According to business paper Nikkei (Jan 22, 2012), Tokyo Electric Power Company (TEPCO), the largest energy provider in Japan and the operator of Fukushima nuclear power plant, is commencing an open procurement of 17 million smart meters, whose estimated amount is USD 2.2 billion at minimum, between 2012 and 2018. Previously, suppliers of such a large procurement were limited to domestic companies having close relationship with TEPCO, but the power provider will allow global suppliers to join this time.

Due to the severe accident of Fukushima nuclear, TEPCO owes numerous liabilities of damage compensation of more than USD 40 billion in total, and comes near to excess of debt. To avoid its bankruptcy, Japanese government decided to step in TEPCO’s management after injecting enough capital using newly established organization “Nuclear Damage Liability Facilitation Fund” (NDLFF).
Currently, NDLFF and TEPCO are making a revival plan to keep the service level of of power providing while incorporating solvency for liabilities. The company needs a lot of measures to get operational efficiency.

In Japan, power meter is strictly regulated by Measurement Act. Any power providers should replace power meters equipped at customer’s house every 10 years. Every power meter unit has to be certified based on governmental rule without exception. Thus, procedures of shipping and buying power meters became very complicated. That is one of the reasons Japanese electric power companies, whose operational areas are monopolized by law, love to deal with just one supplier of power meter. Previously, estimated unit price of Japan made smart meter is around USD230 – USD340. For this procurement, around USD120 is anticipated because of needed operational efficiency.

New policy of 17 million power meter procurement seems open and fair for global suppliers as well as domestic ones. From mid February this year, TEPCO will reveal requirements of power meter to potential suppliers after exchanging non disclosure agreement. First tender for 300 million units is scheduled in October this year.

Since Japanese world of power meter has very specific rules and traditions, global vendors had better to consult with Japanese vendors before making a proposal. Requirements for accuracy, durability and failure rate are extremely rigorous.

Originally posted on Infrastructure Investment Journal authored by Daisuke Imaizumi, CEO of InfraCommons.