Market liberalisation at home is driving Japanese power utility Kansai Electric to seek growth overseas. Yoshiro Takechi, general manager of Kansai Electric international business and cooperation division, has explained what he expects in return for the company’s ¥500 billion ($4.5 billion) war chest in an interview with IJGlobal.

Japan’s power market has for many years been dominated by 10 regional monopolies, including Kansai Electric which used to be the monopoly electricity supplier for Japan’s second largest industrial hub, Osaka.

Partial liberalisation of the electricity market started in 2000, when large factories were allowed to choose their suppliers, and in April 2016 the market was fully opened to competition, giving residential consumers the right to choose their supplier.

More competition at home coupled with a pressure on margins is the principal motivation behind Kansai Electric Power’s drive to invest in power overseas, whether greenfield or brownfield, according to Takechi.

“Kansai Electric Power is seeking to invest ¥500 billion and is aiming for an annual yield on the investment of ¥30 billion in 10 years’ time. In terms of generation capacity, we are looking to add 10GW of assets,” he said.

“Although we would prefer to have long-term US dollar power purchase agreements, we have made two investments in the US recently, both of which are located in quasi merchant markets, PJM and NYISO,” he added.

As of April 2017, Kansai Electric Power already owned 2GW of capacity, by equity ownership, in 11 power plants outside of Japan. These assets range from hydro in Laos and the Philippines, gas-fired in Singapore, Thailand and the US, as well as coal-fired in Australia and Indonesia.

The company intends to maintain this strategy going forward. “We are taking a portfolio approach, with a mix of green and brownfield power plants in Southeast Asia, gas-fired in the US and renewables in Europe,” Takechi said.

The power utility has an even broader portfolio on its home turf. In Japan, Kansai Electric Power owns and operates 12 gas-fired, seven major hydro and three nuclear power plants, as well as five solar and one wind farm.

Partial to hydro

With a long track record of building dams, Kansai Electric Power is looking to leverage its expertise in planning, building and operating large as well as small hydro power projects.

The company’s largest is the 1,932MW Okutataragi pumped storage power station in Asago, Hyogo prefecture, which started operations in 1974. The company also built Japan’s first hydro power plant in 1897, the Keage canal hydro power station in Kyoto.
 
“As an integrated utility, Kansai Electric’s unique expertise is in executing large scale hydro power plants, from the feasibility study stage through construction and long-term operations. We know you need to select at the beginning a location where most of the residents see benefits to building a dam to avoid being caught up in disputes later down the line,” Takechi said.
 
He sees Laos, Myanmar and Indonesia as the most promising markets for hydro power in Southeast Asia.