Publication date: Oct 3, 2025

Why Wheeling Agreements Matter for New Electricity Retailers

As Japan’s power market continues to evolve following its full retail liberalization in 2016, new electricity retailers face a challenging operating environment. One of the key mechanisms enabling their participation in the market is the wheeling (or transmission) agreement: a contract that allows retailers to transmit electricity from their generation sources to end users via the transmission networks operated by regional transmission system operators (TSOs).

Each retailer must obtain a wheeling agreement with every regional TSO in the areas where it intends to supply power, whether generated directly or procured through JEPX.  Each TSO requires two different wheeling applications:

• One for delivering electricity to a customer within the TSO’s own service area
• One for transmitting electricity from that area to a different TSO’s service area

The wheeling application process is highly administrative and requires close coordination with each TSO. It involves the preparation and submission of extensive documentation, all in Japanese. Why Wheeling Agreements Matter for New Electricity Retailers

Challenges for Foreign Entrant

Navigating the retail market entry process as a foreign entrant presents various challenges beyond just the regulatory framework. The language barrier, the highly formalized application style, and the nuances of business culture in Japan often require careful handling to avoid missteps or delays. Based on Shulman Advisory’s experience, the process can take anywhere between 6 to 24 months, depending on the complexity of the application and the responsiveness of the regulators. This is where expert consultation becomes critical to streamline processes, be proactive in anticipation of common pitfalls, and maintain momentum toward license approval.