Nuclear power in Japan: Start ’em up; The government and voters are putting economics before atoms, opening the way for Japan to restart its nuclear power plants

Nuclear power in Japan: Start ’em up; The government and voters are putting economics before atoms, opening the way for Japan to restart its nuclear power plants

Mar 8th 2014 | TOKYO | From the print edition

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JUST three years on from the catastrophic meltdown in March 2011 of three reactors at the Fukushima Dai-ichi plant, Japan is taking steps to revive its nuclear dream. A rush to restart some of the country’s 48 mothballed commercial nuclear reactors is well under way. Hundreds of technicians from utility firms are camped out in downmarket Tokyo hotels, working at the beck and call of the Nuclear Regulation Authority (NRA), the country’s new nuclear watchdog, in hopes of meeting new safety requirements. On February 25th the government published a draft energy plan which put nuclear power at the core. It is a sharp reversal of the previous energy strategy, devised by a former government in 2012, eventually to eliminate nuclear power altogether.

The sense of urgency is driven, first, by the mounting costs of doing without the nuclear plants. One by one, nearly all reactors were shut down in 2011-12. Utilities fired up conventional power stations to make up for lost electricity generation. But the cost of importing extra oil, coal and gas has been all the steeper with a weak yen. The trade deficit has climbed, along with electricity charges, particularly for businesses. Should nuclear plants be left idle, the programme of Shinzo Abe, the prime minister, to revive the economy could be in doubt.

Second, the establishment fears that time is running out. A fourth summer without nuclear power—but also without any sudden blackout to alarm the public—might permanently shift opinion against switching the plants back on. Shigeru Ishiba, secretary-general of the ruling Liberal Democratic Party (LDP), says that people have noticed the lights are still blazing and the trains running. So some 15 months after returning to power, the government is ready to take the political risk of restarts. But it is wary of being thought ahead of the agency charged with nuclear safety.

This month the NRA is due to choose which few reactors it wants to fire up first. The most modern reactors and those farthest from the Pacific coast and the threat of tsunamis are at the head of the queue, and may be restarted as early as the summer. A favoured candidate is the plant at Oi, on the west coast of the country’s main island. Two of its four reactors were the first to restart once before, in the summer of 2012, only to close again in September 2013. Public demonstrations in Tokyo accompanied their return to the grid. At the time Japan had not reformed its lax regime for regulating nuclear power.

Now the government hopes that the NRA, more independent than its ridiculed predecessor, will allay the public’s fears. The agency is replacing Japan’s shattered myth of absolute nuclear safety with the concept of “defence in depth”, that is, multiple back-up plans against a series of worst cases. Several reactors, such as those at Hamaoka, located near Tokyo above the Nankai trough, where two tectonic plates collide, may never restart. But the regulator, understaffed and still susceptible to political pressure, faces a daunting task.

As for the cosy “nuclear village” of utilities, heavy industry, bureaucrats and pronuclear media and politicians, it remains largely intact. TEPCO, the operator of the Fukushima Dai-ichi plant, still bestrides the electricity industry, though its credibility with the public is gone. Mr Abe can take comfort from the fact that the anti-nuclear movement appears spent as a political force, despite the backing of a hugely popular former prime minister, Junichiro Koizumi. In the Tokyo governor’s election last month, economic concerns trumped nuclear ones.

The very first reactor will be the hardest to switch back on. After that, once the NRA gives the all-clear, local governments hosting nuclear plants will waste no time. During the shutdown their economies have been deprived of generous subsidies from nuclear utilities. The governor of Niigata, which hosts TEPCO’s Kashiwazaki-Kariwa plant, the world’s largest, is a loud critic of nuclear power. But last September even he gave permission for the utility to press ahead with its plan to restart reactors.

The long-run future of nuclear power is more uncertain. The age of today’s reactors means that new ones must soon be built—a detail the government’s new energy plan skated over. Along with the Tokyo election, a governor’s race last month in Yamaguchi, the southern prefecture from which Mr Abe hails, was closely watched for signs of the mood about new plants. A battle has raged for decades over one to be built in Kaminoseki, a small fishing town in the prefecture. The result, again, was defeat for anti-nuclear candidates. The government has said it may allow three other reactors already under construction before March 2011 to be completed. Just a short time ago, that would have been unthinkable.

 

Unknown's avatarAbout bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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