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Forget Kyoto: Japan Fires Up Coal And Gas

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Osamu Tsukimori and Rebekah Kebede, Reuters

Japan plans to start up 14 new gas and coal-fired power plants by the end of 2014, allowing a switch away from pricey oil, as Tokyo struggles with a shutdown of nuclear reactors and energy imports drive a record trade deficit.

Regional power monopolies will construct 12 gas-fired units next year, while two new coal power plants will be completed by December 2013, according to a Reuters survey of utilities.

The new power plants will buy liquefied natural gas (LNG) and coal to scale back on the use of expensive crude and fuel oil plants. They will also give Japan a bigger buffer to prevent future power outages when generation plants go offline.

“What this will do is introduce an additional reserve margin into the power network, particularly in areas where some nuclear is coming back,” said Nicholas Browne, a senior analyst with Wood Mackenzie in Singapore.

Expanding gas-fired generation is the only viable large-scale option in a nuclear-free Japan to power its industrial and commercial sector and keep electricity prices low enough for businesses to stay competitive globally.

A massive earthquake and tsunami in March 2011 hit the Fukushima nuclear power station, operated by Tokyo Electric Power Co, also known as Tepco, causing three reactor meltdowns and hydrogen explosions.

The disaster undermined public confidence in the safety of nuclear power, leading to the shutdown of all plants for maintenance and safety checks, which pushed the world’s third-largest economy and biggest importer of LNG to post its first trade deficit since the second oil shock 31 years ago.

Prior to Fukushima, nuclear power accounted for about 30 percent of electricity and at this stage Japan may have only four nuclear reactors back operating by March 2015, the Institute of Energy Economics Japan says.

The new gas and coal power plants, which based on International Energy Agency (IEA) data will cost an estimated $7 billion to build, will add 6.4 percent more fossil fuel capacity by the end of 2014

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