[Japan] Keidanren Released a Policy Recommendation Report on Rebuilding Japan’s Power System

On April, 2019, the Japan Business Federation, called Keidanren, released a policy recommendation report titled “Rebuilding Japan’s Power System—Electric Power Policy to Support a Super-Smart Society, Society 5.0.” The economic organization is comprised of 1,376 Japanese representative companies, 109 industrial associations, and 47 regional economic organizations as of May 31, 2018, and plays a central role in assisting corporate activities by making policy proposals and taking actions to contribute to the self-sustaining development of the Japanese economy. The report highlights the future direction of Japan’s electric power policy in electric power generation, transmission, and distribution systems, and attempts to address current challenges.

Japan faces four main challenges in its electric power sector, including a high dependence (more than 80%) on fossil fuel power generation; the unexpectedly slower penetration of renewable energy, which is hindering Japan from decreasing its high dependence on fossil fuels; difficulties in restarting its nuclear power reactors that have received approval for their safety standards, due to a strong public antinuclear movement; and a failure to significantly reduce electricity pricing even after the recent deregulation of the retail electricity market. Additionally, the uncertainty of the current domestic business environment is discouraging power utilities from committing to major investments in power infrastructure.

In order to achieve “Society 5.0”, the main priority for Japan’s electric power policy should be securing a balance of ‘Safety + Energy Security, Economy, and Environment (S+3E),’ in line with the pursuit of Decarbonization, Decentralization, and Digitalization (3D). It is necessary to promote electric power investment, and to advance the development and implementation of new technologies. To encourage further investments, Keidanren recommends that the government should develop its next basic energy plan by considering the different potential scenarios for the future power system after 2030.