Japanese power plant construction may be decided by open bidding

• 12 years ago (2011-12-23)
• David Flin

Asia 849

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The Yomiuri Shimbun has reported that Japan’s Economy, Trade and Industry Ministry (METI) has plans to require electric power companies to hold open bidding and compete with IPPs when they plan to build new thermal power plants or add generators to existing plants. According to government sources, METI aims to minimise rate increases by the introduction of competition to thermal power generation. A spokesman for METI said that this will encourage more IPPs to enter the power generation business and lead to the collapse of electric power companies’ regional monopolies.

METI aims to submit the new regulatory plan on December 27 to an expert panel set up to review electricity rate systems and management. Under METI’s plan, electric power companies will be required to hold competitive bidding with IPPs when they plan to build new thermal power plants or add to or replace generators at existing plants. The company to make the lowest bid, measured by power generation cost, would win the contract. Under the contract, the winning company would be required to supply a specified level of electric power to an extended period.

Tokyo Electric Power Company (TEPCO) has already announced a plan to purchase electricity from IPPs instead of building new thermal power plants of its own as a step towards rationalising its management. Other regional electric power companies are likely to take similar action.