It’s now been four years since the Fukushima Daiichi accident, and with the world continuing to keep close watch, Prime Minister Shinzo Abe and Japan remain determined to find the shape of Japan’s future energy market. The market is due to undergo some heavy reforms, with Japan still searching for the most viable answers to some difficult questions. In April 2016, the retail sale of electricity will be fully liberalised in Japan, estimated to be worth about 7.5 trillion yen (£40 billion) of the market value open to new entrants. This will no doubt offer some exciting opportunities for British companies to really make a footprint on Japan’s energy market.
Five aging nuclear reactors will be decommissioned in the near future. A move that government officials hope will increase public support for resuming operations at newer reactors. The reactors are or are approaching 40 years of operation. After a new regulation brought in following March 2011, reactors exceeding this time period must be decommissioned or apply for an extension. The one-time-only extension can last up to 20 years, however, due to Japan’s stringent safety inspections as well as the cost of upgrading to the new standards, it has been decided that scrapping them would ultimately be less than the cost of trying to keep them running.
Demolishing the reactors will generate more than 20,000 cu. meters of radioactive waste. The central government still hopes areas around Japan will offer to host low-level waste for temporary storage lasting perhaps half a century while it cools off. There have been no offers yet.
The Ministry of Environment (MoE) started to bring in contaminated soils from the Fukushima Daiichi accident to the newly established interim storage sites in Okuma town and Futaba town in Fukushima prefecture. MoE is hoping to reduce concerns among the local residents by transferring the soils from tentative storage to a more prepared site. Over the next year, around 43,000 cu. meters of waste — equivalent to less than 1 percent of the estimated total of 22 million cu. meters created by the Fukushima No. 1 reactor meltdowns — will be delivered, the ministry said.
The government is negotiating with approximately 2,400 landowners to secure the land needed for the facilities, but many people have voiced strong concern that the storage could end up being permanent if the land is acquired by the state. Others are refusing to sell because the land was owned by their families for generations. This urgent need for storage and disposal strategies presents potential opportunity for British Companies with knowledge in nuclear waste technologies and management.
The Ministry of Economy, Trade and Industry (METI) is planning to expand the power transfer capacity between the East and the West from the current 1.2 million kW to 3 million kW by late 2020. This will be enough capacity to transmit three nuclear reactors worth of energy between the country’s two main power grid sectors. Great East-West transmission capacity would also help make the grid sections more accessible to stick with solar and wind power. Because big fluctuations in supply can trigger blackouts, hooking up more of these natural sources to the grid is easier said than done. Allowing electricity to flow more freely from one region to another could reduce this risk.
METI hopes the flexibility would promote competition among different regions and support stable transfers of renewable energy.
Coal and CCS
Environmental Minister Mochizuki submitted his opinion paper to the METI Minister on Kobe Steel’s planned construction of a new coal plant. The Environmental Minister advised Kobe Steel to consider the most advanced power generation technologies as well as CCS. The opinion paper also requested Kobe Steel to buy CO2 emission reduction credits overseas to compensate the difference between LNG and coal emission. The steel industry is the biggest emitter of C02 in the manufacturing sector and has been largely attributed to the 1.395 billion tons of greenhouse gases in 2013, an all-time high.
Expertise on CCS is in high demand in Japan and is expected to soon be in the rest of Asia, where the need for green technology is surging due to rapid economic expansion. Japan is at Asia’s forefront of using technologies and know-how, which later could be useful, especially in South East Asia.
METI will select 10 areas to conduct smart city projects. Smart cities will have facilities such as solar power plants and storage battery facilities. Prior to that, METI conducted a feasibility study in 4 cities and spent JPY 30 billion. METI will finance 2/3 of the initial cost of the smart city projects. The smart cities projects open up a host of opportunities within system management and creating a new set of system framework or software. There is also a high market potential around smart meters; TEPCO has plans to install 17 million units of smart meter for homes by 2018. Japanese agro-business also needs to be modernised to cope with the decreasing farming population and rising energy costs.
C02 Emission Reduction and Climate Change
METI is going to apply energy saving regulation for newly built thermal power plants within this year. This would oblige plants to minimise their CO2 emissions by using more efficient facilities. Eyeing liberalisation of retail electricity sales, METI hopes this regulation would discourage new coal plants to be built.
The best energy mix for 2030 is soon to be agreed on as the Intended Nationally Determined Contributions (INDC) discussion reached its decision. The reduction target will be around 26% from the base year of 2013. The proposed energy mix would include 20-22% renewable, 26% coal, 27% LNG and 3% fossil fuels respectively. Greenhouse gases targets have been set to reduce by 20% for 2013.
What does this mean for British Business?
As a nation hindered by its limited natural resources and under a lot of recent pressure to provide sustainable energy, now is a great time to explore the potential of Japan’s energy market. Some major reformations are due to take place and it is still looking for the most feasible options to take up in regards to low carbon energy generation, demand-side management and smart storage, all areas of which are strong within UK industries.
As full liberalisation of the electricity retail market fast approaches, the major utility companies are seeking something that can differentiate them from their competitors. Also, many Japanese companies from other sectors such as telecoms and retailers have started entering into the energy businesses and seek unique and innovative products/services from beyond home-turf that can be introduced to the Japanese market.
We are hosting an ‘Electricity Market Reform’ webinar with speaker Kenichi Matsumoto, Chairman of Aggreko Japan KK on July 7.
Viewers can learn more about:
- The history and future of the power market in Japan
- Immediate and long term opportunities for UK companies
- Challenges for UK companies
Article by Sam Maddicott, source Climate Change & Energy team, British Embassy Tokyo.