Japan’s power industry has a compelling business case to raise nuclear run rates as cabinet approval of a climate bill adds to pressure to reduce carbon emissions.
By stepping up rates to 80 percent, against just 65 percent in 2009, Japan could save at least 52 million tonnes of carbon emissions a year by 2020, industry and government figures show, worth around $800 million at current carbon prices.
What’s good for the environment is also good for business, with each extra percentage point of run rates worth around 40 billion yen ($443 million) in extra profit for operators, says the Federation of Electric Power Companies of Japan (FEPC), as they cut use of expensive alternatives like fuel oil.
But nuclear plants may struggle to overcome safety-related fears that have kept run rates in earthquake-prone Japan well short of the 90 percent achieved in the United States.
“Use of nuclear power plants is the shortest way to achieve the climate target because of the large size of emission cuts attained by it,” said Soichi Okuda, chief economist at Sumitomo Shoji Research Institute.
“There is no choice but to rely on it.”
The world’s 5th-largest emitter of greenhouse gases has 54 nuclear reactors that produced about a quarter of its electricity in the year ended March 2009. It aims to add up to another 13 by 2020, pulling even with France as the world’s 2nd-largest consumer of nuclear power.
Laws set to be passed by mid-June outline plans for Japan to cut greenhouse gas emissions 25 percent by 2020 from 1990 levels, once a global climate deal is reached.
Nuclear run rates will play a crucial role in cutting emissions that jumped to a record 1.371 billion tonnes in the year to March 2008, mainly due to the lengthy closure of the country’s largest nuclear plant after an earthquake in 2007.
A one percentage point rise in run rates would cut carbon dioxide (CO2) emissions by 2.4 million tonnes annually, says the Institute of Energy Economics, Japan (IEEJ), while the FEPC’s estimate is a cut of 3 million tonnes a year.
Total emissions fell to 1.286 billion tonnes in 2008/09, with power firms’ share falling to 332 million tonnes from 417 million as some units at Tokyo Electric Power Co’s (TEPCO) quake-hit Kashiwazaki-Kariwa plant, big enough to power half of Tokyo, resumed output.
CO2 emissions would have been 171 million tonnes higher if oil-fired electricity had replaced the portion of electricity generated by nuclear power plants, the FEPC said.
BUSINESS EFFICIENCY
The industry group FEPC has set a medium-term goal of boosting to half the share of non-fossil fuel energy, mainly nuclear power, in total power generation, and to lift nuclear run rates to 85 percent by 2020.
Nuclear power generated 26 percent of electricity in 2008/09 but an average run rate of 85 percent would have boosted this share to 37 percent, Reuters calculations show.
The trade ministry projected last year that nine new reactors by 2020 would cut 44 million tonnes of CO2 emissions annually, and an 80 percent rate for existing plants would cut emissions by another 52 million tonnes a year.
Tomoko Murakami, head of IEEJ’s nuclear energy group, said every added percentage point worth of nuclear power generation would avoid burning up 890,000 kilolitres (5.6 million barrels) in C-type fuel oil equivalent a year, or about 5 percent of Japan’s total C-fuel oil consumption.
That would also be equivalent to the energy of 650,000 tonnes of liquefied natural gas, or 1.49 million tonnes of thermal coal.
“In light of the utilities’ business operations, it’s a waste not to raise nuclear run rates. Once built, it’s best to use facilities to their utmost capacity for a long time,” Murakami said.
She noted that TEPCO posted its first annual net loss in three decades of 150 billion yen ($1.66 billion) in 2007/08, when it bought large oil volumes while Kashiwazaki-Kariwa was shut.
Tokyo Electric Power Co (TEPCO) cut its oil consumption plans by more than half to 4.87 million kilolitres for the year ending March because of the restart of two units at its Kashiwazaki-Kariwa nuclear plant.
CHALLENGE TO UP RUNS
There is definitely scope for Japan to push its existing plants harder, given how far short its run rates fall short of those of other major nuclear power producers.
To support higher nuclear run rates, in January 2009 the government eased inspection rules to let plants run continuously for up to two years, from 13 months, in line with overseas practice.
The government also aims to cut the check-up period from nearly 5 months now, using as example the United States, where check-ups last just a little over a month.
“In the past few years, the run rates have been low due to special factors such as earthquake-related shutdowns and work to beef up plants’ quake-resistance,” said an official with the trade ministry’s Nuclear and Industrial Safety Agency.
“Extending continuous operations is one way of boosting run rates, but the utilities need to convince local governments that the extension would not harm plants’ safety.”
But power firms and analysts could face a long wait for continuous operations to be extended, as the first test case will face scrutiny from municipal bodies worried over residents’ safety.
“We are studying extending operations but no decision has been made. Improving security and safety is the indispensable precondition,” said Jun Takahashi, spokesman for Kansai Electric Power Co.
