Japan's power companies can now look abroad for project opportunities. The country's government is set to loosen a rule preventing the companies from getting involved in overseas energy infrastructure projects. Changing the regulation will allow them to expand globally—which presents new competitive challenges to companies and teams largely familiar with the Japanese project landscape.
A few projects are already taking shape: In June, Tokyo Electric Power Co. Holdings (Japan's largest power company) and Chubu Electric Power announced a joint venture to support power grid development in Singapore. The organizations are also reportedly exploring project opportunities to expand grids and improve reliability in Cambodia and the Philippines, where power shortages are common.
The opportunities for new revenues are clear, but energy companies may struggle to deliver complex projects overseas, says Leon Gielen, head of business development in Japan and Asia Pacific for Delta Energy and Environment, Roermond, the Netherlands.
Mr. Gielen notes that the Japanese energy sector has been highly regulated for decades, which means companies haven't had to compete for customers or develop competitive propositions and delivery strategies. But to succeed in unregulated markets throughout Asia Pacific and beyond, Japanese companies will have to face other energy producers and be more cognizant of their project plans, business models and customer requirements to be successful, Mr. Gielen says. “These companies have great technical skills, but they haven't yet developed the customer centric ways of thinking. It is the biggest challenge they face on all projects.”
—Leon Gielen, Delta Energy and Environment, Roermond, the Netherlands
To mitigate risks, Japanese energy companies may need to add customer insight experts to their global project teams, he says. They will also likely have to partner with local companies in other markets—through joint ventures and public-private partnerships—to navigate unfamiliar regulatory environments and identify the best business opportunities. “Running projects in a competitive field is the quickest way for them to learn,” Mr. Gielen says. —Sarah Fister Gale