriﬁcation started independently inTokyo and in Osaka:
•Tokyo Electric Light Company imported equipment from German AEG with the German 50Hz
frequency standard,
•Osaka Electric Lamp Company imported equipment from General Electric (USA) with the 60Hz
frequency standard.
Until today Western Japan uses 60Hz, while Eastern Japan used 50Hz. Only three frequency converter
facilities (FCF) connect the western 60Hz area with the easter 50Hz area:
•Shin-Shinano FCF (600MWatt)
•Sakuma Dam FCF (300MWatt)
•Higashi Shimizu FCF (135MWatt, from Autumn 2014: 300MWatt)
It is not practically possible to change one of the areas’ frequency standard, so this 50Hz/60Hz split of
Japan’s electricity system is likely to continue forever. However, in the future true national grids are
likely to be built.At the moment there is no true national grid in Japan, only relatively weak
connections between the regional monopoly operators, and other local links.

THE 50HZ/60HZ ISSUE
147
Only three frequency converter
facilities (FCF) connect the western
60Hz area with the easter 50Hz area:
•Shin-Shinano FCF (600MWatt)
•Sakuma Dam FCF (300MWatt)
•Higashi Shimizu FCF (135MWatt,
from Autumn 2014: 300MWatt)
50Hz
(historically German AEG
supplied Tokyo Electric Light Co)
60Hz
(historically US General Electric
supplied Osaka Electric Lamp Co.) Shin-Shinano FCF 600MW
Sakuma Dam FCF 300MW
Higashi-Shimizu FCF
(=Frequency Converter Facility)
135MW (from Autumn 2014: 300MW)
(c) 2012 Eurotechnology Japan KK

JEPX
JAPAN ELECTRIC POWER
EXCHANGETOKYO
148

DISTRIBUTED MODEL GREEN ELECTRICITY SELLING MARKET
150
One June 18, 2012, JEPX set up a small lots Power Exchange, where there is no lower quantity limit,
and the participants are exempt from the 1.6 MillionYEN admission fee and transaction fees.
Trades small-scale electricity generation of 1MegaWatt or less, including electricity in ﬂuctuating and
unpredictable amounts. Sellers can arbitrarily set prices, and can set conditions.
JEPX will try to match sellers with buyers.

IMPACT OFTHE FUKUSHIMA
DISASTER
151

IMPACT OFTHE FUKUSHIMA DISASTER (1)
152
All 50 Nuclear nuclear power stations have been switched off according to their 13 months
maintenance cycle, and only a two nuclear power stations in Oi (Kansai Electrical Power) has been
restarted after maintenance, and intensive discussions about safety by Government, local agencies, and
the public.There is much resistance to restart further nuclear power stations. Since one nuclear
power reactor corresponds to an installed power of about 1 GigaWatt, about 50 GigaWatt have
been removed from Japan’s electricity generation capacity, ie about 25%.
The sudden unplanned removal of about 25% of Japan’s electricity generation capacity has been
compensated as follows:
•planned, forced and voluntary electricity savings: large scale users have been forced by Government
regulation to reduce electricity consumption, and smaller scale users are reducing consumption
voluntarily. This summer the following targets have been announced:
•all customers (households and businesses) in the regions of 6 monopoly utilities in Western Japan
are asked to cut electricity usage voluntarily by 5-15% during summer 2012 compared to summer
2010, and 7% in Hokkaido
•restart of retired thermal power plants using natural gas, coal and oil, resulting in very large added
imported primary energy costs
•planned black-outs: electricity was switched off for certain periods (e.g. 4 hours / day) in selected
areas outside the center ofTokyo. Similar black-outs could also happen this summer 2012. Black-outs
cause great disruption and ﬁnancial damage to the economy, and in some cases deadly accidents.
Some planned black-outs have not been implemented however, due to unexpectedly high voluntary
electricity savings.

153
Japan’s current Energy Basic Plan (established in 2010) provides an increase of nuclear power to over
50% of total electricity generation by 2020. Clearly with all nuclear power station currently switched
off (with one exception), with the forced recalculation of true nuclear energy costs (when the costs
of the nuclear disaster and clean-up and decommissioning are properly included), and with rising
resistance by common Japanese voters as well as industry leaders (such as Masayoshi Son), and
leading politicians, the nuclear disaster forces a review of Japan’s Energy Basic Plan.A new Energy Basic
Plan is currently under preparation, and is very likely to include a much reduced role of nuclear
energy, and a much increased role for renewable energy as new revised national policy of Japan.
Promotion of nuclear power in Japan had the character of untouchable national policy, and 10
electrical utility companies went to great lengths to eliminate any opposition to the nuclear power
policy. In addition, for reasons which are still unclear to me, the 10 electrical utility companies as a rule
kept “new energy”, renewable energy below 1% of electricity production. Independent of any rational
argument or serious discussions, or examples in other countries, renewable “new” energy was kept
below 1% as an untouchable rule, with the result that Japan until recently had the lowest investments
and lowest development of renewable “new” energy of most developed countries.The Fukushima
disaster has temporarily eliminated nuclear power from Japan’s energy mix, and has ended this 1%
rule, and greatly accelerated the introduction and development of renewable “new” energies.

154
•an urgent implementation of the legal and regulatory framework to encourage private sector
investments in traditional and renewable energy generation plants
•it has been reported that manufacturing companies have relocated production sites outside Japan
due to the uncertainties of electricity supply and black-outs
•investment by local authorities (e.g. theTokyo Metropolitan Government) in electricity generation
plants
•the implementation of relatively high Feed-in-Tariffs to encourage private sector investment in
renewable energy generation. Such investments are happening on a large scale now.
Impact on renewable energy
•Currently (new: solar, wind, geo-thermal etc) renewable energy amounts to approximately 1% of
Japan’s overall electrical power output. Japan’s Government plans to work towards increasing the
share of renewable energy in Japan’s energy mix to 15% - 25%.

DEMOCRATIZATION OF JAPAN’S POWER INDUSTRY (1)
155
As to be expected, there are strong movements against nuclear power as a consequence of the
Fukushima nuclear disaster. Currently 10,000s of demonstrators gather regularly in public places in
Tokyo, and recently also in front of the ofﬁcial Prime Minister’s residence2 (organizers claim 150,000
participants, police reports 17,000 participants, and Japanese media report between 20,000-45,000)
These protests have caused powerful local politicians to speak out against nuclear power, especially
Osaka MayorTooru Hashimoto, who is frequently mentioned as a potential future Prime Minister.
Since local Governments are often the largest share holders of the regional electrical monopoly
companies,Tooru Hashimoto’s voice is not only the voice of a regional political leader, but also the
voice of the largest share holder of Japan’s second largest electrical utility.A the recent share holder
meeting, MayorTooru Hashimoto has demanded that Kansai Electric ends the use of nuclear power.
These movements are a strong indication that its likely that nuclear power generation will be reduced,
much reduced, or even eliminated from Japan’s energy mix, and that renewable energy will have
increasing popular and political support.

DEMOCRATIZATION OF JAPAN’S POWER INDUSTRY (2)
156
Since increasing the nuclear contribution of the energy mix to over 50% has been the National Policy
of Japan with strong support especially of the industrial and political establishment, written down as
National Policy in the Energy Basic Plan of June 2010, there is political discussion between many
interest groups and idealists and academics and other players to reach a national consensus for the
future energy architecture and energy mix for Japan.
In the past Japan’s energy policy and its implementation was decided by a group of about 100 people
more or less in secret.
Now and for the future Japan’s energy policy is decided by a much more democratic process with the
participation of many groups and many people and leaders, and the debate is public and causes much
passion and interest.
This change is favorable for the growth of renewable energy, and unfavorable for nuclear energy.

ELECTRICAL POWER
INDUSTRY REFORM AND
LIBERALIZATION
157

ELECTRICAL POWER INDUSTRY REFORM
158
The electrical power industry has essentially three components (not including equipment makers and service industries):
1.electricity generation
2.electricity transportation, grid
3.electricity sales and local distribution, including metering, invoicing and payment collection
•industrial
•private home users
In many countries these three components have been split with mutually independent generation companies, one or more
transportation or national grid companies, and electricity distribution and retail. In Japan, such a split-type liberalization has never taken
place, and the electric power monopoly companies have always strongly resisted such liberalization.
Partial reforms a few years ago in Japan have not brought real change to this structure, mainly because of the resistance by the
incumbent 10 regional monopoly electrical operators.
After the Fukushima nuclear disaster several inﬂuential leaders, including Masayoshi Son, are now demanding the liberalization and split
of generation, grid and distribution. It will remain to be seen, whether such a liberalization will take place.At the moment I do not see
rapid developments in this direction.
As long as such liberalization does not take place, independent solar energy producers, mega-solar power plants will need to sell their
generated electricity via Government mandated feed-in tariffs to the electricity operating monopolies which own the transportation
grid and the distribution to end-customers.

ELECTRICAL POWER INDUSTRY REFORM
METI PLAN
160
2013 2014 2015 2016 2017 2018 2019 2020
(c)2013EurotechnologyJapanKK
generationtransmissiondistribution
planninganddecisionmaking
create
organization
for wide area
grid operation
total
liberalization
of electricity
sales
end
government
control of
electricity
prices
maintain
government
control of
electricity prices
legally separate electrical
power generation and
transmission
prepare
liberalization of
electricity sales
create rules and framework
to separate power generation
and transmission
implement
separation

ASIAN GRID PROPOSALS
162

ASIAN GRID PROPOSALS
163
All European countries are connected
by a strong electrical grid.
Such a grid does not exist in Asia, and
Japan has no true national grid and no
electricity links.
Several organizations are proposing
Asian Electrical Power grids, which use
European grids as model.
Asia Pacific Power Grid
proposal by
Japan Policy Council
Asia Super Grid
proposed by
Masayoshi Son
and Softbank Energy (SB Energy)

JAPAN’S CITY GAS
LANDSCAPE
167

JAPAN’S CITY GAS BUSINESS LANDSCAPE
168
Japan’s city gas business started inYokohama in 1872, and today’s big four gas companies have been
founded between 1885 and 1922.
Japan’s city gas business is structured into the “big four”, which are all public companies traded on the
Tokyo Stock Exchange, and a large number of much smaller regional gas companies, some of which
are owned by the town governments, and others are privately owned or public:
•the “big four” city gas companies:
•Tokyo Gas (Tokyo and Kanto)
•Toho Gas (Nagoya, Chubu area)
•Osaka Gas (Kinki, Osaka, Kyoto area)
•Saibu Gas (Kita-Kyushi area: Nagasaki, Kita-Kyushu, Kumamoto)
•180 privately owned city gas companies (including the “big four”)
•29 local government owned city gas companies or city departments
The “big four” gas companies are globally active gas companies investing in the complete gas business
from exploration to transportation, harbor installations, pipelines, and distribution networks.
Recently the “big four” are aggressively moving into the electricity business to take advantage of the
the shut-down of Japan’s nuclear power generation and its replacement by natural gas.Thus the big
four gas companies are one of the most important new entrants realizing the liberalization of Japan’s
electricity sector.

JAPAN’S REGIONAL GAS
COMPANIES - OVERVIEW
169

JAPAN’S GAS COMPANIES - HOKKAIDO
171
1.Asahikawa Gas Co., Ltd.
2.Bibai Gas Co., Ltd.
3.Hokkaido Gas Co., Ltd.
4.Iwamizawa Gas Co., Ltd.
5.Kushiro Gas Co., Ltd.
6.Muroran Gas Co., Ltd.
7.Obihiro Gas Co., Ltd.
8.Oshamanbe-cho Water & Gas Section
9.Takikawa Gas Co., Ltd.
10.Tomakomai Gas Co., Ltd.

JAPAN’S GAS COMPANIES - KYUSHU/OKINAWA
177
1.Akune Gas Co., Ltd.
2.Amakusa Gas Co., Ltd.
3.Chikushi Gas Co., Ltd.
4.Daiichi Gas Co., Ltd.
5.Iizuka Gas Co., Ltd.
6.Imari Gas Co., Ltd.
7.Itochu Enex Co., Ltd.
8.Izumi Gas Co., Ltd.
9.Kajiki Gas Co., Ltd.
10.karatsu Gas Co., Ltd.
11.Kokubu Hayato Gas Co., Ltd.
12.Kurume Gas Co., Ltd.
13.Kyusyu Gas Co., Ltd.
14.Minaminihon Gas Co., Ltd.
15.Miyazaki Gas Co., Ltd
16.Nankai Gas Co., Ltd
17.Nihon Gas Co., Ltd.
18.Nishinihon Gas Co., Ltd.
19.Nougata Gas Co., Ltd.
20.Obama Gas Co., Ltd.
21.Oita Gas Co., Ltd.
22.Okinawa Gas Co., Ltd.
23.Omuta Gas Co., Ltd.
24.Saga Gas Co., Ltd.
25.Saibu Gas Co., Ltd.
26.Takamatsu Gas Co., Ltd.
27.Tosu Gas Co., Ltd.
28.Yamaga-Toshi Gas co., Ltd.

JAPAN’S REGIONAL GAS
COMPANIES -THE BIG 4
178

JAPAN’S BIG-4 GAS COMPANIES
(ANNUAL NET INCOME)
183
Net income of the big four gas companies is relatively stable, while the gas companies are growing
revenues at an annual compound growth rate of 4.1%.
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
0
50
100
150
200
250
300
netincomeYENbillion
Japan's Big 4 Gas
companies annual net income
US$ 1.0 billion
US$ 2.0 billion
US$ 3.0 billion
US$ 4.0 billion
Tokyo Gas
Toho Gas
Osaka Gas
Saibu Gas

(ANNUAL NET MARGIN)
187
Net margins of Japan’s big 4 gas companies are on the order of 1% - 8%.
Scale is important: the largest gas companies (Tokyo Gas and Osaka Gas show highest margins and
also strongest growth)
1998 2000 2002 2004 2006 2008 2010 2012 2014
2
4
6
8
10annualnetmargin
Tokyo Gas
Toho Gas
Osaka Gas
Saibu Gas
Annual net margin of Japan's Big 4 gas companies

COMPARING JAPAN’S 10
ELECTRICITY OPERATORS WITH
188

10 ELECTRICITY OPERATORSVS BIG-4 GAS COMPANIES
REVENUES
189
While the electricity sector combined is about four times larger in terms of sales than the city gas
sector, the city gas sector shows much stronger growth, with a compound average annual growth rate
of 4.1%, while the electricity sector shows little growth in revenues.
Japan’s big 4 city gas companies grow aggressively by entering new areas, including electricity
generation, partly in cooperation and partly in competition with the electricity operators.
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
0
5000
10000
15000
20000
revenuesYENbillion
Japan's regional electricity
operators annual revenues
Lehman
shock
US$ 50 billion
US$ 100 billion
US$ 150 billion
US$ 200 billion
OKIDEN
KYUDEN
YONDEN
CHUGOKU
KANDEN
RIKUDEN
CHUDEN
TEPCO
TOHOKU
HEPCO
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
0
1000
2000
3000
4000
5000
revenuesYENbillion
Japan's Big 4 Gas
companies annual revenues
US$ 10 billion
US$ 20 billion
US$ 30 billion
US$ 40 billion
US$ 50 billion
Tokyo Gas
Toho Gas
Osaka Gas
Saibu Gas

10 ELECTRICITY OPERATORSVS BIG-4 GAS COMPANIES
REVENUES AND MARKET-CAPITALIZATION
194
Market capitalization reﬂects the much more healthy situation of Japan’s big-4 city gas companies
compared to the 10 electricity operators.
The market capitalization / revenue ratio is substantially higher for the gas companies than for the
electricity companies.
Gas companies Electricity companies
0
1000
2000
3000
4000
5000
marketcapYENBillion
Market cap of Japan's electrical vs gas companies Dec 18, 2012
Tokyo Gas
Osaka Gas
Toho Gas
Saibu Gas
TEPCO
KANDEN
CHUDEN
KYUDEN
HEPCO
TOHOKU
RIKUDEN
CHUGOKU
YONDEN
OKIDEN
Gas companies Electricity companies
0
5000
10000
15000
20000
revenuesYENBillion
Revenues of Japan's electrical vs gas companies FY ended March 31, 2013
Tokyo Gas
Osaka Gas
Toho Gas
Saibu Gas
TEPCO
KANDEN
CHUDEN
KYUDEN
HEPCO
TOHOKU
RIKUDEN
CHUGOKU
YONDEN
OKIDEN

TOKYO GAS
195

TOKYO GAS (ANNUAL INCOME AND MARGIN)
198
For the period FY1999 - FY 2011,Tokyo Gas revenues have grown with an CAGR of 4.8%, income
and margins are relatively stable
1998 2000 2002 2004 2006 2008 2010 2012 2014
0
5
10
15
Annual operating and net margin TokyoGas
1998 2000 2002 2004 2006 2008 2010 2012 2014
0
20
40
60
80
100
120
140
160
180
200
annualoperatingnet
incomeYENBillion
0
US$ .5 Bill.
US$ 1.0 Bill.
US$ 1.5 Bill.
US$ 2.0 Bill.
Annual op. and net income TokyoGas

TOHO GAS
199

OSAKA GAS
203

SAIBU GAS
207

Saibu Gas
Founded
December 1, 1930. Formed initially by a merger of Nagasaki Gas
(founded in 1902), Hakata Gas, Kumamoto Gas, Kokura Gas in1913.
Founder
Headquarters Nagoya
Stock Exchange TokyoTSE 9536
Consolidated sales YEN 128 Billion (US$ 1.5 Billion) (FY2011, ended March 31, 2012)
Number of employees 1512, consolidated (March 2012)
Major share holders
Major business areas
gas supplier for 16 cities & 16 towns: Fukuoka, Kitakyushu,Kasuga,
Onojo, Fukutsu, Kumamoto, Nagasaki, Sasebo, and Shimabara

SAIBU GAS (ANNUAL REVENUES)
209
For the period FY1999 - FY 2011, Saibu Gas revenues have grown with an CAGR of 2.3%., the lowest
of the big-four city gas companies.
1998 2000 2002 2004 2006 2008 2010 2012 2014
0
50
100
150
200
250
300
US$ 1 Bill.
US$ 2 Bill.
US$ 3 Bill.
Annual revenues of Saibu Gas

SAIBU GAS (ANNUAL INCOME AND MARGIN)
210
For the period FY1999 - FY 2011, Saibu Gas revenues have grown with an CAGR of 2.3%. Income is
positive but ﬂuctuating, while margins are slowly decreasing.
1998 2000 2002 2004 2006 2008 2010 2012 2014
0
2
4
6
8
10
annualoperatingnet
incomeYENBillion
0
US$ .05 Bill.
US$ 0.1 Bill.
Annual op. and net income Saibu Gas
1998 2000 2002 2004 2006 2008 2010 2012 2014
0
5
10
Annual operating and net margin Saibu Gas

THE ROLE OF JAPAN’S
TRADING COMPANIES
INTHE ENERGY DOMAIN
211

THE ROLE OF JAPAN’STRADING COMPANIES INTHE ENERGY
SECTOR
212
This section will be included and updated in future versions of this report.

RENEWABLE ENERGY
213

FEED INTARIFFS (FIT) FOR
RENEWABLE ENERGY
214

RENEWABLE ENERGY
215
Japan’s renewable energy industry landscape and markets are documented in our following report:
•Renewable energy in Japan
•information:
•http://www.eurotechnology.com/store/j_renewable/
see also:
•Solid state lighting, GaN LEDs and lasers
•approx. 122 pages, 25 Figures, 21 photographs, 9 tables, frequent updates
•information:
http://www.eurotechnology.com/store/solidstatelighting/
•purchase current edition (single copy license):
•purchase current edition (corporate license):

GLOSSARY
216

GLOSSARY
217
Mega-solar
Solar plants larger than 1 MegaWatt capacity,
corresponding to the electricity needs of about
300 family homes
1 Joule
SI-Unit for Energy.
3,600,000 Joule = 1 kilo Watt hour (= 1 kWh)
1 Joule = 2.778 x 10-7 kWh
1 Watt
SI-Unit for Power.
Measures energy transfer or energy conversion.
1 Watt = 1 Joule / second
1 GW = 1 Giga-Watt
1 GW = 1 Billion Watt = 109 Watt
The power generation capacity of a nuclear
power station is typically on the order of 1 GW

SUMMARY
218

SUMMARY:
JAPAN’S ELECTRICAL ENERGY LANDSCAPE
219
Japan’s electrical industry has been almost unchanged for many years, until the Fukushima nuclear
disaster struck in March 2011.The nuclear energy contribution to Japan’s electrical energy mix was
around 30% and increasing this nuclear energy contribution to 50% was ofﬁcial policy. New
renewable sources were kept below 1% of the electricity energy mix.
The Fukushima nuclear disaster led to a shut-down of almost all nuclear power stations (except two),
and nuclear power has for the time being been replaced by much more expensive fossil sources
(mainly gas), and restarting retired aged conventional power stations.
Legislation came in force on July 1, 2012 to promote renewable energy sources via feed-in-tariffs, and
Japan’s energy strategy plan is currently in intense political discussions. For the future, strong increases
in renewable energy can be expected.The long-term fate of nuclear power has not yet been decided.

EUROTECHNOLOGY JAPAN KK
220

FOUNDED: FEBRUARY 1997 INTOKYO
221
Services and products - focus areas are high-technology, telecommunications, software, middle-ware,
environmental technology and medical equipment:
- Market entry to Japan for European and US high-tech companies, turn-round, reshaping, planning
and building of distribution networks
- European business development and strategy for Japanese companies
- M&A (European and US companies acquiring Japanese companies, Japanese companies acquiring or
investing in Europe)
- Turn-round preparations and management of foreign business in Japan
- Market research and strategy
- Due diligence of high-tech companies, environmental due-diligence
- Advisory services for investment fund managers and investors in technology ﬁelds
- we publish a series of market reports for about 10 years, which are purchased world-wide,
distributed direct and via distribution partners: http://www.eurotechnology.com/store/

222
- Leading high-technology business development boutique inTokyo, working globally
- Founded in 1996/1997 - 14 years experience, relationships, cooperations and success record.
- CEO works with Japan’s high-tech / telecom sector since 1984 - 27 years experience, resources,
cooperations.
- Wide network of cooperations in Governments, Embassies, trading companies, distributors, ﬁnance,
VCs, traditional corporations, venture start-ups, industry associations
- Experience: market-entry, restructuring, M&A, acquisitions, due-diligence
Customers include:
- More than 100 investment fund managers
- Industrial customers:
- NTT-Communications, SIEMENS, DeutscheTelekom, Cubic, Unaxis (now: Oerlikon), CITI Group,
CLSA Asian Markets, Genscape, Google, IKEA, Isabellenhuette, Landis+Gyr, National
Instruments, Swisscom,TechnoCom,
- Government
- NewYork Police Department, European Union,TEKES (Technology Research funding
organization of the Government of Finland)
Deep Japanese technology market knowledge - we publish a series of market reports for about 10
years, which are purchased world-wide.You can purchase our reports on Bloomberg: https://
www.bmart.com/search?&nuts%5B%5D=WIRE%3AEUT, and via eSellerate: http://store.eSellerate.net/
s.aspx?s=STR0576176470 and from http://www.eurotechnology.com/store/

GERHARD FASOL
PROFILE: HTTP://WWW.FASOL.COM/PROFILE/
223
- Worked successfully with Japan’s high-tech sector since 1984 - 27 years. Came first to Japan in
1984 to help build NTT’s first international R&D cooperation on semiconductor lasers
- Entrepreneur inTokyo since 1996, Eurotechnology Japan KK worked with many large corporate
groups (e.g. SIEMENS, NTT, DeutscheTelekom,Asahi Glass...), more than 100 investment fund
managers
- Assoc. Professor of Electrical Engineering atTokyo University. Record of Fasol-Laboratory atTokyo
University: http://www.fasol.com/tokyo_university/
- Elite “Sakigake” (Pioneer) R&D project on Spin-Electronics of Japanese Government Science and
Technology Agency.This work was evaluated by US National Science Foundation and US
Department ofTrade: http://www.wtec.org/loyola/erato/ch7_5.htm
- Co-initiator of spin-electronics device research in Japan, one of the first to start work on spin-
electronics in Japan in 1991
- Tenured Faculty member at Cavendish Laboratory/University of Cambridge.
- Assoc. Professor of Electrical Engineering atTokyo University
- PhD in Solid-State Physics (Cambridge University,Trinity College, UK)
- Diplom-Physiker, Ruhr-University Bochum (Diplom-Thesis on Superconductivity)
- Publication list (Books, patents and publications, several publications are specifially concerning
electron-spin and spin-electronics): http://www.fasol.com/profile/publications.shtml
- Languages: English, German (native), French, Japanese, and some Swedish

GERHARD FASOL WITHTETSUZO MATSUMOTO, EXECVP OF
SOFTBANK MOBILE CORPORATION
224

“POST GALAPAGOS STUDY GROUP”
25 JAPANESE LEADERS + 1 FOREIGNER (GERHARD FASOL) WORKING
FOR ONEYEAR ON CONCEPTSTO OVERCOME JAPAN’S
“GALAPAGOS EFFECT”
225
see: http://www.eurotechnology.com/2013/10/07/galapagos/

“POST GALAPAGOS STUDY GROUP”
25 JAPANESE LEADERS + 1 FOREIGNER (GERHARD FASOL) WORKING
FOR ONEYEAR ON CONCEPTSTO OVERCOME JAPAN’S
“GALAPAGOS EFFECT”
226
see: http://www.eurotechnology.com/2013/10/07/galapagos/

CONTACT AND MORE INFORMATION
227
Contact
•Gerhard Fasol PhD
•Eurotechnology Japan KK,Tokyo, Japan
•http://www.eurotechnology.com/
•fasol@eurotechnology.com
More information:
•reports:http://www.eurotechnology.com/store/
•twitter: http://twitter.com/gfasol/
•website: http://www.eurotechnology.com/
•personal site: http://fasol.com

Japan's energy landscape

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