With the prolonged shutdown of reactors, Japan is facing economic, climate change and public acceptance challenges. However the government is optimistic that nuclear power can play a part in Japan's future energy mix and continues to have ambitious reactor export plans. By Steve Kidd
It is over four years since the Fukushima accident in March 2011 but the future of nuclear power in Japan remains in doubt. All the operable reactors remain offline, the cleanup operation at Fukushima is proving very demanding and expensive, and the future of the established local fuel cycle facilities remains uncertain.
[Cartoon by Alexey Kovynev "And do not forget that you must receive written consent from every inhabitant of the prefecture including infants!"]
Nuclear power has been a cornerstone of Japanese energy policy since the mid-1970s and before Fukushima accounted for approximately 30% of electricity production. This is despite Japan being the only country to have suffered the devastating effects of nuclear weapons in wartime. Japan lacks significant domestic energy resources and has to import some 80% of its requirements, so it has seen nuclear as a counterweight.
Even before the accident, however, there were problems with Japan's nuclear programme. It had slowed somewhat, with new reactors either delayed or cancelled. One reason for this was that forecasts of electricity demand growth had been regularly reduced, as the national economy slowed. This affected the plans of the ten major electricity utilities to introduce new generating capacity of all sorts, not just nuclear. Second, public support for nuclear power in Japan had been seriously eroded by a series of accidents and scandals. The accidents (albeit of a much lesser order than Fukushima) included the sodium leak at the Monju fast breeder reactor (FBR), a fire at a waste bituminisation facility connected with a reprocessing facility and a criticality accident at a small fuel fabrication plant (which claimed two lives). Scandals included the falsification of quality control data on a shipment from Europe of MOX fuel for light water reactors and the poor documentation of equipment inspections at Tepco's reactors, which extended to other plants.
The Japanese industry's image (and that of the responsible public officials) was seriously sullied before Fukushima. Repairing public support is now the most serious issue facing the industry, with the continued flow of negative news from the Fukushima site a formidable barrier.
The Japanese government, however, has recently affirmed that it sees nuclear providing 20% of electricity output going forward. To achieve this, more than half of the operable reactors need to return to service and it will be necessary to commission new units as time passes. Why the government seeks the return of a substantial chunk of nuclear generation is not hard to see.
First, the impact on Japan's balance of payments of the shutdown of all the nuclear units is quite clear. The soaring costs of imported fossil fuels, particularly liquefied natural gas (LNG), sent the current account of its balance of payments into serious deficit for the first time in many years. The increased dependence on imports also means a reduction in energy security of supply.
Second, the elimination of low-cost nuclear power and its replacement by expensive gas-fired power has had a serious impact on electricity prices. In a country where inflation was essentially unknown, industrial and residential customers have faced increases of 20% and beyond. Pressure on industrial competitiveness has prompted the Japanese business lobby to push hard for reactor restarts.
Finally, the impact on Japan's plans to curb carbon emissions must be mentioned. Carbon dioxide intensity from Japan's electricity industry climbed in 2012, up 40% on the period when the country's nuclear reactors were operating normally. This took the power sector far beyond climate targets, emitting about 100 million tonnes per year more CO2 than when the reactors were operating, adding 8% to the country's overall emissions. Targets to cut emissions have been altered to reflect the nuclear shutdowns, but expensive renewable energy plans cannot plug the gap. Renewable energy potential in Japan is not good and a highly urbanised population with significant industrial power demand requires a reliable baseload supply. Japan risks being seriously embarrassed in the upcoming international climate change negotiations without the return of a substantial number of reactors.
Another important issue is the proposed deregulation of the electricity sector in Japan. This has already begun, with limited competition for bigger customers cutting across the regional Japanese power companies. But in April 2016 the electricity market is due to be deregulated, with legal separation in April 2020 between generation, transmission, and distribution. How the nuclear units (assuming some will return to service) will fit into this is difficult to predict. Arguably the most sensible policy of combining them in one specialist nuclear generating company is unlikely to happen. The sector is likely to remain in fragmented ownership, something that has not served it well in the past.
Turning to the prospects for reactor restarts, the 54 units operating before Fukushima have been reduced to 43 by the demise of the six units at Fukushima Daiichi and five other older units that have commenced decommissioning. Of the 43 remaining, there are some that are very unlikely to restart owing to either serious seismic issues or adverse local public opinion (for example, the four units at Fukushima Daini). However, 24 units have already applied to the new Nuclear Regulatory Agency (NRA) to go through the stages necessary to gain approval for restart. Once this is gained, the reactors have to get the approval of the local prefectural authorities to recommence operation. This second stage may, in fact, be more difficult than the first. Five units (Sendai 1&2, Takahama 3 &4 and Ikata 3) have already received NRA approval and it is conceivable that over 30 may eventually be able to achieve it. One uncertainty is how a restriction to 40 year operating lives will be handled, but it is generally expected that if the NRA is happy with extensions beyond 40 years, extensions will be allowed.
Getting local approvals will, however, be challenging for many of the reactors arguably best-placed to come back online. For example, the
two advanced boiling water reactors (ABWRs) at Kashiwazaki-Kariwa are newish, large units but suffer from Tepco's very poor public image. Another possible hurdle is the possibility of legal challenges after the two- stage approval process has been passed. This has already happened at Kansai's Takahama 3& 4, where a court has blocked the restart process. This may eventually get overruled, but the concern about legal challenges adds to the uncertainty. If more than half of the 43 operable units return to service, it may be regarded as a good result. Some observers doubt that even this is achievable given the possible barriers. At best, maybe four units will return in calendar year 2015, with a similar rate for the next few years. It may take until the early 2020s before the final unit that can return to service actually does so.
Impact on fuel cycle and export plans
Without the Japanese reactors operating, the world demand for uranium has suffered and market participants are hoping that restarts will give the market a boost. Inventories held by the Japanese utilities have, however, risen as uranium deliveries under long term contracts have continued. It may be some time before the Japanese buyers need to go back into the market with purchase orders.
Assuming that the commitment to 20% nuclear remains, Japan will also need to build new reactors. At the moment, only Ohma 1 is under construction. It should come into service in the early 2020s and will be the first reactor to be 100% fuelled by MOX fuel, incorporating recycled plutonium. The other unit under construction at the time of Fukushima, Shimane 3, has been suspended until Shimane 2 achieves the NRA's approval for restart after a 15m high sea wall has been constructed to protect the site. Beyond these two, there are another dozen or so units that have been at the planning stage at one time or another, but further progress on these is surely dependent on the current reactor restart programme being successful.
Japan remains very interested in exporting nuclear reactors. In October 2010, industry and government set up the International Nuclear Energy Development of Japan Co Ltd (JINED) to export nuclear goods and services collaboratively. It is owned by the government (METI, through Innovation Network Corporation), nine utilities (Chubu, Kansai and Tepco being main shareholders), and the three manufacturers (MHI, Toshiba and Hitachi). Japan Atomic Power Co. and JINED in 2010 signed an agreement with Electricity of Vietnam (EVN) to undertake the Ninh Thuan II project, Vietnam's second nuclear power plant. Since the Fukushima accident, however, progress has been slow. The only significant export deal in recent years is MHI's involvement with AREVA in contracting to build the Sinop nuclear plant in Turkey, which includes Itochu and GdF Suez (now Engie) as the operating partner. Other initiatives that could lead to substantial exports are in the UK. Hitachi has purchased Horizon Nuclear Power (planning the construction of four ABWR units at Wylfa and Oldbury) and Toshiba has a joint venture with GdF Suez on NuGen (three Westinghouse - owned by Toshiba - AP1000s are planned at Moorside).
Elsewhere in the fuel cycle, Japan progressively developed a complete domestic industry, based on imported uranium. There is a small uranium refining and conversion plant and while most enrichment services are still imported, Japan Nuclear Fuel Ltd (JNFL) has operated a commercial enrichment plant. It has encountered many technical issues but capacity is still planned to be 1.5 million SWUs per year by the early 2020s. There are several fuel fabrication facilities, which can cover most of Japan's needs, but the MOX fuel fabrication facility has also suffered severe delays.
With its uranium deficit, Japan has always been committed to a closed nuclear fuel cycle, but has previously relied on European reprocessing and fabrication facilities. At Rokkasho-mura, there is a major complex including the enrichment facility, low-level waste and high-level waste storage and an 800 tonnes per year reprocessing plant. The latter has also experienced severe delays. Originally the concept was to use the separated plutonium from reprocessing in FBRs, making Japan virtually independent in nuclear fuel. Difficulties have been experienced, however, at the Monju FBR and there must be doubts about the economics in an era of abundant low-cost uranium.
The path to a nuclear future
The foundations are therefore in place for Japan to continue to have a substantial nuclear sector. It has government support and a lot of experience in building reactors and operating them, in the fuel cycle and in research and development. Yet doubts remain about whether the industry has a future.
The Japanese public is now afraid of nuclear power, and the government and regulators have lost their confidence. It will take a long time to restore this and without it there is little prospect of a prosperous future. Many mistakes were made in the aftermath of the Fukushima accident, among the worst being mishandling of the mass evacuation around the accident site and the failure to communicate properly with the general public.
The key undoubtedly lies in the reactor restart programme. It is hard to envisage it moving ahead smoothly, but this is what is required. The first reactors to return will be under a huge amount of scrutiny, with the strong anti-nuclear forces now apparent in Japan ready to pounce on any weakness. The economic boost from restarts will be substantial at the local level, but wider national public support is needed for nuclear if Japan is not to go the way of Germany and gradually phase it out. If the restart programme is slow and anaemic, the alternatives to nuclear will be strongly promoted, particularly in a country (like Germany) that has a high income per head and can arguably withstand some economic pain.
The industry has to greatly improve its public relations and paint a positive picture of nuclear, getting away from the shadow of Fukushima. The continuous negative news stream from there has to be somehow stemmed and confidence in nuclear restored.
About the author
Steve Kidd is an independent nuclear consultant and economist with East Cliff Consulting. The first half of his career was spent as an industrial economist within British industry, followed by nearly 18 years in senior positions at the World Nuclear Association and its predecessor organisation, the Uranium Institute.