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How will energy demand be met in 2014?

December 31, 2013

Energy rivals to face eased demand
Reactor restarts sought but OKs no given; LNG, coal also figure

Staff Writer

http://www.japantimes.co.jp/news/2013/12/31/national/energy-rivals-to-face-eased-demand/#.UsMkOLTrXIU

 

Even as new renewable energy projects come online and changes in the law designed to increase competition and use power generated from all sources more efficiently start to come into effect this year, predictions for the nation’s energy landscape show total energy consumption slightly down.


However, the real issue is how many idled nuclear reactors will be restarted in 2014. At present, the nation’s 50 viable reactors are offline, a legacy of the Fukushima meltdown calamity that started on March 11, 2011.


The economic impact such restarts will have, regardless of whether nuclear energy will still be cost-competitive with liquefied natural gas, which Japan is pushing to increase, and, most importantly, what will happen to the atomic waste the restarted reactors generate, are all questions that must be addressed in the coming months.


The Institute of Energy Economics, Japan noted in mid-December that projections on how many reactors are in operation by the March 31, 2015, end of fiscal 2014 depend on how long the Nuclear Regulation Authority takes to inspect candidate units under new safety rules that took effect in July.


It is assumed that it will take nine months to inspect and actually put a reactor back online. This includes time required for gaining local government consent for the restart. Officially, local approval is not required, but it has always been sought. To break that precedent would create political problems for both the central government and the utilities.


“This (nine-month scenario) would result in no nuclear power plant restarts within this fiscal year, which ends in April 2014,” the IEEJ said

.

However, if the NRA assessment and approval period took six months, the IEEJ predicts 16 reactors could be restarted and operating for an average of seven months in fiscal 2014.


On the other hand, an inspection and approval period of a year means only six reactors would be operating by the end of fiscal 2014. If there was an increase in the number of NRA inspection staff from April, and a smooth restart application process by the utilities, the time could be shortened to the point where the IEEJ sees 22 restarted and operating for an average of eight months during fiscal 2014.


Compared with 2010, the last year nuclear plants were running, the additional cost of importing fossil fuels in 2014 to replace atomic power is expected to be ¥7.3 trillion, according to the IEEJ.


Restarting 22 reactors will save ¥2.4 trillion. But the IEEJ also predicts the restarted units would not be generating electricity at the 2010 cost of ¥8.2 per kilowatt-hour. If 16 reactors were restarted, the cost would be ¥11.4/kwh, which is more expensive than generating power from some fossil fuels.


The IEEJ prediction is comprehensive. But it assumes the NRA will not reject most applications. Nor does it address either long-term issues related to nuclear power that are rapidly becoming short-term issues, or questions about costs that are more political than economic.


Restarting reactors in 2014 may mean more electricity. But it also means Japan will have to quickly address a fundamental problem that nobody has an answer for, which is what to do with the spent nuclear fuel.


Nationwide, spent fuel pools at 17 reactor sites are about 70 percent full on average. The spent fuel pools at 33 of the remaining 50 reactors will be completely full within six years if those reactors are restarted and run at pre-3/11 levels. Another 14 reactors could see their spent fuel pools fill up within a dozen years.


“In order to restore public trust in nuclear power, it’s critical that Japan address the issue of what to do with its spent fuel, of which 17,335 tons was in storage as of September,” said Tasujiro Suzuki, vice chairman of the Japan Atomic Energy Commission.


The Rokkasho reprocessing plant in Aomori Prefecture was supposed to recycle spent fuel, and there are still hopes it will finally open next fall. But the NRA is reviewing the Rokkasho construction plan to ensure it meets the new earthquake safety standards and it is unclear what or when its final decision will be.


Unknown variables such as the intensity of local opposition to a restart and local government heads demanding that Tokyo first guarantee funding for their pet projects before granting approval will also determine the timing of any restart.


Assuming 16 reactors will be restarted, the IEEJ predicts a slight increase in natural gas and coal imports but an 8.8 percent decrease in oil exports for 2014, and a slight total decrease in total energy consumption. Domestic demand for natural gas is forecast to reach 91.1 million tons in fiscal 2014. That’s 1 percent higher than the expected 90.2 million tons for fiscal 2013.


To meet domestic energy demand, two new coal plants with a total capacity of 1,600 megawatts are due to begin operation soon, while 2014 and 2015 will see 14 new gas-fired plants coming online that will consume about 5.8 million tons of LNG annually.


Six utilities have already raised electricity bills between 6 and nearly 10 percent for certain customers. Price hikes due to external factors, a colder than predicted winter or a hotter than predicted summer, could also affect utility bills in 2014. At the same time, the April sales tax hike to 8 percent may curb some energy use.


Renewable energy, solar in particular, made great gains in 2013, a year after a feed-in tariff was introduced, and increased capacity is expected for 2014. Operating capacity of renewable energy is predicted to reach 36.6 gigawatts by the end of fiscal 2014, an increase of 6.8 gigawatts over this year.


This year will see Japan’s largest mega-solar power plant open in Oita Prefecture. Built by Marubeni, the 81.5 megawatt plant, big enough to supply about 30,000 homes, will sell power to Kyushu Electric. The Oita plant follows a 70 megawatt mega-solar plant that went online in November with enough power to supply about 70,000 homes within the prefecture. In July, a joint solar park operated by Mitsui & Co. Ltd. and SB Energy Corp., a subsidiary of SoftBank, will open in Osaka, providing about 19.6 megawatts, enough for 5,700 homes.


Due to land issues, grid connection costs, a lack of financial incentives, political opposition locally and in Tokyo, by the nuclear power lobby, the future of new mega-solar parks after 2014 is uncertain.


On the other hand, this year is likely to be one of anticipation for new firms looking ahead to changes in the law that are designed to liberalize the nation’s power market between 2015 and 2020 in three phases. Last April, Prime Minister Shinzo Abe’s Cabinet approved electricity reform that included expanding the operation of wide-area electrical grids, fully liberalizing the retail market for power generation, and legally separating the power transmission and distribution networks at the utilities.


In November, the law was revised to meet the goals of the first phase, which begins in 2014 and includes establishing a new authorized entity to monitor the state of national electricity supply and demand and to order utilities to supply power when demand is tight. It is also supposed to arrange for renewable energy generation, which can vary greatly, to be distributed more widely and effectively.

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