11 March 2021 will mark ten years since the nuclear accident at Tokyo Electric’s Fukushima Daiichi Nuclear Power Plant. The problems caused by the disaster, however, are nowhere close to being resolved. Disaster recovery has not been adequate, and many challenges remain, including disposing of ALPS-treated water and contaminated topsoil that has been removed, and the handling of the accident at the power plant. Having said this though, with regard to energy use, a major conversion is taking place that would have been inconceivable before the disaster.
Taking a look at nuclear power, in fiscal 2010, before the Fukushima disaster, 54 reactors were in operation and were responsible for 25% of Japan’s total electricity generation. The situation changed completely though after the accident. Twenty-four reactors are scheduled to be decommissioned, and of all the country’s nuclear power plants, only nine, owned by Kansai Electric, Kyushu Electric, and Shikoku Electric, have resumed operations. As a result, nuclear power’s share of Japan’s electricity generation has plummeted to around 6%.
Electricity generated by nuclear power in fiscal 2019 was nearly the same as levels seen in the 1970’s. Considering the situation for all of Japan, it is clear that nuclear power has already stopped functioning as the country’s base load power source. Nuclear power has declined greatly and is now barely hanging on. The operating period for nuclear reactors under the Reactor Regulation Act is limited to 40 years or 60 years even when extended to the maximum amount allowed, so the fate of nuclear power is to disappear.
Japan’s energy policy, however, seems to be in denial. The Green Growth Strategy towards 2050 Carbon Neutrality, announced in December 2020, lays out the government’s vision for the future of nuclear power. The government plans to continue to make safety enhancements and maximize utilization while decreasing overall dependence, but this policy is completely at odds with current reality.
One reason the government gives for ‘maximum utilization’ is the notion that nuclear power is inexpensive. A document used by the Strategy Policy Committee of the Advisory Committee for Natural Resources and Energy, held in advance of the country’s new Strategic Energy Plan, actually states that nuclear power has inexpensive operating costs.
I have therefore made some very simple cost estimates for existing nuclear power plants that have begun investing in safety measures since 2011 to resume operations. My estimates make the following optimistic assumptions: the costs considered for each power plant are the cost of additional safety measures, and for maintenance costs, fuel costs, and others, I use the assumptions of the government’s 2015 Power Generation Cost Analysis Working Group; initial investment (construction costs) is set at zero; for total electricity generation, the actual operating period is used for power plants that have resumed operations; from fiscal 2022 onward, it is assumed that all reactors will resume operations, including those currently offline, and that thereafter capacity utilization will be maintained at 70%; and accident costs use the 21.5 trillion yen figure indicated by the Committee for Reforming TEPCO and Overcoming 1F Challenges in 2016. Data on individual plants is not available, so average generating costs at existing nuclear plants for their remaining operating periods should be understood as rough approximations only; they may not be entirely accurate.
The results are shown in the table. Even with optimistic assumptions, average generating costs are high at nearly every plant. There are two reasons for this.
Generating Cost Estimates for Existing Nuclear Plants (Including Social Costs)
The first reason is the increased cost of additional safety measures. Costs for additional safety measures at individual reactors are disclosed at the level of the power plant, so a number of reactors are combined. The cost of additional safety measures at nuclear power plants nationwide is approximately 220.0 billion yen per reactor on average. This figure diverges significantly from the assumption of the 2015 Power Generation Cost Analysis Working Group, which was 60.1 billion yen.
The second reason is the decrease in electricity generation. That is to say, since the Fukushima disaster, most power plants have remained offline. And even those that have resumed operations had been shut down for an extended period of time to implement safety measures. Plants have also been stopped for a period of time due to lawsuits and other issues. At the same time, the allowable operating period is normally 40 years, and even if extended, the limit is only another 20 years, so there are limits then, too, to the amount of electricity that can be produced. If plants end up spending a longer period of time offline, this operating period will shorten still further and the amount of electricity they generate will decline as a result.
Generating costs are the costs involved in generating electricity divided by the amount of electricity generated. When the costs involved in generating increase and the amount of electricity generated declines, generating costs rise synergistically. Going forward, additional safety measures will only increase; they will not decrease. Operating periods will not increase, so the amount generated will also not increase. Accordingly, generating costs will not decline going forward.
Nuclear plants that have resumed operations have high generating costs, and those that are still offline have even higher costs. For example, Tokyo Electric’s Kashiwazaki-Kariwa Nuclear Power Plant, if it operates for 40 years, will have costs in the 23-24 yen range per 1 kilowatt, and the 16-17 yen range per kilowatt even if it operates for 60 years. Though the calculations here are simplified significantly, Japan’s existing nuclear plants have reached the point where it is very difficult to understand why, in terms of economics, they plan to resume operations. Having embarked on this can only be called a failure of managerial judgment on the part of the major power utilities (the former general electric utilities and Japan Atomic Power Company). More likely than the reason that has been given, that the plants are being restarted because generating costs are inexpensive, is that the utilities have already made their investments and cannot now reverse course. Or, the government is unwilling to wave the white flag, so the power utilities are unable to stop.
It is equally clear that generating costs are high at new nuclear plants, not just existing ones. The International Energy Agency published a report in 2019 entitled Nuclear Power in a Clean Energy System. The report describes how nuclear power costs are high and that as renewable energy increases, the margins that allow its utilization get smaller, such that in a competitive environment it becomes difficult for nuclear power to survive. The report asserts that nuclear power has advantages, so it needs to be supported by the government. One may not agree with this assertion, but the report is correct in its honest acknowledgement of the facts regarding the economic rationality of nuclear power.
In formulating its energy policy, the Japanese government needs to accept the basic premise that nuclear power is expensive. Otherwise, it will misjudge the future of nuclear power. As result, despite its inevitable disappearance, valuable policy resources will continue to be invested. And that would mean that the government’s Strategic Energy Plan and its Green Growth Strategy towards 2050 Carbon Neutrality will have incorporated failure right from the start.
Public opinion is almost entirely against maintaining nuclear power. The best course of action for government policy is to give up on nuclear power and speed the transition to a zero-nuclear society while converting to an energy system of 100% renewable energy.
Taking a look at nuclear power, in fiscal 2010, before the Fukushima disaster, 54 reactors were in operation and were responsible for 25% of Japan’s total electricity generation. The situation changed completely though after the accident. Twenty-four reactors are scheduled to be decommissioned, and of all the country’s nuclear power plants, only nine, owned by Kansai Electric, Kyushu Electric, and Shikoku Electric, have resumed operations. As a result, nuclear power’s share of Japan’s electricity generation has plummeted to around 6%.
Electricity generated by nuclear power in fiscal 2019 was nearly the same as levels seen in the 1970’s. Considering the situation for all of Japan, it is clear that nuclear power has already stopped functioning as the country’s base load power source. Nuclear power has declined greatly and is now barely hanging on. The operating period for nuclear reactors under the Reactor Regulation Act is limited to 40 years or 60 years even when extended to the maximum amount allowed, so the fate of nuclear power is to disappear.
Japan’s energy policy, however, seems to be in denial. The Green Growth Strategy towards 2050 Carbon Neutrality, announced in December 2020, lays out the government’s vision for the future of nuclear power. The government plans to continue to make safety enhancements and maximize utilization while decreasing overall dependence, but this policy is completely at odds with current reality.
One reason the government gives for ‘maximum utilization’ is the notion that nuclear power is inexpensive. A document used by the Strategy Policy Committee of the Advisory Committee for Natural Resources and Energy, held in advance of the country’s new Strategic Energy Plan, actually states that nuclear power has inexpensive operating costs.
I have therefore made some very simple cost estimates for existing nuclear power plants that have begun investing in safety measures since 2011 to resume operations. My estimates make the following optimistic assumptions: the costs considered for each power plant are the cost of additional safety measures, and for maintenance costs, fuel costs, and others, I use the assumptions of the government’s 2015 Power Generation Cost Analysis Working Group; initial investment (construction costs) is set at zero; for total electricity generation, the actual operating period is used for power plants that have resumed operations; from fiscal 2022 onward, it is assumed that all reactors will resume operations, including those currently offline, and that thereafter capacity utilization will be maintained at 70%; and accident costs use the 21.5 trillion yen figure indicated by the Committee for Reforming TEPCO and Overcoming 1F Challenges in 2016. Data on individual plants is not available, so average generating costs at existing nuclear plants for their remaining operating periods should be understood as rough approximations only; they may not be entirely accurate.
The results are shown in the table. Even with optimistic assumptions, average generating costs are high at nearly every plant. There are two reasons for this.
Generating Cost Estimates for Existing Nuclear Plants (Including Social Costs)
The first reason is the increased cost of additional safety measures. Costs for additional safety measures at individual reactors are disclosed at the level of the power plant, so a number of reactors are combined. The cost of additional safety measures at nuclear power plants nationwide is approximately 220.0 billion yen per reactor on average. This figure diverges significantly from the assumption of the 2015 Power Generation Cost Analysis Working Group, which was 60.1 billion yen.
The second reason is the decrease in electricity generation. That is to say, since the Fukushima disaster, most power plants have remained offline. And even those that have resumed operations had been shut down for an extended period of time to implement safety measures. Plants have also been stopped for a period of time due to lawsuits and other issues. At the same time, the allowable operating period is normally 40 years, and even if extended, the limit is only another 20 years, so there are limits then, too, to the amount of electricity that can be produced. If plants end up spending a longer period of time offline, this operating period will shorten still further and the amount of electricity they generate will decline as a result.
Generating costs are the costs involved in generating electricity divided by the amount of electricity generated. When the costs involved in generating increase and the amount of electricity generated declines, generating costs rise synergistically. Going forward, additional safety measures will only increase; they will not decrease. Operating periods will not increase, so the amount generated will also not increase. Accordingly, generating costs will not decline going forward.
Nuclear plants that have resumed operations have high generating costs, and those that are still offline have even higher costs. For example, Tokyo Electric’s Kashiwazaki-Kariwa Nuclear Power Plant, if it operates for 40 years, will have costs in the 23-24 yen range per 1 kilowatt, and the 16-17 yen range per kilowatt even if it operates for 60 years. Though the calculations here are simplified significantly, Japan’s existing nuclear plants have reached the point where it is very difficult to understand why, in terms of economics, they plan to resume operations. Having embarked on this can only be called a failure of managerial judgment on the part of the major power utilities (the former general electric utilities and Japan Atomic Power Company). More likely than the reason that has been given, that the plants are being restarted because generating costs are inexpensive, is that the utilities have already made their investments and cannot now reverse course. Or, the government is unwilling to wave the white flag, so the power utilities are unable to stop.
It is equally clear that generating costs are high at new nuclear plants, not just existing ones. The International Energy Agency published a report in 2019 entitled Nuclear Power in a Clean Energy System. The report describes how nuclear power costs are high and that as renewable energy increases, the margins that allow its utilization get smaller, such that in a competitive environment it becomes difficult for nuclear power to survive. The report asserts that nuclear power has advantages, so it needs to be supported by the government. One may not agree with this assertion, but the report is correct in its honest acknowledgement of the facts regarding the economic rationality of nuclear power.
In formulating its energy policy, the Japanese government needs to accept the basic premise that nuclear power is expensive. Otherwise, it will misjudge the future of nuclear power. As result, despite its inevitable disappearance, valuable policy resources will continue to be invested. And that would mean that the government’s Strategic Energy Plan and its Green Growth Strategy towards 2050 Carbon Neutrality will have incorporated failure right from the start.
Public opinion is almost entirely against maintaining nuclear power. The best course of action for government policy is to give up on nuclear power and speed the transition to a zero-nuclear society while converting to an energy system of 100% renewable energy.