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Companies

Shell enters Japan's retail power market

Oil and gas giant weighs further opportunities in renewable energy

Royal Dutch Shell's entry will intensify competition in Japan's retail electricity market.   © Reuters

TOKYO -- Royal Dutch Shell has begun selling electricity to businesses in Japan and is considering residential sales in the future.

Shell is distributing power procured from the wholesale market, with approval from the Ministry of Economy, Trade and Industry.

The oil and gas company is also looking into potential options in renewable energy. It acquired German home battery maker Sonnen in March and may bring that business into Japan.

Japan began a feed-in tariff scheme in November 2009 to purchase excess electricity generated by solar panels on homes. But households with a combined generating capacity of 6.7 million kilowatts -- the equivalent of seven nuclear reactors -- will stop qualifying for this program by 2023. They are expected to seek new buyers for their solar power or consume more themselves, likely boosting demand for home batteries.

Shell is also entering the Japanese market for virtual power plants, which will launch in fiscal 2021 and link various power-generating units and storage batteries to ensure a stable supply of electricity. Such systems are key to popularizing renewable energy, whose output can fluctuate with the weather.

In addition to European players like Shell, such nonenergy companies as SoftBank Group and Toshiba are also eyeing Japan's electricity market. Increased competition could drive rates down.

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