Japan’s nuclear revival: shaken but not stirred by the Noto earthquake [Gas in Transition]

The rehabilitation of Japan’s nuclear industry has been developing slowly since 2011, but gathered significant pace in 2023. In September, the Kansai Electric Power Company restarted the 826-MW Takahama-2 pressurised water reactor (PWR). The neighbouring Takahama-1 reactor had restarted in July, while the third and fourth 870-MW PWR units at the Takahama complex resumed operation in 2016 and 2017, respectively. The Takahama-2 restart means that all seven of Kansai Electric’s potentially operable nuclear reactors are now generating.

Overall, 12 reactors with 11,608 MW of gross capacity are now operational out of the country’s 33 potentially operable units, which together have 31,679 MW of capacity. The other restarted reactors include the Kyushu Electric Power Company’s Sendai-1 and 2 units, which, in November, were approved for operation for a further 20 years beyond their original 40-year operating period. 

September 2023 also saw the Chugoku Electric Power Company announce that it planned to restart the Shimane-2 reactor at Matsue in August 2024. The 820-MW unit would be the first boiling water reactor to restart since the 2011 disaster. Shimane-2 is one of five reactors that have received permission to restart, while a further ten have begun the inspection and other processes needed to secure the regulatory and political approvals required to operate.

A further indication of the sector’s improving fortunes came in late December when the country’s Nuclear Regulation Authority (NRA) said it was lifting a ban on the potential operation of the Tokyo Electric Power Company’s 8,200-MW Kashiwazaki-Kariwa plant in Niigata prefecture. The ban on Japan’s largest nuclear complex was imposed in 2021, owing to safety breaches.

Moreover, Japan looks likely to build new nuclear capacity in the future. The country signed up in early December to the COP-28 climate conference declaration to triple global nuclear capacity by 2050 from 2020 levels to help achieve net-zero greenhouse gas emissions. 

Japan’s commitment to the declaration was in line with the government’s decision in February 2023 to undertake, where feasible, reactor life extensions beyond their previous maximum operating life of 40 years, and to promote the construction of new capacity.

Source: earthquake.usgs.gov

Noto Peninsula Earthquake

The Noto Peninsula Earthquake came at an unwelcome time for a nuclear industry that may have got strong central government backing, but is still finding it difficult to secure support from many politicians at local level and from much of the population. The earthquake affected an area hosting seven operating reactors – Kansai Electric’s Mihama, Ohi and Takahama units in Fukui prefecture – as well as a number of potentially operable facilities.

In the event, the earthquake, its aftershocks and the tsunami did not appear to have a severe impact on any of the facilities. The NRA confirmed as early as 2 January, the day after the quake, that none of the seven operating reactors had been significantly affected. 

The NRA also downplayed concerns about the nuclear facility closest to the epicentre – the Hokuriku Electric Power Company’s Shika two-unit plant in Ishikawa prefecture, where the No.2 reactor is scheduled to resume operation at some stage after April 2026. 

While the electric power system serving Shika-2 was damaged by the earthquake, the NRA noted that replacement power had been made available immediately afterwards from emergency generators. It added that there had been little other damage and no radiation leaks at the plant. The Kashiwazaki-Kariwa complex further to the north was also mainly unaffected, according to the NRA.

Japan’s changing landscape

The smaller scale and location of the 2024 earthquake and tsunami were primarily responsible for their more limited impact on nuclear facilities than in 2011. 

However, the lessons learned from that disaster also helped mitigate the impact through the intervening implementation of better nuclear plant infrastructure, equipment and procedures. These measures formed part of the wider reframing of nuclear industry rules after 2011, not least the creation of the NRA, which provided early information on the impact of the earthquake, helping to allay political and popular concerns. 

Perhaps the biggest difference from the 2011 events was the market impact. Hokuriku Electric and Kansai Electric share prices took an initial hit over concerns that delayed nuclear restarts or prolonged shutdowns would cause their fossil fuel procurement costs to rise, but the fall was not sustained. The impact on the global, Asian and Japanese LNG market was limited, with barely any movement in prices – a very different story to 2011.

The rapid measures taken by the nuclear generators and the posting of information by the NRA were in stark contrast to the chaotic response of the industry and tardy public communications in the aftermath of 2011.

This is an important point. The government may be in favour of nuclear power, with little expectation that the continued operation of reactors will face political opposition, but that could change with a massive surge in public opposition. While there is a substantial anti-nuclear body of opinion, public surveys conducted in the early 2020s suggest that a large number of respondents do not have a strong view one way or another about closing existing plants. 

This suggests that, in the absence of a catastrophic accident, serious industry scandal or poor communications, public opinion seems unlikely to tip decisively against nuclear power.

Nuclear power is also now less prominent in Japan than prior to 2011, when it accounted for almost 30% of electricity generation. In 2022, it accounted for barely 5% of total output (see figure 1). 

In addition, LNG would not now be the only potential immediate replacement for nuclear as it was in 2011. While coal is due to be phased out in the longer term, it is still a significant component of an electricity market where demand is growing very slowly. 

Meanwhile, renewable energy, and especially solar capacity, is expanding at pace. The upshot is that the gap that would have to be filled by LNG, if any or all of the country’s operating reactors were to close, would be nothing like the gaping chasm that occurred after 2011.

LNG demand likely to fall

LNG supply in Japan has also changed since 2011. Imports fell from 121.8bn m3 in 2014 to 98.3bn m3 in 2022 (see figure 2), according to the Energy Institute’s latest Statistical Review of World Energy, mirroring a similar fall in gas consumption. Based on the provisional data available, imports in 2023 dropped to 66.58mn tons (about 90.5 bn m3), much of it bought on a term rather than spot basis. 

By 2030, the country’s portfolio of long-term LNG contracts will fall by about a third from the 2022 level to about 55mn tons, but this still leaves time to renew, extend or sign new contracts. 

Other measures being promoted by the Ministry of Economy, Trade and Industry to strengthen supply have been approval of the generator Jera’s plan to hold a strategic reserve of LNG to avoid supply disruptions. All this suggests that, as with LNG consumption, Japanese LNG supplies are much less vulnerable to physical or financial shocks.

Despite the Noto Peninsula earthquake, there appears to be little public or political pressure to slow the already protracted process of restarting nuclear reactors, let alone to stop the process or close those reactors that have restarted. The prospects for much-increased LNG use are thus slight, not least given the steady growth in renewable capacity in an electricity market where demand growth is weak.

It is possible that Japan’s traditionally cautious power companies could respond to the earthquake and any risk of a shift in public opinion by investing in further LNG-fired capacity. One indication of this would be, if Kansai Electric revisited plans announced in late December to finally cancel a 3,700-MW LNG-fired generator at Wakayama. The project, under development for almost three decades, was scrapped because of slow demand growth and the restart of Takahama-1 and 2.

However, even then, the move could have little impact on overall LNG use, since new, more efficient generating capacity might simply displace output from the company’s existing LNG generators. Japan may still be the second-biggest LNG importer and user in the world, and, in 2022, regained its role as the biggest, but it seems that the prospect is for a further decline in its purchase and use of the fuel.