The Ministry of Economy, Trade and Industry has relaxed regulations to make it easier for nonutility companies to supply electricity to other companies.
The move, designed to promote cogeneration systems at industrial complexes and other facilities where exhaust heat from power generation systems can be reused, is in line with the government energy strategy introduced in September.
The strategy aims to boost power from cogeneration systems, which produce both electricity and heat, by five times the amount in 2010 by 2030.
Previously, nonutility firms with power generation capabilities were only allowed to supply electricity to users if they could meet their full demand.
This rule, aimed at creating a stable power supply, was criticized as being too strict.
METI is now allowing any company to supply power as long as it can cover half of the demand, with the rest supplied by power firms. It expects the deregulation to stimulate fresh investment in cogeneration systems.