Beyond nuclear: the triple challenge facing Japanese utilities

After decades of market dominance, high profitability and the creation of strong shareholder value, Japan's nuclear utilities have seen their fortunes turn in the wake of the Fukushima nuclear disaster. They have suffered large declines in returns and share prices, and have experienced only limited recovery, with 48 out of 50 nuclear reactors remaining offline. This report lays out the three main challenges Japan’s energy companies must address if they are to survive in the post-Fukushima environment. The challenges are: A new wave of market deregulation, the devaluation of nuclear assets, and breakthroughs in renewable deployment. In combination these challenges will result in massive changes. Impacts on utilities will be further compounded by a shrinking electricity market and by high and volatile prices for oil, liquefied natural gas (LNG), and coal. This report looks into what Japanese utilities could learn from how Europe and the US have addressed similar challenges, and proposes a range of strategies that could help Japanese utilities to become more resilient to political and market fluctuations.