Here's the latest updates on Japan's nuclear industry

In November, the government announced early elections, funny way of expressing this as all elections in Japan can be considered “early”. The government also created the NRA (Nuclear Regulation Authority), which has the task of defining the new safety regulations for the Japanese Nuclear Industry as well as making assessments of its implementation.

In short, NRA needs to approve any reactor startup. Within weeks of establishing this entity with “enhanced independence” it was revealed most of its senior management are or very recently have received contributions from the same Nuclear Industry they are supposed to assess.

The lack of Nuclear power being operational is increasingly showing its impact on the financial situation of 9 out of 10 Japanese Utilities, with only Okinawa having no Nuclear power reporting positive results.

Utilities are lobbying hard for further tariff increases as well as reactivation of their nuclear cash cows. At the same time hardly any progress has been made in the restructuring of the Utility environment in Japan.

The outgoing government intended to implement a new energy policy, but the final
document was not endorsed due to strong objections from Utility and Industry representatives. The “Society not dependent on Nuclear power” document was reduced to a policy paper, which can be easily mothballed by the new government.

On a positive note, the new FIT implemented in July is potentially proving to be a game changer. From July to October a total of more than 2GW PV FIT applications have been approved, of which mega-solar (>1GW) accounted for about half.

To put this into perspective, up to July this year a total of around 5GW of PV was installed in Japan.

The PV boom is a clear evidence that the current 42Yen/kW is very attractive, both for domestic as well as overseas players. Even the March 2013 first revision of the rate is not expected to dampen the enthusiasm, as the market forecast still remains in the range of 3GW to 5GW annual for next two years.

The government target of 28GW PV power in 2020 seems to be very much in reach.

With such an increase in renewables the challenge of the utilities will be to best integrate these highly decentralized and intermittent resources in a cost efficient way. Considering the lack of restructuring in the utility industry, this will become one of the bottlenecks to achieve a higher renewable portion in the overall energy mix.

Competition in the transmission market is one critical element to reduce cost for the consumer.

Procurement is another element. So far only Tokyo Electric (TEPCO) has prepared a number of public tenders in a bid to reduce procurement cost. Behind the scene driver is the fact that TEPCO is now under control of the government, who injected huge amount of cash in the company to prevent it from going bankrupt, and as such must comply with the World Trade Organization (WTO) guidelines.

It makes more than common sense other Utilities follow suit to do their part to reduce cost. A new 300MW HVDC connection that is being planned in the near future can provide some indication.

The respective Utility is not TEPCO and international market prices for such a link are substantially lower than what is available by Japanese manufacturers. In the interest of the consumers this can be the next game changer, let’s keep our fingers crossed.

The views expressed are mine alone and do not necessarily reflect the views of my employer.