EDITOR: | April 28th, 2014 | 1 Comment

Japan starts to count cost of idled nuclear plants

| April 28, 2014 | 1 Comment
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NuclearJapan has 14,000,000,002 reasons for restarting its nuclear reactors. The first 14 billion are U.S. dollars to that amount, the monthly trade deficit for March reported by Japan, a large part of which is due to the fast rising imports of liquefied natural gas needed to provide the electricity no longer available from the country’s nuclear plants. (Of course, if you annualise the March amount, you get 168,000,000,002 reasons.)

After those 14 billion reasons, what are the other two? One, is that Japan is getting further away from meeting its greenhouse gas reduction targets the more fossil fuel it uses. The final reason is that some of the gas now going to Japan needs, for geopolitical reasons, to be freed up to supply Europe so that continent can lessen its dependence on Russia; according to London’s The Daily Telegraph, Japan last year imported 76 billion cubic metres of LNG. “This has been ruinously expensive. It has also soaked up the world’s supply of LNG and driven up the price in Asia to at least four times U.S. levels,” the newspaper reported. It added: “Reactor start-ups could free up 34bcm in global supply, allowing it to be re-routed to Europe. Russia’s total gas exports to the EU are 130bcm.” It also opines that two reactors in western Japan — the safest area — could be open within six months or less. A further 29 may follow in stages.

Shinzo Abe, Japan’s premier, has announced his country will reopen many of its 48 nuclear reactors once they are cleared by safety regulators, despite the Fukushima disaster in 2011. Utilities have so far applied to restart 17 reactors at 10 plants and the first company to be examined under new safety regulations is Kyushu Electric which wants to reopen its Sendai plant in Kagoshima prefecture.

So as Japan moves to tackle the nuclear issue, keep in the mind that the key will be the money, and money always wins, doesn‘t it? Nuclear is the one base-load power source Japan can afford. Especially since the fall of the yen. Abe became prime minister in December 2012. Since then, the U.S. dollar has gone from buying ¥82 then to ¥102 now. This has meant costs of imports, and of LNG for powering Japanese industry, have risen by about 21%. (Remember, too, that Japanese utilities have substantial stockpiles of uranium, so that is another cost incentive to get those reactors working, although not good news for uranium suppliers as it will take some time for the utilities to whittle down those stockpiles).

However, there are doubters. Reuters says its own analysis shows that somewhere between a third and two-thirds of reactors in Japan will pass the new stringent safety checks, which involve seismological, economic, logistical and political hurdles to be jumped. Many of the idled plants will, as a consequence, never come back online. If this analysis proves correct, then Japan may not be able to reduce its fossil fuel imports by as much as its economic situation desperately needs.

Before Fukushima, Japan had 54 operating nuclear reactors and these collectively supplied about 30% of the nation’s electric power. Reuters, in doing a case-by-case basis, first rules out the six reactors at Fukushima. It allows that 14 others will restart, 17 are uncertain, and 17 will remain closed. That Reuters scenario would mean nuclear reduced to supplying just 10% of Japan’s electricity needs. (The Reuters analysis is based on questionnaires and interviews with more than a dozen experts and input from the 10 nuclear operators.)

Yet this analysis does not quite fit with the Abe government’s new Basic Energy Plan which lays out the principle that nuclear power is the country’s primary source of base-load power. Japan is now the largest importer in the world of LNG — not to mention the world’s second largest coal importer and the third largest net oil importer.

This does not make financial sense.

But, as if to back up Reuters analysis, just in is this report from the Nikkei news service. It reports Kansai Electric Power is facing protracted delays to bring back into service its reactors at the idled Oi plant. One problem is that there are three fault lines nearby, and the company is now reworking its earthquake resistance figures. The reactors will, at the very least, need to have reactors and piping further reinforced.


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Comments

  • u4eah

    Wow! Robin; talk about being caught between a rock, a hard place, and Fukushima !
    – This significantly future focused Japanese Energy initiative, from your site; tweaked my optic nerve as well. “http://investorintel.wpengine.com/technology-press/japans-25-year-plan-put-gigawatt-solar-power-farm-space/

    April 28, 2014 - 6:45 PM

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