As Japan deregulates electricity, this startup lets consumers compare suppliers

Yohei Kiguchi, CEO of Enechange

This article is part of Tech in Asia’s partnership with Disrupting Japan where we publish the revised transcripts from the show’s podcast interviews with Japanese entrepreneurs. This is heavily revised from the original transcripts. For the full interview, go here.

While power regulation gets most of the press, most of the market disruption is happening on the retail side, with hundreds of companies entering the market and offering steep discounts. Around the world, electricity consumers have never had this much choice.

This is where Enechange comes in. It is an energy-switching website that allows consumers and businesses to shop for the best-priced energy supplier. It’s one of the innovative startups in the newly deregulated energy market in Japan.

Yohei Kiguchi, CEO of Enechange, talks about the company and the market.

What attracted you to the business?

Energy deregulation was happening all over the world. When the market gets deregulated, this kind of business model—which did not exist in Japan yet—was set to happen anyway.

We intentionally started the company in April 2015, exactly one year before the market deregulation, so we could prepare well.

Tell us about the other companies you’ve started.

I started to have an entrepreneurial experience at 21, running a company in Japan for three years. Then, I went to the UK in 2012 as a Cambridge student, getting my master’s degree and then a PhD in energy technologies.

In 2013, my friends and I started Cambridge Energy Data Lab, of which Enechange and SMAP Energy are spin-offs.

What is Enechange’s business model?

There are around 70 million potential customers in Japan, and we get around 2 million average monthly visitors on the site. Just like in every energy comparison website, our service is free for customers but we get commissions from our suppliers.

Are people mostly switching based on price?

Yes. We were actually hoping that people switch energy suppliers because they want a greener company or home. But we found that around 95 percent of customers say they’ve switched because they found something cheaper.

They’re not necessarily after the cheapest supplier, though. When the market was opened one and a half years ago, there were just 10 companies supplying electricity in Japan. But all of a sudden, the market became really crowded, though it’s starting to shrink now with mergers and acquisitions. So now, there’s probably a maximum of 100 players in the market. Seventy of those are listed on our site.

How do you select suppliers?

First, they need to agree with our commission model. Second, we interview them to see the company’s quality. If the company doesn’t have any kind of experience or a good criteria to be an energy supplier, we would not put them on.

Do you view shopping comparison site Kakaku as a major competitor?

We are actually in an official partnership with them. They’re basically under the umbrella of the energy-switch network.

What kind of analysis do you want to provide them with?

Who do you think will win the market: low-cost providers or big brands?