Japan’s entire nuclear power fleet is offline

THE WALL STREET JOURNAL Energy Journal
Japanese Nuclear Plants Power Down 

    By Ben Winkley

 

JAPAN POWERS DOWN

Japan’s entire nuclear power fleet is offline, two-and-a-half years after the Fukushima Daiichi reactor accident.

Only two of Japan’s 50 reactors have generated electricity since July 2012. On Sunday night, Kansai Electric Power Co.’s Oi No. 4 followed Oi No. 3 in a maintenance shutdown, and for the second time since March 2011 Japan is nuclear free.

But at what cost? On top of the ¥47 billion ($472 million) spent dealing with the leaks and contamination at Fukushima, and a ¥1 trillion capital injection into plant operator Tokyo Electric Power Co., Japan must now import its missing energy needs.

Liquefied natural gas, oil and coal must all now provide the heat and light Japan needs. Imports of LNG, especially, have increased substantially since a tsunami struck the Fukushima plant–an 11% increase in 2012 after a 12% rise in 2011 have together cemented Japan’s place as the world’s number one market for LNG.

In the same time, the cost of these shipments has increased by 75% as the yen weakened against the U.S. dollar.

So no wonder Japan is seeking new suppliers, preferably some who would be happy to provide at lower prices. As The Wall Street Journal’s Mari Iwata reports, last week’s LNG Producer-Consumer Conference in Tokyo was the venue for some aggressive courtingof Asian buyers by emerging North American suppliers.

For now, thanks to new capacity coming online in recent years, supply is abundant. But with the International Energy Agency warning of unprecedented tightness this year and next as that Asian demand increases yet further, the period of low, low prices that Japan so desperately needs may be short-lived.

Recent evidence suggests that a fall in LNG use–particularly a cost-related fall–will lead to greater burning of coal. Bad news for the huge LNG-export projects planned in Australia, all of which are pointed firmly at the Asian markets, but potentially good news for struggling thermal coal producers Down Under.

 

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