Japan electricity markets: the March 2011 disaster revealed fundamental weaknesses, which now lead to restructuring and electricity market liberalization
Japan electricity markets: financial weakness of Japan’s electrical power companies
On April 30 Japan’s electricity operators announced their financial results for the financial year that ended on March 31.
Japan’s ten regional electricity operators again announced combined net losses in excess of US$ 15 billion for the Financial Year ending March 31, 2013, similar in size as the previous year: energy remains one of Japan’s most pressing problems.
For Financial Year FY2010, which ended March 31, 2011 three weeks after the March 11, 2011 disaster, Tokyo Electric (TEPCO) already announced net losses in excess of US$ 10 billion as an immediate consequence of the nuclear disaster at their Fukushima nuclear power station. In FY2010 other electricity operators beyond TEPCO were not yet substantially affected.
In FY2011 (ending March 31, 2012) and FY2012 (ending March 31, 2013) all electricity operators (except Okinawa Electric Power Corporation) were directly affected by the stop of all except 2 of Japan’s nuclear power stations, and by the replacement of nuclear power with thermal power stations – mainly fired by LNG.
Currently all Japanese regional electricity operators, except Hokuriku Electric Power Corporation and Okinawa Electric Power Corporations show net losses.
These losses drive dramatic actions to reduce fuel cost, to introduce renewable energy, to introduce demand management and smart-grids, and liberalization of Japan’s electricity sector.
Net margins are negative for all but two electricity operators
Only Okinawa Electric Power Corporation (which operates no nuclear power stations and is not linked to any other region) continues to announce profits. Hokuriku Electric Power Corporation announced very small profits, while all other eight regional power companies show large negative margins.
Electricity revenues show no slow-down
Electricity revenue statistics show a striking slow-down as a consequence of the Lehman shock. No such slow-down occurred as a consequence of the March 11, 2011 Tohoku disaster. Partially of course revenue increases are due to price increases to offset increased fuel costs.
More details and analysis in our report on Japan’s energy sector
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