J-Power is in talks to acquire three plants in the United States this year to help more than double its generation capacity in the world's biggest energy market as demand slows at home, according to one of the company's senior executives.
The utility, officially known as Electric Power Development Co., may sign agreements to buy part or all of three natural gas-fired stations on the U.S. East Coast, said Masayoshi Kitamura, J-Power's executive vice president who is due to replace Yoshihiko Nakagaki as president next month.
He declined to name the plants as negotiations are still under way.
Utilities including Tokyo Electric Power Co. are expanding overseas as a shrinking population and energy-saving measures curb power use in Japan.
J-Power, the country's largest electricity wholesaler, will spend as much as ¥10 billion a year through March 2013 on plant acquisitions in the U.S. and also plans to add assets in China, Thailand and Indonesia, the 62-year-old Kitamura said.
"J-Power and other Japanese utilities may be compelled to take one of two courses — tap overseas markets or drastically diversify their core businesses at home," said Hirofumi Kawachi, a senior analyst at Mizuho Investors Securities Co. "Local electricity demand will probably grow at a slower annual pace of about 1 percent in the next decade, and it may ride a downward trend in the following decade."
The three plants would add as much as 1,500 megawatts to the combined 1,300-megawatt capacity of the seven stations in the U.S. in which J-Power already holds stakes, Kitamura said.
J-Power has formed a 50-50 joint venture with John Hancock Life Insurance Co. to look for suitable acquisitions. The venture, J-Power U.S.A. Generation L.P., signed agreements in December to buy three gas-fired plants in New York and Virginia.