Softbank to begin retail electricity sales in spring

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Telecommunications giant Softbank is gearing up to begin retail sales of electricity in the spring.

The company announced its plans to begin selling electric power derived from renewable sources to consumers at a news conference in Tokyo on Friday. Softbank said SB Power Corp, a subsidiary of its SB Energy Corp, will sell electricity derived from solar, wind, hydropower and other renewable energy to corporate customers at first, and then the general populace by 2016, Sankei Shimbun reported Saturday.

The plan is the first phase of Softbank chief Masayoshi Son’s long-stated desire to liberalize energy distribution in Japan.

SB Energy officials said they plan to develop and build solar-panel facilities and other equipment, after which SB Power will manage all distribution to the consumers.

Prime Minister Shinzo Abe’s government has been discussing electricity industry reform to break up regional monopolies.

A new, higher feed-in tariff for renewable energy has spurred many companies to start investing heavily in wind and solar power, transforming defunct golf courses into solar farms and building offshore wind turbines. Besides Softbank, such companies include trading houses Mitsui & Co and Marubeni Corp, Toyota Motor Corp’s Toyota Turbine and Systems Inc and Oji Paper, among others.

At present, utilities such as Tokyo Electric Power Co and Kansai Electric Power Co, still supply almost 98% of Japan’s electricity and terms for access to their transmission lines make it onerous for new entrants.

Wrenching control of transmission from regional monopolies to create a national grid is also a key issue after the March 2011 earthquake that sparked the Fukushima disaster highlighted the inability to transfer power to areas suffering shortages.

The monopolies, set up in 1951 during the American occupation after World War II, followed the U.S. model at the time, with regional utilities controlling all aspects of power generation and transmission with legally sanctioned profitability.

Japan’s ability to smoothly transfer power between regions is also hampered by it having two different frequencies dividing its eastern and western sides.

That is supposed to change in the first stage of the reforms, slated to be carried out over the next seven years. The government has submitted legislation to create a national grid company in 2015, with the bill also laying out a schedule for the following two phases of reform.

In the second phase, the government plans to liberalize the market for homes, an important source of earnings for power companies.

The market to supply to customers using more than 50 kilowatts was opened up in 2005, but utilities can still block supply from independent power producers as they control transmission lines.

The final and most ambitious phase envisages breaking the monopolies into separate generation and transmission companies by 2020 and abolishing all price controls.