Nukes and their real cost

POINT OF VIEW/ Eiji Oguma: Planned protective measures show real cost of nuclear power

http://ajw.asahi.com/article/views/column/AJ201501150006

SPECIAL TO THE ASAHI SHIMBUN

The industry ministry is discussing a new protective measure for nuclear power plants: the contract for difference (CfD) system.

The CfD, introduced in Britain, guarantees that electricity will be purchased at a fixed rate over a certain period of time.

The purchase price is calculated in consideration of the plant’s total cost, including future expenses, such as those for disposing of spent nuclear fuel and decommissioning reactors.

An agreement has been reached to apply the system to one nuclear power plant in Britain, with the reference purchase price set at 8.95 pence (around 15 yen or $0.13) per kilowatt-hour. That is higher than the corresponding price for a land-based wind farm, and comes with a longer guarantee period of 35 years.

A nuclear plant requires so much initial investment that there is no guarantee the cost will be recovered under the market economy. That is why the CfD and other protective measures for nuclear plants are being discussed in Japan ahead of the liberalization of the power retail market slated for 2016.

But various objections have been raised to the introduction of such measures.

First, the purchase price will likely be reflected in electricity rates, increasing the financial burden on consumers.

An article on the “real cost of nuclear power” that appeared in the December issue of the Sentaku monthly magazine introduces an expert's view: “Calculations show that applying the nuclear CfD to existing nuclear plants (in Japan) would result in total annual dues of more than 3 trillion yen, which is worth about the same as payments for alternative fuels within the current electricity rates.”

“Alternative fuels” refer to fossil fuels for thermal power plants that have substituted nuclear plants idled after the Fukushima nuclear disaster in 2011.

The article also quoted a senior official of a major manufacturer as saying: “There would be no advantage in resuming nuclear power generation if the rates were to be higher, although I don’t know about companies involved in building nuclear reactors.

“We would have no choice but to sharply increase in-house power generation if the CfD were to be introduced.”

Second, the decision process is not transparent.

Representatives of power utilities and nuclear industry sit as “expert members” on the Nuclear Energy Subcommittee, where the discussions are being held. The panel falls under the Ministry of Economy, Trade and Industry’s Advisory Committee for Natural Resources and Energy.

According to environmental economist Kenichi Oshima’s article in the December issue of the Sekai monthly magazine, live video broadcasts of panel meetings, which were available in the aftermath of the 2011 Fukushima nuclear disaster, are no longer shown, and records of the first six meetings have never been released, even in audio format.

Audio records alone have been released for the seventh and subsequent meetings, but they are designated for “temporary availability until the minutes are published.”

The article said the chairman of the Nuclear Energy Subcommittee said the meetings are not broadcast live because “some members say such a setting would not help them express their opinions.”

Third, such measures would give an advantage to power utilities that fail to reform their operations.

According to a special feature on power industry realignment in the Oct. 11 issue of Shukan Diamond weekly magazine, Chubu Electric Power Co. has long sought to enhance the efficiency of thermal power generation, and Tokyo Electric Power Co. also “decided to define thermal power operations as a pillar of growth” following the disaster at its Fukushima No. 1 nuclear plant.

Both utilities are seeking to integrate their fuel procurement operations to reduce their international procurement prices for liquefied natural gas.

The special feature said Kansai Electric Power Co., on the other hand, adheres to its traditional focus on nuclear power operations as if to “commit a double suicide with nuclear power.”

Policy measures that favor an old guard management policy and fail to reward efforts to meet the demands of current times would not help to open up a new future for energy.

Nontransparent protective measures that lack consensus would only create dependence and harm sound efforts.

Tatsuya Murakami, former mayor of the village of Tokai, Ibaraki Prefecture, known for having hosted nuclear plants, says “everybody stops making efforts” and “other industries stop growing” once a community hosts a nuclear plant.

In an interview published in the Feb. 6 edition of Diamond Online (http://diamond.jp/articles/-/48302), he said, “Clothing shops, for example, are not looking toward the village residents. They can get along by just buying in and selling work clothes and shoes for nuclear plant workers.

Murakami said the same can be said of inns.

“They are intended for nuclear plant workers, so you sleep crowded together and use a joint bath,” he said. “I used to say they have to remodel their rooms, say, into private rooms, but nobody has come forward to do so. Everybody says, ‘I don’t care about remodeling. Workers are coming, after all.’”

Prime Minister Shinzo Abe took part in a debate of political party leaders on Dec. 1, the day before the official start of the campaign for the Lower House election.

According to the Dec. 2 issue of The Asahi Shimbun, the prime minister said: “It is all too natural for the public to feel they are fed up with nuclear power. At the same time, we have the responsibility to provide a stable supply of inexpensive energy.”

I want Abe to explain if nuclear plants need to be protected, given that power utilities and the industry ministry have virtually admitted that nuclear power is anything but “inexpensive.”