Tepco gets nuclear green light

Tokyo Electric Power (Tepco), owner of the crippled Fukushima power plant, has secured Japanese government approval for its revamped 10-year business strategy – including plans to partially reopen its seven-reactor nuclear station in Kashiwazaki, Niigata prefecture.

The long-rumoured resumption of nuclear activity is still not certain – for one thing Tepco needs to get geological clearance for the Kashiwazaki plant – but would be highly controversial in Japan following the Fukushima disaster in 2011.

Tepco, Japan’s largest utility, has said it needs to switch reactors back on at the Kashiwazaki facility – the world’s largest nuclear power plant – to remain financially stable.

The last of Japan’s 50 nuclear reactors were shut down for maintenance last September, partly in response to public opposition to the use of nuclear energy in the wake of the March 2011 accident at Fukushima Daiichi, which began releasing radioactive substances after being overwhelmed by a tsunami.

Japan’s cabinet is currently considering a draft energy plan submitted by the ruling Liberal Democratic Party (LDP) late last month.

A part in the plan for nuclear – which in 2011 was seen as unlikely to make a comeback – could have implications for the size of the role renewables will play in the future Japanese energy mix.

It is still unclear if the plan will include specific targets for wind and solar, which renewables industry bodies in the country say could be vital if the momentum built up since 2011 is to be maintained.

The Japan Renewable Energy Foundation has previously called for a “zero nuclear economic growth strategy”  and claimed that nuclear will be hugely expensive once decommissioning expenses and other costs are accounted for.

The Tepco restructuring should at least help the company to be ready for government plans to open Japan’s electricity generation and transmission market – currently monopolised by Tepco and nine other regional utilities – to competition.

The government plans to liberalise the retail electricity market between 2016 and 2018 and legally separate the utilities’ generation, transmission and distribution assets by 2020.

That could help accelerate the rollout of renewable energy in Japan, as the nuclear- and coal-focused utilities have traditionally dragged their heels in accepting more electricity generated by solar and wind resources.

Tepco – currently under the control of the central government – reportedly wants to restart the No. 6 and No. 7 reactors at the plant in the summer, and hopes to switch reactors No. 1 and No. 5 back on in the second half of the upcoming Japanese fiscal year.

The plan approved by the government covers cost reductions of roughly ¥1trn ($9.6bn).

The shutdown deprived Japan of 30%, or or about 44.6GW, of its baseload power, forcing the nation to import massive amounts of oil, coal and liquefied natural gas (LNG). In 2012, it spent ¥6trn ($60bn) on LNG, versus ¥3.5trn in 2010, pushing the nation into a trade deficit for 17 consecutive months.

Tepco estimates that the resumption of operations at just one of the Kashiwazaki reactors could reduce its operating expenses by up to ¥145bn.

In addition to the financial hit Tepco has taken due to the nuclear plant shutdown, it remains hobbled by the need to compensate victims of the Fukushima Daiichi accident.

It is also expected to continue to contribute to the reconstruction of Fukushima prefecture.

As part of its revised business plan, Tepco intends to reduce annual fuel expenses by roughly ¥650bn and establish a venture with its competitors to buy up to 40 million metric tons of LNG per year. It will also slash 2,000 jobs and shift to a holding company structure within two years.