Electricity Power Mix in 2030: Nuclear power generation would account for about 15%

Faculty Fellow, RIETI

Nearly four years after the nuclear accident at Tokyo Electric Power Co., Inc.'s Fukushima Daiichi Nuclear Power Plant, a subcommittee commissioned to prepare Japan's long-term energy supply and demand outlook was established under the government's Advisory Committee for Natural Resources and Energy (ACNRE), finally kicking off long overdue discussions in full swing on what Japan's electricity power mix and primary energy mix will or should be like in 2030. Why did it take so long to get the discussions started?

The reason lies with political speculation. In the elections for the House of Representatives in 2012 and the House of Councillors in 2013, as well as in the Tokyo gubernatorial and the House of Representatives elections in 2014, the Liberal Democratic Party (LDP) chose not to make any clear statements about the medium-to long-term prospect of Japan's nuclear power policy as a matter of its campaign policy. Finding public opinion overwhelmingly against nuclear power generation, the LDP concluded that keeping the issue of nuclear power policy off the campaign agenda would better secure its victory. Based on a similar political decision, the Cabinet of Prime Minister Shinzo Abe did not specify the target energy mix for electricity generation--including the level of dependence on nuclear power generation--in the Strategic Energy Plan adopted in April 2014.

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Discussions on the electricity power mix have been and will continue to be strongly tinged with political bias. Quadrennial local elections are coming up in April 2015. Judging from their usual tactics, it is unlikely for the incumbent government and the LDP to release specific figures concerning the electric power mix in 2030 prior to the forthcoming elections.

However, once the elections are over, politicians and bureaucrats no longer will be able to postpone making decisions. The 21st Conference of the Parties (COP21) to the United Nations Framework Convention on Climate Change, which is to set a specific framework for reducing greenhouse gas (GHG) emissions from 2020 onward, will be held in Paris, starting from November 30, 2015. In June 2015, five months prior to the COP21 meeting, the Group of Seven (G7) leaders will convene in Germany and discuss, among other things, measures to combat global warming. Thus, Japan must decide on the composition of energy sources for electric power generation, including the level of dependence on nuclear power generation, in time for the prime minister to present specific GHG emission reduction targets for 2020 and onward at the G7 summit. Otherwise, Japan would become isolated in the international community.

In other words, the likelihood is that Japan will rush to determine its target electricity power mix between the local elections in April 2015 and the G7 summit in Germany in June 2015, a period in which the Diet is in the midst of its regular session. The focal point of the current Diet session is the issue of collective self-defense, and Komeito, the junior coalition partner of the ruling bloc, has lots of reservations about accepting the LDP's plans for security legislation. It is highly probably that the LDP will offer a certain tradeoff to Komeito for the sake of smoothing the way for passage of its planned security legislation, and the tradeoff may be a compromise on the target percentage of renewable energy sources in the target electricity power mix in 2030. At the moment, the LDP is insisting that Japan should aim to raise the share of electricity generated from renewable energy sources to "21% or more," whereas Komeito believes that the target should be set at 35%. If they are to find a meeting point roughly halfway in-between but somewhat in favor of Komeito, they could quite possibly settle for 30% as the target.

However, an electricity power mix has a significant impact on Japan's future, and we definitely must not continue to leave the matter to politically-motivated speculative decision making. Serious discussions need to take place to determine Japan's future electricity power mix. In doing so, three options presented to the ACNRE's Fundamental Issues Committee in 2012 under the government of the Democratic Party of Japan (DPJ) (see the table below) would be a good reference.

Table: Electricity Power Mix Options Presented to the ACNRE's Fundamental Issues Committee n 2012
Nuclear Renewable Thermal Cogeneration
Option 1 0% Approx. 35% Approx. 50% Approx. 15%
Option 2 Approx. 15% Approx. 30% Approx. 40% Approx. 15%
Option 3 Approx. 20-25% Approx. 25-30% Approx. 35% Approx. 15%
Actual for FY2010 26% 11% 60% 3%

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Option 1 is the view of committee members opposed to nuclear power generation, whereas Options 2 and 3 represent the position held by those calling for reducing dependence on nuclear power generation (moderates) and that by pro-nuclear power members, respectively. As a member of the Fundamental Issues Committee, I supported Option 2. The halting of nuclear power plant operations forced Japanese power utility companies to increase fuel imports for thermal power generation, which in turn caused a massive outflow of national wealth and steep hikes in electricity rates. Given that reality, I found Option 1 unacceptable. Meanwhile, Option 3 seeks to raise and maintain Japan's dependence on nuclear power generation approximately to and at the pre-quake level, which would go against the general direction of public opinion which is in favor of (and Prime Minister Abe's promise of) reducing dependence on nuclear power generation as much as possible. My view remains unchanged today.

In Option 2, the target share of nuclear power generation is set to 15% on the basis that nuclear power reactors are to be decommissioned upon reaching 40 years in service as required by the 2012 revisions to the Act on the Regulation of Nuclear Source Material, Nuclear Fuel Material and Reactors. The 40-year rule for decommissioning nuclear power reactors is subject to some debate, but it will likely take root given the level of social acceptability.

If the rule is applied strictly, 30 of the existing 48 nuclear power reactors will have been decommissioned as of the end of 2030, leaving only 18 reactors with a total power generating capacity of 18,913,000 kW. These remaining reactors, combined with two additional reactors currently under construction, i.e., the No.3 reactor at Chugoku Electric Power Co., Inc.'s Shimane Nuclear Power Plant and the No. 1 reactor at Electric Power Development Co., Ltd. (J-POWER)'s Oma Nuclear Plant, would be able to cover only about 15% of electricity demand in 2030 (estimated based on the assumption that all of the reactors operate at 70% of their capacity), significantly down from 26% in 2010.

The share of cogeneration is set to 15% because it is the level recommended by both anti- and pro-nuclear power members of the committee in 2012.

In the electricity power mix that I advocate, the 30% target for renewable energy sources is the most difficult to realize. Renewable energy-based electric power generation can be classified into two broad types: (A) hydroelectric, geothermal, and biomass power generation featuring high operating rates and low output fluctuations, and (B) solar and wind power generation characterized by low operating rates and large output fluctuations. In FY2013, hydroelectric and other renewable energy sources in (A) accounted for 9% of the electricity power mix, whereas only 2% was generated from those classified as (B).

Type (A) renewable energy sources impose less burden on the power grid. However, each of those classified as Type (A) faces a bottleneck: suitable sites available for hydroelectric power plants are increasingly limited; geothermal power generation is subject to regulatory constraints including those under the Natural Parks Act and facing opposition from hot spring operators; and biomass power generation involves large costs for fuelwood transportation. As such, there is not much room to expand power generation capacity based on those energy sources. The share of Type (A) renewable sources in the electricity power mix in 2030 would be about 15% at the most.

If so, in order to achieve the 30% target for renewable energy in 2030, the share of Type (B) sources--i.e., reliance on solar and wind power plants that typically operate at low rates and have large fluctuations in output--must be raised to 15% or more.

The cost of solar and wind power generation has been lowered significantly due to the advancement of technology in the relevant fields. However, dark clouds hover over the future of Type (B) renewable power generation as illuminated by a recent solar power episode; some major electric power utility companies virtually refused to give grid access to operators of mega solar power plants in 2014 following a rapid increase in their number under the feed-in-tariff (FIT) system.

What needs to be made clear is that the problem of grid access denial is essentially the problem of the FIT system. However, the question of whether or not we can achieve the target share of 30% for renewable power generation in 2030 is not about the FIT system but about how we design a post-FIT policy.

In the first place, so far as Japan continues to rely on the FIT system, which is to promote the penetration of renewable energy into the electricity supply mix by providing de facto subsidies, the goal of 30% renewal energy share in 2030 will not be attainable. Fostering market-driven penetration of renewable energy sources is essential to achieving that goal.

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The key to promoting solar and wind power generation purely on a market basis in Japan is to solve power grid problems. What measures can be taken to achieve that end?

First, we can utilize the electric power transmission lines and transformers of nuclear power plants to be decommissioned in the coming years. Efforts to solve the power grid problems, which are indispensable to the full-fledged penetration of renewable power generation, should start from the thorough utilization of those power grid facilities that will be made redundant as a result of decommissioning old nuclear power plants.

Second, mechanisms for promoting and enabling power grid construction must be created. More specifically, there must be a mechanism for having power grid construction projects evaluated properly by the financial markets, a mechanism designed to enhance the social acceptability of such infrastructure in local host communities, and a mechanism for providing government support to investments in power grids. Building these mechanisms is of critical importance.

Third, more off-grid systems--those that would not use transmission lines operated by electric power utility companies--should be introduced. In this regard, it is important to develop more smart communities across the country and increase the proportion of electricity produced and consumed locally in a way to reduce the load on the power grid. Furthermore, we should consider introducing a system for transporting excess electricity generated from renewable energy sources to areas of large consumption, which can be achieved by using leftover electricity to liberate hydrogen for transportation to other areas.

>> Original text in Japanese

* Translated by RIETI.

March 17, 2015 Nihon Keizai Shimbun

April 15, 2015