Japan's post-3/11 energy policy

The March 2011 meltdowns at the Fukushima No. 1 nuclear power plant, which was flooded by the giant tsunami eight years ago, have not only changed the lives of tens of thousands of people in its vicinity, but also the energy landscape in Japan and the rest of the world. The massive extra costs of safety investments following the disaster made nuclear power more expensive and less competitive as a source of energy — in contrast to the growing use of renewable energy such as wind and solar power, which has made them more cost-competitive. It should be examined again whether the government’s energy policy since 2011 adequately reflects the post-Fukushima reality and is a feasible path for the future.

The changes have doomed Japanese companies’ overseas nuclear power business. The collapse of Westinghouse Electric Co., the U.S. nuclear power unit of Toshiba Corp. — due to cost overruns and delays in its construction of nuclear power plants in the United States — and subsequent losses threw Toshiba itself into a financial crisis. In the face of declining domestic demand, the government promoted the export of nuclear power plants by Japanese makers. However, Hitachi Ltd. has effectively given up its plan to build two reactors in Britain, and Mitsubishi Heavy Industries is similarly expected to withdraw from its project in Turkey as costs balloon from the initial estimates.

At home, the Fukushima crisis led to the shutdown of all nuclear power reactors at one point. The Abe administration has since reversed the previous Democratic Party of Japan-led government’s policy of phasing out nuclear power and positioned nuclear power as a key baseload source of electricity supply that would account for 20 to 22 percent of power generation in 2030. It promotes restarting the idled reactors once they clear the new safety standards of the Nuclear Regulation Authority.

But the restart of idled reactors has remained slow. Power companies have so far been able to bring nine reactors in five plants back online after getting approval from the NRA and host local governments. Nuclear power’s share of the electricity supply was a mere 3 percent in 2017.

Meanwhile, the cost of safety investments needed to reactivate a reactor — hundreds of billions of yen for each one — forced power companies to choose between seeking to reopen the plants and decommissioning reactors whose restart would not make business sense. Aside from the six reactors at the crippled Fukushima No. 1 plant, power companies have so far moved to decommission 11 reactors at seven plants — mostly aging units with relatively small output capacity that were nearing the 40-year threshold since their launch — as the firms determined that they would not be able to recoup the needed investments to extend their operation.

It is estimated that about 30 reactors will need to be in operation to supply 20 percent of the nation’s power supply demand, and the current state of nuclear power generation casts doubt on the feasibility of the government’s energy mix target. There are calls from industrial sectors for the government to push for the construction of new nuclear power plants and reactors, but that prospect remains tough given the deep-rooted popular opposition to restarting idled reactors.

Meanwhile, the years since 2011 have witnessed a global surge in the use of renewable energy. Renewables now account for 26 percent of the global power supply, and increased use has significantly reduced their cost. In its basic energy plan updated last year, the government calls for turning renewables into a ” primary” source of power supply. But Japan lags far behind other industrialized countries in introducing renewable energy.

The government’s target of increasing the share of renewable energy in the 2030 power supply mix to 22 to 24 percent, compared with 15 percent as of 2016, still falls short of today’s global average. Renewable energy in Japan — effectively subsidized under the feed-in tariffs system launched in 2012 — is still much more costly than in many other countries because the domestic market is small. As expansion of renewable energy remains slow and nuclear power’s share continues to be minuscule, fossil fuel-fired thermal power including coal accounts for more than 80 percent of Japan’s electricity generation. And yet many industrialized countries plan to phase out coal-fired plants because they emit more global warming gases than other sources of energy.

Since 2011, the government has vowed to reduce Japan’s dependency on nuclear power while maximizing the use of renewable energy. While nuclear power has clearly lost its competitiveness, renewable energy has yet to become economically competitive in this country. The government needs to flesh out its goal of turning renewables into a primary source of the power supply with concrete steps to make that happen.