Billionaire Masayoshi Son has a track record in taking on monopolies after building a business that opened up the nation's telecommunications industry. Now he aims to shake up Japan's power utilities after the worst nuclear crisis in 25 years.
Son, the 53-year-old chief executive officer of Softbank Corp. (9984), plans to build solar farms to generate electricity with support from at least 33 of Japan's 47 prefectures. In return, he's asking for access to transmission networks owned by the 10 regional utilities and an agreement they buy his electricity.
Radiation has spread across at least 600 square kilometers (230 square miles) in northeastern Japan after the March 11 earthquake and tsunami caused reactor meltdowns at the Fukushima nuclear plant. Prime Minister Naoto Kan said in May he will rethink a plan to increase atomic power to 50 percent of the nation's total from 30 percent. Renewable energy accounts for 10 percent, according to Japan's Agency for Natural Resources and Energy, and Son wants that ratio to be tripled by 2020.
"The question is how this nation is going to survive after cutting nuclear power," Son said at a government panel meeting June 12. "A framework should be designed in a way to make the power business open for anyone who has the will to start it."
Moving In
Son, who was born in Japan to Korean parents, became an advocate of renewable energy after the disaster forced the evacuation of more than 50,000 households and contaminated drinking water and food. Tokyo Electric Power Co., the nation's largest power company, is still struggling to gain control of the stricken reactors at its Fukushima Dai-Ichi plant more than three months after the earthquake.
Son is trying to get access to the power transmission network of Japan, said Amir Anvarzadeh, senior salesman of BGC Partners Inc.'s Asian equity sales team in Singapore.
"This is a very high cash-flow business, very similar to the telecom business 10 years ago, which is why he's moving in, he can sense deregulation is coming."
After meeting with Kan and attending government discussions, Son announced the plan on May 25. He asked for land regulations to be modified to make 540,000 hectares of unused farmland available for solar power stations.
He declined to comment on details of the solar project June 10, saying it's at an early stage.
The Entrepreneur
Son's entrepreneurial streak emerged at the University of California, Berkeley, where he invented a voice-operated multilingual translator that he sold to Sharp Corp. for 100 million yen in 1979, about $456,000 at the average exchange rate that year, or $1.2 million today. He also capitalized on a burgeoning appetite for video games, importing bestselling Space Invaders machines from Japan and leasing them to cafeterias.
In the late 1980s, he offered a system enabling fixed-line phone users to choose operators with the cheapest rates, threatening the dominance of Nippon Telegraph & Telephone Corp. (9432), which was privatized in 1985. When Son introduced Softbank's broadband Internet service in 2001, he grabbed customers from NTT with free modems and prices that undercut NTT's by as much as half.
By 2006, Son had transformed his Internet venture capital company into a full-fledged phone service firm similar to NTT via 2 trillion yen acquisitions of Japan Telecom Co. and the Japanese unit of Vodafone Group Plc. (VOD)
"Son broke through the telecom industry and has the financial power and connections to make things happen," said Satoshi Nagata, a former president of Mitsui High-Tec Inc. (6966) who now runs VPEC Inc., a power solutions venture.
Raising Capital
Tokyo-based Softbank plans to set up an affiliate that will use some of the company's 3 trillion yen annual revenue to build solar power stations, Son said at a May 26 conference.
One option would be to raise funds to invest about 80 billion yen into building 10 solar farms, each with about 20 megawatts of capacity, said Softbank spokeswoman Makiko Ariyama.
The combined 200 megawatts of power capacity will provide more than 10 times the 19 megawatts in total produced at eight photovoltaic power stations run in Japan by the regional utilities as of June 9. Japan produced 988 terawatt hours of electricity in the year ended March 31.
Prime Minister Kan pledged to generate 20 percent of the nation's electricity through renewable sources by the 2020s as the nation rewrites its energy policy.
Kan Speech
"We will do everything we can to make renewable energy our base form of power, overcoming hurdles of technology and cost," Kan said in a speech in Paris before the Group of Eight summit last month. Japan aims to cut the cost of solar power generation to one-third current levels by 2020 and one-sixth in 2030 and will install roof-top solar panels at 10 million homes, Kan said.
A revision of the energy plan means Japan will probably step up a campaign to encourage the use of solar cells at the expense of atomic power, Takashi Watanabe, a Tokyo-based analyst at Goldman Sachs Group Inc., wrote in an report in April.
"I have a very high expectations, especially for our thin- film solar cells which had been limited to overseas sales," said Mikio Katayama, president of Sharp, Japan's biggest maker of solar cells. "Mega-solar plants have been nonexistent here and it could expand business opportunities."
Sunny Farms
Solar plants using 20 percent of unused agricultural land in Japan can have the generation capacity of about 50 gigawatts, almost matching that of Tokyo Electric, Son said.
"We can probably invite more companies to invest in our solar projects once a business model is set up," said Yukiko Kada, governor of Shiga prefecture, who is one of Son's partners.
The Japanese government may break up utilities' regional monopolies and separate their power-generation businesses from distribution operations, Kyodo News reported May 31, without saying where it obtained the information. A panel will begin discussing the issue from June as the government seeks to reform the power industry by 2020, Kyodo said.
Any move to separate power distribution from utilities "should have a national discussion after careful analysis on the merits and demerits as well as the impact on the stability of power supply and electricity fees," Hiromasa Yonekura, chairman of Keidanren, Japan's biggest business lobby, said on June 6.
"It's an extremely important issue that can impact the international competitiveness of Japanese industries," he said.
Salary Pledge
The 10 regional utilities handle generation, transmission and retail of electricity, maintaining virtual monopoly over the nation's power market.
The power business was partially liberalized in the late 1990s but few new companies entered the market partly because of difficulties in competing against the utilities, VPEC's Nagata said.
In April, Son pledged to donate 10 billion yen and his salary until retirement to help support disaster victims. Son earned 108 million yen and 1.3 billion yen in dividends in the fiscal year ended March 2010, Softbank said in June.
His 21 percent stake in the company is valued at more than 740 billion yen, according to data compiled by Bloomberg. Forbes magazine ranks him as Japan's richest man.
"Mr. Son has made quite a stir," Shiga Governor Kada said. "We expect the government to make a change."
