Japanese nuclear still competitive after compensation payouts, study shows

• 13 years ago (2011-09-03)
• Junior Isles

Asia 892 North America 1021 Nuclear 659 Renewables 776

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The cost of nuclear generation in Japan, even taking into account the compensation related to the Fukushima Daiichi accident, remains likely to be less than using fossil fuels, according to a new study.

The Institute of Energy Economics of Japan (IEEJ) says that for the past five years the cost of Japanese nuclear generation remained stable at around ¥7.00 ($0.09) per kWh. However, once compensation of up to ¥10 trillion ($130 billion) for loss or damage from the recent nuclear accident is taken into account, the cost of electricity generation with nuclear reactors increases to some ¥8.50 ($0.11) per kWh.

According to the IEEJ, the cost of fossil fuel generation over the past five years averaged ¥10.20 ($0.13) per kWh, while the costs from renewable energy sources (mostly geothermal) averaged ¥8.90 ($0.12). Nuclear is marginally cheaper than both these competitors in Japan.

Further, the study shows that the cost of fossil fuel generation, unlike nuclear generation, varied widely over the period measured – from ¥9 to ¥12 ($0.12 to $0.16)  – due to fluctuations in the costs of importing the fuel.

IEEJ based its calculations on financial reports published by 12 Japanese power utilities over the past five years, but prior to the March 2011 earthquake and tsunami. The study includes the costs of decommissioning existing reactors, but does not include spending on research and development or payments to communities hosting nuclear power plants.

Japan has few natural resources of its own, so depends on imports for some 84 per cent of its primary energy needs and relies on its 50 or so nuclear power reactors to generate some 30 per cent of its electricity. A significant expansion in the use of nuclear energy  – to more than 50 per cent in 2030  – had been proposed under the country's basic energy plan.

This expansion in nuclear generation had been based on cost estimates made in 2004 by a government sub-committee. At that time, the cost of nuclear generation was put at ¥5.30 ($0.07) per kWh, by far the cheapest means of generating electricity, with oil at ¥10.70 ($0.14), coal at ¥5.70 ($0.07), gas at ¥6.20 ($0.08) and hydro at ¥11.90 ($0.16).

This expansion has now been placed under threat from safety concerns after the Fukushima accident,. A number of plants were closed following the accident but it looks likely that Japan's new Prime Minister Yoshihiko Noda will endorse their restart and maybe further support further expansion of nuclear power.