Market Overview

The total retail electricity sales reached 821,800 thousand MWh in FY2024, which is a 2.4% increase from the previous fiscal year. Sales by new market entrants accounted for 20.0% or 163,980 thousand MWh, while sales by existing power companies accounted for 80.0% or 657,820 thousand MWh.

According to documents from the Electricity and Gas Market Surveillance Commission, retail electricity sales by new market entrants have increased since the electricity market fully opened in 2016. However, rising wholesale electricity market prices coupled with skyrocketing fuel prices from FY2022 to FY2023 forced many new electricity retailers to go bankrupt or withdraw from business. This resulted in customers returning to existing electricity companies, especially in high-pressure and special high-pressure areas. Consequently, retail electricity sales by new market entrants declined for two consecutive years. However, they are expected to increase again in FY2024, due to an improved wholesale electricity market environment. 

Noteworthy Topics

Changing Market Environment Surrounding New Electricity Retailers

Soaring fuel prices worldwide in 2022 significantly impacted new power retailers. This is triggered by Russia’s invasion to Ukraine, which surged prices of liquid natural gas and coal supplies and resulted to increase new electricity retailers’ power procurement costs. Many new market entrants that fell into the situation where purchasing prices exceeding selling prices suspended acceptance of new contracts with household customers as well as their sales activities to enterprise customers for a certain period of time.

According to the Energy Resources Agency, 83 new electricity retailers suspended, abolished or dissolved their companies. It was particularly a hard blow for companies that relied on the wholesale electricity market for power procurement.

Future Outlook

The total retail electricity sales are forecast to reach 840,870 thousand MWh by FY2030, of which sales by new market entrants are projected to account for about 24.0% or 198,120 thousand MWh, while sales by existing power companies are expected to account for about 76.0% or 642,750 thousand MWh.
Retail electricity sales are expected to grow moderately toward FY2030. Driving forces, including the establishment of new data centers and semiconductor plants as well as energy conversion (electrification) at existing factories, outweigh suppressing forces of a declining population and energy-saving promotions to achieve carbon neutrality.
Following the improved electricity procurement environment in the second half of 2023, new electricity retailers are likely to compete for customers once again and increase their share of retail electricity sales.    

Research Outline