Limited Reactor Restart Looks Likely for Summer 2012

It has been about a month since the last functioning Japanese commercial nuclear reactor, in Hokkaido, shut down for their "regular maintenance."

Each reactor is shut down after 18 months of operation, on a regular schedule. And by custom/policy it is  not restarted by the operator until the prefecture and locality in which it sits have signed off.  This need for local sign-off, plus government-mandated "stress tests" and a review of tsunami and earthquake resistance standards, has meant that no reactors have restarted since the March, 2011 Fukushima disaster.

(As an aside, the requirement for shutdowns at 18-month intervals, and numerous sign-offs before restart, are one reason that even pre-March 2011, Japan had VERY low capacity utilization for its nuclear reactors, compared with the United States, France or other major developed economies -- I think something close to 60% in Japan vs 90% in the U.S. in recent years.  Ironically, low capacity utilization made it was necessary to build many more of reactors, dramatically increasing the cost of generation, and the risk of accidents such as Fukushima.)

In some parts of Japan where nuclear is a small part of the electric energy mix (Chubu region, for example), it has been relatively easy to replace nuclear generation by firing up dormant fossil fuel plants.  Even TEPCO (Tokyo Electric) expects to meet summer demand this year without mandatory conservation requirements, by using fossil fuel generation.  The result has been a huge increase in Japan's import of hydrocarbons, and a national swing from current account surplus to deficit.

But in Kansai (Osaka, Kyoto, Kobe and surrounding areas) and Kyushu, nuclear power is a huge part of the electric generation capacity mix, and is difficult ("difficult" in Japanese actually means "impossible") to replace on a short-term basis.  For peak usage in July and August 2012, Kansai predicts at least a 15% shortfall.  Kansai and Kyushu are implementing mandatory conservation measures for large users, requesting all users to cut consumption significantly, and arranging to purchase power from nearby regions.

This lack of supply, coupled with pre-existing high electricity prices that will only get higher, make the situation dire enough to influence factory relocation decisions and drive away employers.

Also, there is a hint of panic in the debate among establishment players -- the utilities, major suppliers, business groups, more conservative politicians, et al., over whether or not to restart reactors to deal with the 2012 summer peak demand.  Lurking in the background is a realization that, if no reactors restart for the 2012 summer peak, and somehow creative conservation measures manage to deal with the situation as they did in 2011, the argument will have been lost that reactor restarts are somehow essential, that the existing nuclear reactor base MUST be utilized, or that Japan will sink into chaos without nuclear power.

Unlike Prime Minister Kan, who favored getting rid of nuclear power in its entirety, as quickly as possible, Prime Minister Noda takes a much more nuanced approach, trying to navigate between public anti-nuclear sentiment, on the one hand, and demands of the business community and bureaucracy, on the other.

So no target has been set as of yet for Japan's target future electric generation mix of sources.  Nuclear could be 0%, or 30% of the mix, or somewhere in between.  At least the 45% option is off the table!  And Mr. Noda has followed through based on the results of the government "stress tests" clean bills of health, and has made every indication that the government will push ahead to restart two of the Kansai Electric reactors (Omi Nos 3 and 4) for this summer, as soon as the necessary arm-twisting is done at the local level.

It seemed likely from the start that Fukui Prefecture and the actual town where the Omi reactors sit would sign off.  Both are heavily dependent financially on the nuclear industry (a topic for another post) and have little option, unless it is to somehow use their current leverage to extract further benefits.  The sticking point has been the surrounding prefectures -- Kyoto, Shiga, and Osaka, whose governors have pushed hard for their own veto rights, since they are major population centers well within the danger zone should a Fukushima-like event occur again.  The Osaka Governor, Toru Hashimoto, is worth special focus, since he is a young, charismatic politician who leads an populist, insurgent group that may run a large number of candidates and try to gain significant national power in the next general election.

But even Kyoto, Shiga and Osaka governors must be alarmed at potential implications of summer shortages.  The latest news, reported in Friday's major Japanese newspapers, was that the Kyoto, Shiga and Osaka governors are likely to acquiesce in restart of the Omi reactors, but want it to be on a temporary basis, only to address this summer's demand.  So it seems very likely, as of today, that we will see a limited restart by July, in time to ease the summer peak demand in Kansai.

Of course, the legal framework does not provide any backing for a "temporary restart", and to allow it is to lose the battle for anyone who believes that Japan must eliminate nuclear power as soon as possible.  If the reactors really are not "safe", they should not restart, regardless of demand.  If they are "safe", then why shut them down in mid-September?  And if the Omi reactors are "safe" to restart, then why not others?  If the stress test results are sufficient for the Omi reactors, then why should we not consider and abide by the results for others as well?

So it seems likely that the debate of the future of nuclear power in Japan is not over.  It is just starting.

All that said, I think there are some boundaries we need to recognize as a practical matter.

The fallout (literal and figurative) of the Fukushima disaster will be with us for our lifetimes and beyond.  Just when you think life has returned to normal, you read that bamboo shoots from Chiba, just across the bay from Tokyo, were not allowed onto the market due to high cesium levels, or that cesium levels have continued to increase monthly in Tokyo Bay's silt at the month of the Arakawa river.  And the "clean up" effort to reduce radioactivity in towns nearer Fukushima ... will inevitably have mixed results, at very high cost.

So I think it is very safe to predict that the Japanese public will not accept construction of any new nuclear plants in the next 20 years, or perhaps much longer.

And the public will not accept the restart of any existing plants that have any identified special risk factors -- a newly discovered earthquake fault nearby, or aging components.

I predict that none of the 40+ year old reactors will restart or have their licenses extended/renewed.  The utilities should simply save their money and start focusing on decommissioning these (but they will not).

I predict that the Hamaoka reactor in Shizuoka will not likely restart anytime in the next 10 years -- despite all the ongoing expense to build a higher seawall against a future tsunami.  Again, money better spent elsewhere.

And, whatever the decision about future nuclear mix, it is clear that Japan needs huge efforts at each of

1. energy conservation (not just turning the thermostat up in summer and down in winter, but efforts that do not cause direct discomfort, please!);

2. new renewable generation -- solar, wind, geothermal, biomass, small hydro, etc.; and

3. new, efficient natural gas generation.

And these need to occur at the same time as a fundamental reform of its electric supply and distribution system -- deregulated markets, access to transmission and distribution for competitive suppliers, peak pricing regimes to shift demand, on-grid storage technologies using electric vehicles and other new battery technologies, smart meters, and much much more.

So if nuclear policy is still unclear, what needs to be done on other fronts is gradually coming into focus.

WSJ blog report here and article (subscription required) here.  Japan Times here.   Bloomberg report of up to a thousand anti-nuclear protesters at the prime minister's office in Tokyo Friday here.