Commodity trading house Vitol Group is considering opening an office in Tokyo to trade Japanese electricity, making them the latest foreign firm seeking to join the fast-growing power market.
Vitol is exploring options to trade physical electricity which may include setting up a domestic office in Japan, according to people familiar with the matter.
The company is still debating plans and hasn’t yet made decisions on the strategy or about a timeline, said the people, who asked not to be named as the details are private and deliberations are ongoing.
A spokesperson for Vitol declined to comment.
Japan’s power market, which was liberalized in 2016, is attracting more overseas firms as the transition away from fossil fuels, extreme weather and nuclear restarts increase volatility. BP and Engie both launched Japan power trading desks in Tokyo last year.
The volume of Japanese power derivatives on the European Energy Exchange, the bourse with the most popular offering, jumped 357% in January from the same month a year earlier.
It’s also part of a broader trend as a weak yen and low-interest rates prompt more foreign interest in Japan’s equity and real estate markets.
Known as the world’s biggest independent trader of oil, Vitol has been active in power markets globally for over a decade. The company, and others, have faced scrutiny in the U.K. over strategies that contributed to higher energy prices.
In Japan, companies must obtain a trade ministry permit to operate a power retail business and to participate in the physical electricity market.
Power futures contracts don’t require government approvals and can be easily handled from overseas. Vitol already trades Japan power futures from Singapore.