Tag: 東京電力

Japan electricity sector disruption – new business models and deregulation overdue
Japan electricity regional operators’ income peaked about 10 years ago

Japanese electricity companies’ business models face massive disruption by technology innovation and the Fukushima nuclear accident

With the annual general shareholder meetings completed and financial results published, we have analyzed the financial results of Japan’s 10 regional electric power companies (plus several other Japanese electricity companies, including J-Power) in detail.

We find that each of Japan’s electrical power companies has its own particular circumstances, and some are coping better than others, while of course Tokyo Electric Power Company is a special case due to the incalculable costs of the Fukushima nuclear accident, and due to possible changes in case of a change of Japanese Government policy regarding TEPCO.

Our financial analysis shows, that revenues of Japan’s electricity sector have increased substantially, due to increased electricity costs. On the other hand, revenues of Japan’s electricity companies overall have been declining steadily since a peak around 2005, i.e. ten years ago.

Switching off nuclear power generation contributes to financial problems, but is clearly not the root cause

From our analysis it is obvious that the financial profitability issues of Japan’s electricity sector have started about 10 years ago, long before nuclear reactors were switched off due to the Fukushima accident – while of course the switch-off of nuclear power does contribute to a worsening of the financial situation in the last 3 years.

Clearly, the electricity deregulation which is now on track with regulatory and legal changes, was long overdue, and in my opinion is more due to the declining profitability of Japan’s electricity sector, than immediately triggered by the Fukushima accident. The financial data clearly show that a change of business model for Japan’s electricity sector is needed.

Operating income of Japan’s electricity sector has been falling continuously since the peak in 2005

Chugoku Electric Power Company as an example

Our analysis shows that each of Japan’s 10 regional electricity companies have different financial circumstances.

We discuss Chugoku Electric Power Company which serves the area around Nagoya in the middle of Japan as an example. The Figure below shows that Chugoku Electric Power Company’s income peaked around 2004-2005, about ten years ago, and since then has been continuously falling, with net income dropping into the red for the first time for Financial Year 2008 (ending March 31, 2009), about two years before the Fukushima nuclear disaster. An important point to consider is that only about 10% of the electricity generation capacity of Chugoku Electric Power Company is nuclear power, which is one of the lowest ratios of nuclear power in Japan. It follows logically, that switching off this 10% of nuclear generation capacity has a much lower impact than for other regional power companies, where the nuclear contribution was about 30%.

Japan electricity: income and margins of Chuo Electrical Power Company have been continuously falling since their peak around 2004

We conclude that the peak around 2004-2005 in profitability followed by a long decline in profitability indicates a deep rooted need for change of business models which was exacerbated but not directly caused by the Fukushima nuclear accident. Japan’s Government is now reacting to this fact by deregulating the electricity sector.

Japan electricity: Why do current business models need to change?
- Japan’s regional electricity companies enjoyed monopoly power within their regions, where the electricity prices were regulated by Government, and in exchange electricity companies could enjoy a financial model where they could charge costs + profits to customers. There was no competition and little incentive to reduce costs
- Japan will now follow the global trend from top-down electricity grids with large central generation facilities and a top-down distribution grid to more de-centralized, localized smart-grids, driven by technological progress, and the emergence of renewable energy.
Renewable energy Japan – research report

Renewable energy Japan (9th edition)

Japan’s energy sector – research report

Japan energy markets (21st edition)

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June 30, 2014
What will happen with Japan’s nuclear power stations?

by Gerhard Fasol

Watch The Economist interview on Japan’s energy policy.

Read our report on Japan’s energy sector,
and our report on Renewable energy in Japan.

Many times, often several times a day, I get asked about what will happen with Japan’s nuclear power stations – today alone twice. So here is the answer I usually give – please note that I am Physicist, and I know a lot about the Physics of nuclear power, and although I have personally avoided working in the nuclear physics field (which is much wider than nuclear power), I do not have a personal opinion for or against nuclear power:

Quick answer: it is impossible for anyone, including the Prime Minister of Japan, to know with any certainty.

Long answer: Japan is a democracy. Japan currently is quite polarized for or against nuclear power. Everyone knows that some Japanese leaders including the Prime Minister Abe, are in favor of nuclear power. On the other hand, many outstanding opinion leaders are strongly against nuclear power in Japan, these include Nobel Prize Winner Kenzaburo Oe, and also the former Prime Minister Koizumi. Currently we can observe the evolution of a democratic process in Japan to reach a consensus on the future of nuclear power stations in Japan. This process is different for every single nuclear power station, and it is impossible for anyone to make predictions.

Obviously the owners of the nuclear power stations hope to restart their power stations as quickly as possible, and they are supported by many industrial leaders and the current Prime Minister. They need to obtain the agreement by the newly established nuclear power regulator, which was newly established because the Parliamentary Committee which investigated the Fukushima nuclear disaster established that the cause for the nuclear disaster was “regulatory capture”. This committee was chaired by Kiyoshi Kurokawa, and you can read one of his speeches “Groupthink can kill”, and watch YouTube movies explaining the results of his committee here.

Sofar none of the nuclear power station was cleared by the new nuclear safety agency, and no one knows when the safety inspection program will be concluded for any of the nuclear power stations, nor which stations will be cleared to restart (in principle) and to which the nuclear safety agency will refuse the clearance.

However, clearance by the nuclear safety agency is by far not enough. In addition, in Japan, nuclear power stations need the agreement of the local communities, i.e. the local mayors and Province (Ken, Prefecture) Government Prefects. As an example, the world’s largest nuclear power plant is Kashiwazaki-Kariwa, it is currently owned by the Tokyo Electric Power Company to supply Tokyo with electricity, and it is located approximately 80 km from the Prefecture capital city Niigata-shi, which has about 1 million inhabitants. The current very outspoken Governor (Government Leader) of Niigata-Prefecture, Hirohiko Izumida (泉田裕彦), has clearly stated his opposition both to the restart of the Kashiwazaki-Kariwa nuclear power station, and secondly he has also stated that he considers Tokyo Electric Power Company unsuited to manage a nuclear power station. Read and watch a video of Governor Hirohito Izumida here. I have read speculations that as a consequence it might be thinkable that ownership and/or management of the Kashiwazaki-Kariwa Nuclear Power station could be transferred to a different power company to overcome this local resistance. But it is not possible for anyone to predict how this will play out.

It is my understanding also, that in Japan it is not clearly defined which local authorities have to agree before a nuclear plant can operate, and which distance from the nuclear power station is still close enough that agreement of local authorities is needed. In my understanding also it seems to be unclear which type of local authorities have veto power: The Prefect (i.e. the chief of the Prefectural Government), cities, towns, villages etc. There seems to be much uncertainty here, which did not exist in the past, or which did not come out into the open in the past.

Another factor is the local geological situation for each nuclear power station. In Japan there are legal requirements that nuclear power stations need to be located away from active geological faults. Recently there have been investigations by geological experts about the geological conditions near the nuclear power stations, but my understanding is that many questions are still unsettled at least for some of the nuclear power stations.

Still another factor are the courts. Traditionally Japanese courts have rejected all complaints against the operation of nuclear power stations, but I hear that recently some court complaints against the operation, or against the restart of nuclear power stations have been successful. Court decisions also cannot be predicted by anyone.

So in summary: No-one can possibly predict what will happen with Japan’s nuclear power stations. When pushed, I sometimes say that a possible scenario will be that about 10 out of Japan’s approx. 50 nuclear power stations might be restarted in about 3 years from now. However, no one can know this for sure, and no one can assign a probability to any outcome.

There have been enquires by some non-Japanese/foreign media, which interviewed a number of experts, asked them to estimate the probability for each of Japan’s nuclear power plant, and then took some kind of average of these experts opinions. I was also asked to participate in this experts’ enquiry, but I refused to participate, and said that simply no one can know with any precision at all.

Watch The Economist interview on Japan’s energy policy.
Read our report on Japan’s energy sector,

Japan energy markets (21st edition)

and our report on Renewable energy in Japan.

Renewable energy Japan (9th edition)

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May 22, 2014
IAEA recommends international cooperation for Fukushima decommissioning, Mr Yukiya Amano (天野之弥), Director General of the International Atomic Energy Agency (IAEA)
IAEA President Amano on Fukushima decommissioning

by Gerhard Fasol

It is wrong that Japan has all technology to decommission Fukushima Dai-ichi

“It is wrong that Japan has all technology to decommission Fukushima Dai-ichi. The IAEA strongly recommends international cooperation for the decommissioning of Fukushima Dai-ichi nuclear power plants”, is the strongest statement Mr Yukiya Amano (天野之弥), Director General of the International Atomic Energy Agency (IAEA) made today at the Foreign Correspondence Club in Tokyo in a very carefully worded presentation.

IAEA is currently preparing a report about Fukushima Dai-ichi which will be completed by the end of this year, 2014.

We are often asked, whether nuclear power is safe, the answer is that no technology is 100% safe. A multilayer defense is required against risks, in-depth defense. Safety levels are now higher than they were before the Fukushima Dai-Ichi nuclear accident.

IAEA: non-proliferation, nuclear safety, and other programs

Let me introduce The International Atomic Energy Agency (IAEA). The IAEA has three roles:
1. Advise on nuclear power and nuclear safety. In this area, IAEA has no authority. IAEA only can advise. IAEA also helps developing countries which are are thinking to introduce nuclear power.
2. Prevent nuclear proliferation. In this area, IAEA has authority.
3. Other projects, for example in healthcare and decease prevention. For example, IAEA used radiation to disable breeding by insects distributing malaria and other illnesses.
IAEA is not an international nuclear safety regulator. IAEA can only advise on nuclear safety. IAEA does not influence countries, but provides comprehensive assistance.

Of course nuclear safety is intrinsically international: one country’s nuclear accident is all countries’ nuclear accident.

IAEA position on nuclear power

The IAEA has the position that nuclear technology is affordable and useful. IAEA is much more than a “nuclear watchdog”. IAEA also helps to make nuclear technology available for developing countries.

IAEA advises countries introducing nuclear energy. Today we have 437 nuclear power plants globally, and 72 are under planning or construction. Growth of nuclear energy is mainly in Asia, especially China and India, but also in Europe and in developing countries.

30 countries use nuclear power, and 60 countries are considering to start using nuclear power in the future.

IAEA and nuclear security

A growing role for IAEA is nuclear security, to advise on proper protection of nuclear materials, for example to prevent dirty bombs. IAEA provides guidance and measurement equipment. IAEA is ready to assist Japan in advising on nuclear security for the Tokyo Olympics in 2020. Next week, we will have a Nuclear Security Summit in Den Haag.

IAEA prevents proliferation, prevents spread of nuclear weapons

The main current issue is Iran, and Iran has taken positive steps forward, but much remains to be done.

Regarding North Korea, the IAEA is currently not involved inside North Korea, but ready to help. The IAEA calls on North Korea to fully cooperate with IAEA.

IAEA motto is “Atoms for peace”.

Q&A
- Question: Is it right to release contaminated water into the ocean?
  
  Answer: It is common practice globally, to release contaminated water into the ocean, provided contamination is sufficiently low, and it is essential to talk to stake holders, e.g. fishermen. Storage is not a long term solution. IAEA recommends to release contaminated water into the ocean after proper treatment of the water, and after consultation with stake holders. IAEA recommends release into the ocean, because storage is cost and human resource intensive, and these resources need to be used in other areas of the decommissioning work.
- Question: Should not Japan have higher safety requirements because Japan is in an earthquake zone?
  
  Answer: IAEA does not discriminate against any countries, and strong earthquakes are also known to happen in Europe. Strong earthquakes and tsunami can occur anywhere.
- Question: what is IAEA’s position regarding the prioritization of the Sendai nuclear plant in Kyushu?
  
  Answer: IAEA does not take party in such decision making. Regulation is the responsibility of each country, and IAEA says that the regulator must be robust, independent and well funded.
- Question: Prime-Minister Abe says that Japan’s nuclear safety regulations now are the strictest in the world. What about missing evacuation plans?
  
  Answer: It is not IAEA’s role to rank countries. Broadly speaking, Japanese regulations today are broadly in line with global regulations recommended by IAEA, and Japan has requested the IAEA to review the Japanese nuclear safety standards. IAEA makes safety standards, recommends the use of these standards, and if requested, sends missions to assist.
- Question: why do you say “broadly”?
  
  Answer: Nuclear safety is a huge and complex field. In our view, Japanese nuclear safety regulations are broadly in line with global regulations, and IAEA will evaluate Japanese safety regulations on request by the Japanese Government.
- Question: Did IAEA warn that pre-Fukushima Dai-Ichi-disaster Japan’s nuclear regulator did not fulfill IAEA criteria: (1) robust, (2) independent, and (3) well funded?
  
  Answer: IAEA did warn in polite language that more independence was needed.
- Question: What was the Japanese Government’s response?
  
  Answer: The Japanese Government’s response was, that the regulatory body was sufficiently independent.
- Question: IAEA promotes nuclear power, and sets safety standards. Is there no conflict of interest between these two roles?
  
  Answer: The IAEA is not a global regulator. In each country separately an independent in-country regulator is responsible for regulation in that country. IAEA supports, provides training for in-country regulators.
- Question: Who assesses IAEA?
  
  Answer: The member states assess, and will end the tenure of the Director General if they are not satisfied.
- Question: Did IAEA hide nuclear radiation information in the days after the Fukushima Dai-Ichi disaster?
  
  Answer: The IAEA came on a radiation measurement mission to Tokyo and Fukushima on March 18, 2011 one week after the Fukushima Dai-Ichi disaster, reconfirmed the measurements on March 19, 2011, the next day, and published these data.
- Question: Japan has 331 kg Plutonium. What is the target?
  
  Answer: There are three issues: (1) Safeguard: this material is placed under IAEA control, assure that all material is used for peaceful purpose, and short-notice controls by IAEA are included by Japan, (2) nuclear security: is the responsibility of each state under IAEA guidance, (3) transparency, including future use: it is the responsibility of the Japanese Government to provide transparency regarding future use
- Question: do you think that 30-40 years will be sufficient for complete decommissioning of Fukushima Dai-Ichi?
  
  Answer: I don’t know. Good understanding of the melted core takes very long time. At present we have no understanding of the melted core. IAEA recommends international cooperation. It is wrong that Japan has all technology. It is IAEA’s recommendation to cooperate internationally. Decommissioning the most difficult nuclear power plant will help to decommission all other nuclear power plants.
- Question: what about the shortage of workers for decommissioning Fukushima-Dai-Ichi?
  
  Answer: Shortage of workers in nuclear plants is a global phenomenon.
Director General of the International Atomic Energy Agency (IAEA) Mr Yukiya Amano (天野之弥)

Japan energy markets (21st edition)

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March 17, 2014
Financial instability of Japan’s electricity companies started in 2007

Financial instability of Japan’s electricity companies started long before the Fukushima nuclear accident

Japan’s electricity companies ran into financial instability long before the March 11, 2011 disaster

It is often assumed that the financial difficulties of Japan’s electricity companies are caused by the shut-down of almost all Japanese nuclear power stations within 13 months of the Fukushima disaster.

This newsletter shows that the financial impact of switching off Japan’s nuclear power stations does not seem to be the major contribution to the financial instability of Japan’s electricity companies.

However, this newsletter clearly proves that Japan’s electricity companies ran into financial instability long before the March 11, 2011 disaster and long before Japan’s nuclear power stations were switched off. The financial instability of Japan’s electricity companies seem to have started in 2004 – about 7 years before the Tohoku Earth-quake, as shown below. Therefore reform of Japan’s electricity industry sector is highly overdue.

Japan’s electricity crisis predates the Fukushima disaster by several years. Source https://www.eurotechnology.com/store/j_energy/

Financial instability of Japan’s electricity companies started with the increase of natural gas payments in 2004

Japan’s electricity industry sector is dominated by 10 regional electricity operators, which to a large extent have the monopolies of electricity business in their regions. In exchange, their profits are calculated as a fixed percentage of costs. However, the figure above shows, that this system had become unstable around 2009 following a strong increase of natural gas costs since 2004. The figure above clearly shows that the net profits of Japan’s 10 regional electricity operators started a steady decline since 2007, and dropped firmly into the red in the financial year FY 2010, which ended on March 31, 2011, ie almost entirely before the Fukushima disaster, and about a year before nuclear power stations were switched off in Japan.
This argument shows, that the difficulties of Japan’s electricity sector are even more profound than the cut-off of nuclear power stations, and shows that reform of Japan’s electricity sector is long overdue. For details read our report on Japan’s electrical industry sector.

Financial trouble of Japan’s electricity companies started before Fukushima. Source https://www.eurotechnology.com/store/j_energy/

Financial instability of Japan’s 10 electricity operators started in FY2007 – several years earlier than the Fukushima nuclear disaster

This figure shows the combined annual net income of Japan’s 10 regional electricity operators for the period FY1999 – FY2011. The figure clearly shows, that combined net after-tax income was extremely stable until 2007, when net income started to drop dramatically, and has been falling ever since, culminating in combined net losses of over US$ 20 billion in FY2011. Losses are expected to increase even further for FY2012.

This figure clearly shows, that the financial instability of Japan’s electricity companies started several years earlier than the March 11, 2011 disaster and well before any nuclear power stations were switched off. More details in our report on Japan’s electricity and energy sector.

Japan energy markets (21st edition)

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November 27, 2012