What exactly is electricity liberalization?

With the lifting of the ban on electricity liberalization, we, the people, are now able to buy and sell electricity, and the electricity retail business is undergoing major changes. How will this liberalization of electricity affect households that have already introduced solar power generation?

What exactly is electricity liberalization?

What exactly is electricity liberalization? Until now, ordinary households have been able to use electricity by purchasing electricity from a designated electric power company. Electricity is a kind of resource and an important lifeline for households, so if it is targeted for business, it may affect the lives of ordinary households. Therefore, in order to provide a stable supply of electricity, each household could only contract with the local power company.

Sale of electric power

However, the exclusive sale of electric power by such a jurisdiction electric power company is a way of thinking that is contrary to the capitalist economy. For consumers, the fact that electricity can only be purchased from a specific power company may lead to a situation where they have to contract for a high electricity rate, and these problems have been pointed out for a long time.

Is liberalization of electricity monopoly?

Liberalization of electricity is not a monopoly as in the past, but a system that allows various companies to buy and sell electricity. With the start of electricity liberalization, ordinary households will be able to choose where to buy electricity and will be able to use electricity at better prices and services. And the liberalization of electricity will bring about various changes not only when buying electricity but also when selling it.

What is the impact of electricity liberalization?

The electricity produced by solar power can be sold to each electric power company. Regarding the sale of electricity by solar power generation, it was allowed to sell electricity to any company even before the liberalization of electricity. However, with the start of electricity liberalization, it is expected that more and more businesses will enter into the electric power business.

Surplus electricity, which had to be sold to a specific electric power company before the liberalization, may have more chances to sell under better conditions because there are more options for selling electricity after the liberalization.

“New electric power” or “PPS”

Businesses other than existing electric power companies that have newly entered the electric power business are called “new electric power” or “PPS”, but if the new electric power increases steadily, surplus electric power from solar power generation will be purchased at a higher price.

It is expected that the number of new electric power companies will increase further. As for the sale of electricity by solar power generation, the selling price of electricity is declining year by year because the system has spread widely to ordinary households.

This is because the high selling price of electricity so far was aimed at further popularization of photovoltaic power generation systems. However, if the number of new electric power companies increases due to the liberalization of electric power, some people think that the selling price of electricity, which had been on a downward trend, has room to rise.

We need to think how can we increase number of solar panels for common households. This kind of electricity liberalization would help us in multiple ways. You can also read Why solar panels are good for environment?