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Shell to break into retail power business in Japan
JAPAN
ROYAL Dutch Shell aims to expand into Japan’s retail power market a er beginning electricity sales to business customers in March 2019.
Shell said last week that the Japanese market was attractive as the government’s liberalisation of the retail market was making good progress.
e oil giant buys power from the country’s wholesale power market before supplying it to customers.
Shell said that it also aims to provide solar batteries and to become an operator of virtual power plants, two innovations that are expected to enter the Japanese market in 2023 and 2021.
Shell already sells electricity in European and North American markets and is keen to use its experience to build up its presence in Asia.
However, the company did not reveal any more details of its intentions.
Shell Japan registered as a retail seller of elec- tricity at the Japan’s Ministry of Economy, Trade and Industry in November 2019.
The liberalisations of Japan’s retail market would allow more providers to break up the local retail monopolies held until by regional utilities such as TEPCO, Kansai Electric Power and Chubu Electric Power.
Japan’s retail power market in currently worth $73bn, and since liberalisation in 2016 the
incumbent utilities have lost clients to start-up providers, o en gas companies.
TEPCO, Kansai Electric Power and Chubu Electric Power have lost 5.7 million retail power customers since April 2016, as consumers can now choose their electricity supplier.
Japan is in the midst of a process of deregula- tion of its power market, which started with the liberalisation of retail electricity in 2016.
Other reforms include wholesale power trading later in 2019, which would also provide trading in derivatives and other energy-based products. e government is opening the market as part of wider e orts to deal with the decline of nuclear power a er the 2011 Fukushima disaster.
e country’s incumbent utilities are mov- ing into renewables, and are expanding their imports of LNG to drive gas- red thermal power plants (TPPs).
Liberalisation has also forced regional incumbents to innovate at all levels of the elec- tricity value chain by investing in new solar and wind projects and cutting retail tari s.
e city gas market has also been reformed, with many power utilities recovering some lost business by selling gas to retail customers, while former gas utilities such as Tokyo Gas and Osaka
Gas are now o ering
power. ™
e retail segment is asset-light and as such, TNB earns minimal pro ts as Peninsular Malaysia’s only retail electricity provider,” it said in a recent report.
On July 5, the government said it was conducting a study on whether to allow new energy suppliers to come into the market, with the results to be made known soon. e government is studying whether the move would make tari rates more competitive for consumers.
e transformation of the local electricity industry is expected to come through the implementation of the Malaysia Electricity Supply Industry (MESI) 2.0. is aims to increase the industry’s e ciency, as well as decentralise the electricity supply industry. It is expected to be launched later this month.
UOB Kay Hian said it understands that the aim of opening up the retail market
is “to give consumers the opportunity to choose a greener route, for example, by buying electricity from environmentally- friendly players like Cypark Resources Bhd , which owns 30MW of renewable energy in Peninsular Malaysia.”
POLICY
Sri Lanka ends power cuts
Sri Lanka’s state-run Ceylon Electricity
Board has stopped power cuts a er Ceylon Petroleum Corporation resumed fuel supplies that were cut o on July 08 a er arrears of LKR80bn ($450mn) were racked up, a media report said.
“ e fuel supply is back, but it is not clear at the moment what the solution will be,” Power Ministry spokesman Sulakshana Jayawardene said.
On July 08, sudden power cuts were reported from several areas.
Sri Lanka’s energy utilities have seen a sharp rise in costs a er the central bank busted the rupee from 153 at the begging of 2018 to 176 to the US dollar now.
In the four months to April, CEB racked up losses of LKR23bn ($130).
Jayawardene said a subsidy should come from the Treasury or the arrears limit has to be raised.
CPC’s bank borrowings shot up in 2018
NEWS IN BRIEF
partly due to the currency collapse.
CEB’s losses are expected to be covered by
tax payer subsidies from the Treasury. ere were expectations when the Public
Utilities Commission was set up, that cost recovery tari s would come in, but this has not yet happened.
REFORM
Malaysia looks at opening up retail power sector
Malaysia’s power sector could be set for reform as the government considers ending incumbent supplier TNB’s monopoly
is would give consumers more options to buy electricity, but it is likely to have limited earnings impact on Tenaga Nasional Bhd (TNB), said analysts at brokerage UOB Kay Hian.
TNB is currently Peninsular Malaysia’s only retail electricity provider.
“ e incentive-based regulation (IBR) model is based on returns of regulated assets.
Week 27 09 •July•2019
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