Performance and Policy Implications of Retail Electricity Market Liberalization in Japan under the Energy Crisis

This study evaluates liberalization of Japan's retail electricity market, using the 2022 global energy crisis as a "stress test" alongside the government's 2025 verification results.While liberalization successfully expanded consumer choice, the crisis exposed critical structural vulnerabilities in market design.The analysis reveals that the heavy reliance of new entrants on spot markets and asymmetric procurement structures, compared with incumbent utilities, led to significant instability.Furthermore, the coexistence of regulated and liberalized tariffs distorted price signals during the crisis.The findings indicate that retail competition alone cannot ensure price stability or supply resilience during severe external shocks.Japan's experience highlights that sustainable market reform requires not only deregulation but also robust procurement mechanisms, rational tariff design, and strong regulatory governance to function effectively under crisis conditions.