Significance of Independent Power Producers in Japan's Energy Policy
Independent power producers (IPPs) in Japan attract close attention after the recent revision of the Electric Utilities Law. The revision abolished the licensing of wholesale electricity supply and at the same time introduced the wholesale bidding system.
The background of this change consists of the technical innovation and economical condition. The technical innovation is the development of efficient and economical small size power sources which utilize gas-turbine, fuel cell or co-generation system and the economical condition is the situation that requires more competition for inexpensive energy supply.
The bidding of wholesale electricity supply which was solicited in FY 1996 and FY 1997 proved the existence of considerably large amount of potential IPPs which are inexpensive than the projects of electric utilities. This fact leads to the further expansion of bidding system, which is that all thermal power plant will be decided to develop through the competition of the bidding after FY 1999.
On the other hand, to correspond to the global warming issue, the bidding system will be revised to introduce the evaluation of the environmental impact which will be caused by the IPPs. It means a significant change of the philosophy of the present bidding system, which had established a principal value on the economical standpoint.
To introduce furthermore completion into the electric industry, the liberalization of retail supply is under discussion now. Through this process, IPPs will get higher appreciation from the standpoint of more economically efficient electricity supply.